Strategic Alliances: Partner Up and Play to Win

Strategic Alliances: Partner Up and Play to Win

Jared Fuller 26 min

This is a chapter from The PartnerHacker Handbook. You can get it Free in PDF or HTML or purchase at-cost on Amazon.


The root of strategic alliances is strategy. Strategy is choice. If you are playing to win, you must understand what strategy actually means: Not all choices are equal.



“You idiot, the KGB is here!”


I barely heard the whisper in my ear through the crowd when a dozen colleagues rushed me out the door and threw me into a car. We sped off.


I thought it was a joke.


“What do you mean, the KGB? Like, Stalin’s KGB?” I yelled at my colleagues-turned-captors.


“Of course Stalin’s KGB...Your joke about the President, you can NEVER make a joke about him here. We might not have seen you again. They were waiting for you to say something stupid, then BAM, black bag, and you would’ve been gone.”


They weren’t laughing.


I was in Minsk, the capital city of Belarus, speaking to a few hundred techies on how to build sales and partnerships.

If you’ve seen the PartnerHacker tagline, Trust is the New Data, or read the opening chapter of the Handbook, you’ll find this ironic: Trust was the subject of the joke in question.


It went like this:



“According to a Harvard study, only 3% of people trust salespeople. Coincidentally, about 3% of the population are also salespeople. I also hear that’s about the same as Lukashenko’s approval rating.”


I smirked.


When I said it, a roar of laughter erupted, immediately followed by pin-drop silence. I touched a nerve or two.


Back then, Minsk was the home of PandaDoc, and though both founders immigrated to the States, the tech team HQ still called Belarus home.


It was 2016. I was leading partnerships for PandaDoc, and the very next day, the C-suite of HubSpot was flying to Minsk to meet the PandaDoc engineering team.


We were in due diligence.


That next day would mark the biggest day of all of our lives.


That was one year, almost to the day, after my first conversation with that executive.


On that first call, I told him:


“In less than one year, I am going to be your number one partner globally, and you are going to try to buy me.”


I made that promise from an apartment that served as our San Francisco office and, for a few months, my temporary bedroom.


The guts!


We were nobody. I was nobody.


Little did I know that in bulldozing my way to fulfilling that promise, I was about to discover a formula. A formula I repeated three consecutive times, minting two unicorns where alliances were an undeniable part of the journey.


I figured out how to go from nothing to the #1 partner, to the most important possible partner.


I uncovered an art. How to PartnerUp and win together.


I realized that a startup’s goal shouldn’t necessarily be to build an ecosystem, but to win inside an existing ecosystem by forming a strategic alliance with the ecosystem parent.


I learned that technology partnerships, service partnerships, and overall partner strategy for an early-stage company should emanate from one strategic alliance at the top, and then surround it.


And now you can too.



What is the purpose of a partner-led executive?

Strategic alliances are not something you need to validate for your Board, CEO, or yourself.


Strategic alliances are for the brave, the bold, the market shifters, and category creators. They are for those that play to win.

Strategic alliances result from a fundamental understanding somewhat antithetical to traditional startup advice: not all choices are equal.


Sometimes, you have to call your shot. At that point, you had better damn well be calling the right shot because not only does your job rely on it, the entire company does as well.


The right choice (and execution) can alter the course of your company and possibly even the course of markets toward greatness or a colossal failure.


A true partner executive or founder understands that if not all choices are equal, then neither are all partners.

They develop a strategy, call shots, and nail it.


Strategy isn’t a dirty word. It’s misunderstood.


The best companies in the world often have “partner” or “business development” functions rolled up into some sort of “Chief Strategy Officer” because, to put it simply, strategy is a choice.


If you are going to play the game of strategic alliances, you have to make better choices than everyone else. Why? Because get in line, everyone wants to partner up with the sumos of your space.


That’s what separates a partner executive from just another title. True partner executives know how to make choices no one else can make.


They are entrepreneurs and market makers. They make choices others fail to make. Choice is what separates the professionals from the amateurs.


How do I know?


I’ve seen the power of winning a strategic alliance as a startup several times.


First at PandaDoc partnering with HubSpot, where we became their number one tech partner globally for CRM and secured HubSpot’s first ever venture investment. Then at Drift partnering with Marketo, where we became Marketo’s first ever exclusive alliance as a 100-person startup. After Marketo was acquired, we went all in on Adobe, becoming Adobe’s first ever exclusive alliance as well and won Adobe Partner of the Year out of 1,700 partners—in our first year of the partnership.


All three of these alliances have one thing in common: within one year, our tiny startups were the most important partnership in a giant’s entire ecosystem.


There were term sheets, big deals, legal, travel, and hand-to-hand grinding out referrals after building one-on-one trust. It took everything.


How was all that possible? How were we able to land exclusive alliances and win with the likes of HubSpot, Microsoft, Marketo, and Adobe?


We played to win. Second place was last place.


It’s hard. Stupid hard. But for the brave, here’s how you can do the same.



The five PartnerUp principles

  1. Build-In-Market > Go-To-Market
  2. Understand Strategic Alliances
  3. The Playing to Win Framework
  4. Find Your Black Swan
  5. Negotiate and Win the Big BD Deals



1. Build-In-Market > Go-To-Market

The market always wins.


Companies? Rarely.


It’s amazing how myopic our world can become in a venture-backed startup, looking at the world through the lens of some spreadsheet that spits out results we think we control.


That’s Go-To-Market—designing the spreadsheet inside your walls to get the results you math’d into existence.


In today’s world, understanding an operating model and unit economics isn’t an advantage. It’s table stakes. GTM is B2B SaaS entrepreneurship level 101 and that’s it.


So, what’s the next level?


It’s being market-led and building-in-market, instead of merely going-to-market.


Let’s take an example: Slack and HipChat.


HipChat had a very similar product to Slack, or at least not different enough to justify a switch. So why did Slack win?


Slack had a much better GTM strategy. They pioneered the freemium product-led growth framework that layered sales on top of product usage and data, and created a far more efficient revenue engine.


And they beat HipChat. But they lost the war.


No one can say that a 27.5 billion dollar exit makes a loser with a straight face.


But the fact is, Slack (acquired by Salesforce) had just over 15 million daily active users, and then, almost out of nowhere, Microsoft Teams had north of 125 million!


If they had such a good product and a great GTM strategy, how was Teams able to catch up and lock Slack out of market dominance?


In the walls of the best B2B venture firms, there’s a little saying:

“Great product never beats great Go-To-Market.


To be fair, they got it half right.

The reality is actually more like this:


Great product never beats great Go-To-Market, but great GTM never beats great Ecosystem.


Does Microsoft Teams have a better chat product than Slack? I sure don’t think so. But they made it MANDATORY, which drove their entire Office productivity suite through their field teams and their GIANT partner programs. They leapfrogged Slack because they drove Teams to all of their channel and tech partners through existing nodes of trust, with the obvious bonus of Microsoft already a line item in virtually every enterprise.


Slack’s innovative product-led revenue engine never saw Microsoft coming. Then they got scared, real scared. So scared that Slack took out a full-page ad in The New York Times entitled “Dear Microsoft.”


It was clever, but to the Microsoft network, it was merely cute.


That’s the power of an ecosystem.


No ad, email, or phone call could compete with being directly walked in, no matter how targeted, automated, or personalized.


Again, the market always wins.


Build In Market, don’t merely go to it.

Build In Market > Go To Market.

BIM > GTM.


So, how do you start?



2. Understand strategic alliances

I believe startups are victims of endless opportunity, and first-time partner professionals are perhaps the only ones duped more often than first-time founders.


I’ve seen it time and time again. They chase after every partner opportunity they see—an inbound big agency; another tech integration; co-selling with a consultant; partner marketing with an industry-friendly; and so on.


At a startup, everyone feels like everything they’re working on is priority numero uno. But if everything is “high priority,” then nothing is a priority.


What’s the solution for startups?


You can’t build an ecosystem until you win inside another ecosystem.


The PartnerUp method forces choice and says before you build any other partner function inside of your org, you have to become NUMBER ONE with the most important market leader in your category.


You need to land a Strategic Alliance that should drive your entire partnership strategy until you have the network effects and orchestration support to become your own ecosystem.


The problem is the root word in strategic alliances is STRATEGY. And strategy is the most misunderstood word in all of startup land.


Strategy equals choice.


And not all choices are equal.


So, how do you make the right choice and influence the choices that your company makes?



3. The playing to win framework

It was my first day at Drift. I was reporting to the Founder & CTO, Elias Torres.


Elias is one in a million, perhaps one in a billion.


Have you ever met a CTO who didn’t have a laptop at the office? That’s Elias.


“I build teams, products follow,” he used to say.


My first day started with a barrage of WhatsApp messages basically saying I had until Friday and my first Executive Leadership Team meeting to figure out where we place our partner bets.


But something told me this was more than just another meeting. I had a feeling I was expected to be right!

Thankfully, Elias had shown me Playing To Win: How Strategy Really Works.


In a very brief summary, Playing To Win has three distinct parts:


  1. Strategic Choice Making
  2. Reverse Engineering
  3. Strategic Testing


The first part, Strategic Choice Making, details five steps of cascading choices to not just call your shot, but to call the right shot.

  • What is the winning aspiration?
  • Where will you play?
  • How will you win?
  • What capabilities must be in place?
  • What management systems are required?


I worked 24/7 to turn the entire book into a template in my first week:


Strategic Choice Making


It’s not just about what you say yes to. It’s also about what you say no to. As a forcing function, it’s dang challenging exercise.


I highly recommend doing this with your most trusted partner before doing this with your leadership team as an exercise.


(If you are interested in getting a copy of the template slides, shoot me a DM on LinkedIn. Happy to get a copy over to you and help.)


Breaking it down a tad more:


What is our winning aspiration?

  • Don’t think about money. Everyone is playing for money in business. Start with people. What does it mean to win with your customers and partners?
  • What is the competitive nature? Who are you winning over?


Where will we play?

  • Market, Segment, Vertical, Horizontal, Geo, Size. (Don’t make the mistake of choosing your current field of play for ease. It can be, but this is not a descriptive exercise; it’s a prescriptive one.) What people are you playing with?
  • Channels or Methods. What field are you playing in?


How will we win in chosen markets?

  • Simply put, how to win on the field.


What capabilities must we have?

  • The activities you must excel at. The more reinforcing the capabilities are of other capabilities, the better the advantage.


What management systems do we need?

  • Guardrails, rules, processes, and measures that demonstrate how well the strategy is working.


These five questions are the bedrock for the Playing To Win strategy. They’re not a crystal ball, and getting them right certainly takes more than a ten-minute reading (more like ten sessions), but let’s put it this way: Can you afford not to have these questions answered before choosing which ecosystem you are going to win in?


The right choice can shift markets. The wrong choice can tank your company.


Be bold, but be thorough. Measure twice, cut once.


Frame your strategic choices to generate possibilities.



Start with a strategic problem. You should have multiple strategic problems to work through—and remember, this is about the market, not about you or revenue.


What are the choices to focus on to solve that strategic problem?

Reverse engineer your strategies.



You’re not done yet.


Reverse engineering ensures your strategic plan has tactical legs and implications across four vectors:


Industry

  • Segments
  • Structure


Customer Value

  • What’s in it for them?


Relative Position

  • Capabilities
  • Costs


Competitors

  • Reaction - what will they do?


For each step, you have to be able to say, “It would have to be true that…”

You’re not done until you get rid of the “nice-to-haves.”


Focus your highest level of intellectual capacity there as a leadership team—this can be where you bring in the rest of leadership.


Ask questions about the market, and don’t discuss going to market. The market doesn’t care about the problems of your GTM strategy. The market rewards creative solutions to problems it knows it has.


The central node to your PartnerUp strategy, your Sumo, the giant of your space, also doesn’t care about your internal problems or processes or choices.


They only care about why you are the most important partner to them.


And their people? They need to believe the same thing for themselves.


The Playing to Win templates are a critical part of the startup alliances playbook. Now that your choice is nailed and you know where you want to win, you need another force on your side.


The “aha!” moment.



4. Find your black swan

When I went to Drift, I took what I had learned from securing the HubSpot alliance and built another strategy. The result of the Playing to Win strategy I created at Drift was simple: win Marketo.


If you’ve followed PartnerUp or PartnerHacker, you’ve heard from my friend, Jill Rowley, who basically invented social selling… She’s a big deal!


In early 2018, when I was setting out to strike this sumo alliance, I was a fan of hers.


Little did I know that she and I would soon meet on the playing field to win, as partners.


In 2018, Jill was Marketo’s Chief Growth Officer. She wasn’t directly responsible for partnerships, but she was the chief evangelist, and I knew she understood how critical partnerships were to Marketo’s future.


I met Jill and two other Marketo executives in San Francisco with my vision for a much bigger deal than just another integration.


We had to WIN Marketo. Be number one. The best. Far above and beyond any other partner. That was the goal.

I had one shot to turn Jill from connection to champion.


We were playing to win, which meant this meeting mattered. I had to nail it.



Turning belief into proof

Before even stepping into the meeting, I believed we were going to be Marketo’s number one partner, but I needed more than just belief to convince Jill and the partner execs.


I needed proof.


It’s hard to prove something before it happens, but luckily, I had read Chris Voss’s book, Never Split the Difference. Voss explains that the most important part of a negotiation is, “Finding the black swan.”


He describes a black swan as a “Game changing piece of information that neither party knows when entering a negotiation.”

So, what was that game-changing piece of information? I had no idea, but I knew I had to find it.


Come to find out, finding the black swan isn’t a linear path.


The nature of the black swan is completely contextual, which means every company has something different to bring to its target sumo.


Black swans also aren’t always obvious, but there is a trick for finding your company’s black swan.


Instead of searching for the answer first, make sure you know the right questions to ask.


If you can’t answer the right questions, you will never win the alliance or become critical to their ecosystem. You just won’t.


To unearth the black swan for a B2B alliance, you have to answer two questions.


Question 1 – Company:



What is the most important metric that is a top three priority for the entire business?


This could be things like net retention, pipeline growth, churn, activation, conversion, win rates, competitive win rates, and on and on. There are countless permutations and combinations that matter to different companies at different times, all the way up to the Board and CEO.


Make sure your company impacts a metric that the CEO and her team would immediately respond to with, “Yes, that is a top three priority as a business.”


Question 2 – Role:



Which department (and role specifically) is directly responsible for the metric, and which role’s compensation is directly tied to the metric?


Tying these two questions together is where the magic happens.


They are the formula for playing to win in alliances because they’re how you turn belief into proof.


Back in San Francisco, I was sitting down with the Marketo execs and my friend Bobby Napiltonia, who agreed to shadow the meeting (a total power move on my part).


At the table, I set the stage for the meeting, stating, “By the end of this meeting, if we can agree on the answers to two questions, we are going to be high-fiving across the table.”


Hours later, the meeting ended with high-fives initiated by none other than Jill Rowley.


We uncovered the black swan and turned belief into proof.


Here’s what we learned: 


Question 1 – At the time, Marketo’s most important metric was Net Dollar Retention. We needed to show that they could effectively grow the subscription price per customer while reducing churn.


Question 2 – Marketo’s CSMs were compensated based on Net Dollar Retention. 100% of their commissions were based on customers they owned spending more at renewal than the previous year.


This seems like basic stuff, but here’s where the black swan appears through the fog.


What was the most important driver for Marketo increasing the subscription price year over year? The number of contacts in their customer’s Marketo database.


There are dozens of pricing/upsell levers, but the number of contacts in their customers’ databases was the most important to the CSMs and to Marketo. It showed their customers were growing and Marketo was, too.


Keep following here because it hasn’t even gotten good yet.


At the time, Drift’s basic integration with Marketo took marketing automation concepts used for personalizing email to websites through chatbots.


These chatbots were designed for marketing and sales. They would engage, understand, recommend personalized next best actions for website visitors, and capture new contacts more effectively than the forms on the website, thereby sending more contacts to Marketo.


Boom.


Did you see it? The elusive black swan, IRL.

  • By recommending and installing Drift and connecting it to Marketo, customers were capturing more contacts from their website.
  • Marketo drove serious results for Net Dollar Retention.
  • CSMs were delighted because they could recommend a trusted partner who helped them get paid, delighted their customers, and impacted the most important goal for their employer.


By answering those questions and understanding how our company and product affected their customers, their company, and their CSMs who were directly responsible for and impacted by contacts in the database, we were able to flip belief into proof.


At that meeting, it was agreed that we were Marketo’s most critical partner.


I could go on with another dozen stories about how we took over Adobe Summit and the main stage keynote after that meeting, how we became Adobe’s Partner of the Year out of 1,700 other partners, or about how we won over 1,000 accounts from this thesis.


The proof is real.


It’s the same formula I used for PandaDoc with HubSpot.


When HubSpot CRM launched, it was in the most competitive SaaS industry: SMB CRM. PandaDoc was an e-sign and proposal tool. At the time, Hubspot was already a juggernaut public Martech SaaS company, but it was so early that HubSpot CRM didn’t even have APIs.


I knew they’d win CRM, and we HAD to be number one.


Here’s that same formula applied to the PandaDoc and HubSpot alliance:


The year we went after HubSpot, we found out that HubSpot CRM’s most important metric was activating trial signups. We also uncovered that the most important metric for taking a signup to a paying customer was moving a deal to Closed Won.


Moving a deal to Closed Won meant a 7000% increase in the likelihood a customer paid HubSpot!


And that’s exactly what PandaDoc did. It helped people close deals.


We covered the full story on episode 1 of the PartnerUp Podcast, but the short of it is:

  • PandaDoc hacked a chrome extension which allowed it to send documents from HubSpot even without access to their APIs.
  • We got a few dozen joint customers to use it and even sent a few customers to HubSpot to try it out.
  • We discovered that PandaDoc cleared the friction for closing a deal and moving their first opportunity to Closed Won at a faster rate and with higher predictability than any other single partner HubSpot had.
  • Less than one year later, PandaDoc was HubSpot’s number one CRM integration. We were so successful that we even convinced HubSpot to cut their first ever venture check. That’s right, this formula won so well that HubSpot Ventures was formed, and PandaDoc was the first ever check HubSpot cut to invest in another SaaS company.


This is the PartnerUp formula.


I’ve used this formula to establish strategic alliances with three sumos and to advise dozens of other startups.

This formula is only for those bold enough to uncover the secrets and only for those brave enough to Play to Win.


You have the formula; now it’s time to close the deal.



5. The deal is yours, not theirs – Winning the big BD deal

This is the final table.


Ninety-five percent of people never get here, and you made it. But access does not equal power.


The reality is, this is the hardest part, and it’s only for the wisest and bravest.


Now that you have the knowledge, the validation, the black swan, and it seems like it all feels right, you have to follow it through to the finish line.


Remember this: these are your terms; you are in charge. Not your partner.


This stage is not collaborative.


Whatever you do, don’t make this about your alliance partner’s template, their standard partner program, or their contract review process.


Sure, you may be a part of their program, which gets you access to APIs or maybe even listed, but that’s perfunctory, not a victory. Victory is an alliance deal, a custom contract with real commitments and skin in the game—millions, tens of millions, hundreds of millions, or even billions on the line.


To close these types of company-changing, market-shifting deals, you need to realize that you are the entrepreneur.



Ask the sumo of your space to spend insanely costly hours to craft a deal that makes you famous, and money is never going to happen. That’s not partnerships—it’s you being lazy and entitled to the success you think you’ve earned up until this point.


Don’t lose the race at the finish line. You aren’t done.


The entrepreneur who wins doesn’t wait for the market to set the terms for them; they create something entirely new based on an unshakable vision. This is your vision. This is not your partner’s vision. If it was, they would have already won, and you wouldn’t be at the table.


You are creating something new, an asset of value, and you are bringing that value and creativity to the table.


Bernie Brenner, the author of The Sumo Advantage, describes Business Development (BD) saying,



BD is about taking the assets or capabilities of two or more companies and combining them to create a third, even more valuable asset.


So what is that asset? What is the new state of an even more valuable asset?


That’s your proposal—the deck, the pitch, just like an investor pitch. Ninety-nine percent suck.


And how does the rubber meet the road?


That’s your term sheet—the requirements, the numbers, the commitments. Your terms.

The ones that make everyone a winner, but YOU are the only one that completes the formula.

Control is everything at this stage.


There’s very little out in the wild about how to win strategic partnership deals at the finish line. Not just negotiation tactics, but real-life steps that take you from the partner knowing who you are, to not only being important to them, but actually minting the deal.


That high five with Jill Rowley? Amazing. But was it a contract? Nope.


We ain’t done yet.


Luckily, as I called out above, there is one little book that’s quite the gem to traverse this stage: The Sumo Advantage. It’s not perfectly suited to B2B, but the contract negotiation principles are remarkably similar given the nature of those partner contracts being B2B contracts.


According to Brenner, the primary problem BD people face in winning these types of rare but incredible deals is the illusion that you are in control.


Just because you have a seat at the table doesn’t mean you are going to win. In fact, by the very nature of you being at this stage, you are already at a disadvantage.


The reality is, because you are the one driving next steps, you force your alliance partner into reactive mode.


They have to react to each move you make, which is both a blessing and a curse. When others are reacting to you, you can’t predict their next move. At any point, no matter how far along you are in the process, you’re still vulnerable to their “not right now.”


The solution: confusion.


Wait, what? No, I’m not talking about dishonesty. I’m saying, “don’t show up and throw up.”


You need to strategically withhold information and create a sense of FOMO. The fear of missing out is driven not by complete information, but by the right information at the right time.


Momentum in these deals can create the illusion that you are ready for the final step of the deal—the contract—but before you go there, take a step back.


At each step, you are doing something important: keeping contracting as the final and perfunctory step. Once legal and procurement and finance is involved, you have lost 100% control.


The goal of the final step of the process is to take as long as you need while pushing forward each step to get the answers to the test.



Getting the answers to the test

If contracting isn’t the last real test, then what is? The term sheet.


Like meeting agendas, or cadence, the term sheet is never something you should cede control of. Never.


Why?


Because it’s all interconnected. The purpose of every meeting and every step is to find your answer to the overarching test.

You have your private term sheet which outlines your ideal state, but it’s not the answer to the test.


The term sheet is the necessary list of bullets and basics of the deal that would change the game for you and, you think, your partner. It also outlines your private set of “walk away conditions,” where the deal doesn’t make sense any longer.


You get the answer to the test by working backward from the term sheet.


The question you need to answer is: How will you reach the goal at the end of the alliance rainbow and ensure that by the time you present the first term sheet to your sumo, you’ve already won?


That answer will allow you to drive the agenda.


In the immortal words of Sun Tzu, “Victorious warriors win first and then go to war.”


Done correctly, once you’ve answered that question, you’ve already won the war.


There’s a reason why so few strategic partnerships exist.


Most lose before they ever go to war.


Most take the test, only to find out they got the answers wrong.


If you have the opportunity to help your growing business land an alliance, to win in an ecosystem before you try to build your own from scratch, good luck.


If you pull it off, you’ll be a market maker.


You’ll earn the respect of leaders in an industry, not just your company.


You’ll change your company forever.


And you’ll change your life.


PartnerUp and Play to Win.


I’ll see you in the arena.


Grab a copy of the full PartnerHacker Handbook - a #1 best-seller in its category. Free in PDF and HTML, and sold at-cost on Amazon.


Prefer to listen? Subscribe to our PartnerHacker Articles Podcast.



Jared Fuller 26 min

Strategic Alliances: Partner Up and Play to Win


The root of strategic alliances is strategy. Strategy is choice. If you are playing to win, you must understand what strategy actually means: Not all choices are equal.


You Might Also Like

X

This is a test comment.

X

This is a longer test comment to see how this looks if the person decides to ramble a bit. So they're rambling and rambling and then they even lorem ipsum.