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Solutions: A Platform of Best-of-Breed

Large technology platforms face increased competition from smaller, vertical players that provide better experiences, as highlighted in a recent a16z article.

One of the most effective forms of that competition often comes in the form of newcos who aspire to take chunks out of that emergent platform by better addressing the needs of a specific vertical within that platform—by creating a user experience or business model that’s much more tailored to the unique attributes of that vertical.

We see this in B2B software as customers seek a best-of-breed approach and choose to work with a variety of specialized vendors that offer a relatively limited series of capabilities, but do so extremely well. This approach ensures that every part of the application and IT environment is providing the maximum benefit for end-users and admins.

The challenge, however, is integrating all of these vendors so together they feel like a platform. To provide real value, vendors need to not only provide their capabilities very well, but must do so in concert with all the other vendors a customer is using. When vendors build and market product, they must do so with adjacent vendors in mind.

At a very minimum, they need to provide documentation and best practices on how to integrate with other vendors. A better approach, however, is a complete go-to-market motion with select partners where they provide their joint integration as a complete solution that addresses the customer’s needs.

This “meet in the market” approach allows best-of-breed vendors to present an offering that highlights the unique value-add of each, but does so in a unified, almost “platform” way.

Know the customer, build the solution

The first step in building a good BD partnership is to focus on a problem/solution statement; what problem is a customer facing and how do two (or more) companies working together uniquely solve that problem.

Understanding the customer demand is the Big Bang, the explosion of information from which the universe of partner opportunities is formed (OK, I really pushed that analogy). Once you have a strong grasp of what pains customers are feeling, you can go out into the market and find the right partner to work with and develop the right solutions.

Developing a solution with a partner company is the product strategy part of BD. Like a product manager, a good BD professional must know market trends, must know customer demands, and must know what is in-scope and out-of-scope for their own products.

Additionally, however, BD must have the same understanding of the partner’s market, customers and product scope as well.

Once you’ve identified the customer pain and developed a solution thesis that is aligned with the corporate and product strategy of your company and your partner’s, the BD teams can then move on to the next step which is to work together to loop in the right teams to build and market the solution.

Partners as an Extension of Product

Customers don’t want to buy your products, customers want you to solve their problems. This is an obvious statement, but it is worth repeating. To solve a customer’s problem, often your particular product may not solely suffice.

You may have an incredible offering (and I’m mainly talking about technology here), but the simple fact is that customer problems are now so complex, no one offering can fully address them right now.

This is where strong product-focused partners can help and how a well-executed Business Development strategy can make partners an extension of your product, and a solution for your customers.

Be Market Driven

In technology, especially now with SaaS, there is no end to the number of other companies you can partner with. Some partnerships may be intellectually challenging, some may be outright cool, but the ones that are really valuable are market driven. In other words, can you quantify the real customer demand for the solution that you and a partner can offer. If there is real demand, then you have the basis for a successful product partnership.

Will Both Partners Invest?

Both companies need to recognize the market demand and be willing to invest product, engineering and marketing resources to build and evangelize the joint solution. Customer will be far more comfortable contemplating a joint solution if they hear equal commitment from the companies involved

To Offer a Solution, Must There Be a Deep Integration?

This is an interesting question and I actually think the answer is no. You and a partner certainly want to come to a customer with a solution that offers unique value, and two (or more) deeply integrated products may do that. But there are also cases where a reference architecture will suffice; showing how two or more products working side-by-side addresses exactly the customer needs.

Product Management builds the product that addresses many of the needs of your customer. Business Development complements this role by finding and building the partnerships that expand the product, and allows your company to come to a customer with a more complete solution.

StartupBD: The Integration is the Product

The role of BD is evolving to look like a mashup of a product managment and product marketing. But in the BD world, the “product” that needs to be built, maintained and marketed is an integration or a partnership with another company.

Sure, applications have always been connected to one another in some way. But with applications moving to the cloud coupled with the easy ability to create and manage APIs, software applications that used to operate in a silo can now connect to share data and create new workflows.

For example, an HR system, a firewall, and a collaboration platform all offer certain value to customers. But when these systems are deeply integrated, new secure workflows are enabled that the creators of the HR system, the firewall, and the collaboration platform could never have imagined. For example, imagine a newly integrated and automated workflow whereby a firewall detects a security incident, alerts high-value applications like HR to suspend user-access, and then opens a new collaboration channel so SecOps can investigate and discuss the incident.

BD teams must actively discuss customer use cases when contemplating an integration between their respective companies. Is there a real use case that can be jointly solved? Has the use case been validated by the market?

With a use case validated, the BD teams then line up the right marketing and field resources to bring their partnership to market.

Such is the rise of the customer validated use case solved not by a product, but by an integration. Integrations therefore need to be created and treated as if they were products.

History of risk capital in San Francisco

Although we often think of VC and risk capital as being a relatively recent phenomena in the Bay Area; starting during the 1950s and 1960s with the rise of the microchip industry and the birth of “Silicon Valley.”

But the culture of of risk capital extends far before that, all the way back to the 19th century!

I’m reading this great book San Francisco Stories (borrowed from a public library… yay libraries!!!), which is a collection of letters and essays by great writers on San Francisco.

One who was not impressed by the city is Anthony Trollope, indeed his letter is titled “Nothing to See in San Francisco”

But as he wrote his letter in 1875, he was amazed by the willingness of San Francisco entrepreneurs and San Francisco financiers to take risks on new ventures, something that he could not imagine taking place in London or elsewhere in the US.

The great commercial community is there [in San Francisco]… If a young man there can make friends, and can establish a character of honesty to his friends and for smartness to the outside world, he can borrow almost any amount of money without security, for the purposes of establishing himself in business. The lender, if he feel sure that he will not be robbed by his protege, is willing to run the risk of unsuccessful speculation.

(Although we need to continue to ensure the risk capital investments and investees increasingly are women, as well!)

Love your product, but Silicon Valley wants to talk about the money

My recent article in the Globe and Mail highlighting that while innovation is important, but it has to be coupled with a strong business plan and market adoption.

The weather here [in Silicon Valley] is warm but the culture is coldly capitalistic. If you want to talk about investment, be prepared to talk about return. If you want to talk about business partnerships, be prepared to talk about customer demand and market opportunity.

Love your product, but Silicon Valley wants to talk about the money

Find your mafia

Networking is a key part to success. You need to find your mafia, groups of people you can call on to help with business, advice or job hunting.

I try to find different mafias, some centered around my b-school friends, some centered around my old workplaces.

Coming from Canada, I also spend a lot of time with the Canadian mafia here in Silicon Valley.

Here’s an excerpt and a link to an article I wrote that talks about Canadians in Silicon Valley and our relationship to Canada

I’m from Toronto and I’ve been in tech for more than 15 years. A lot of my friends are also Canadians in tech. In fact, I got my last three jobs through my network of other Canadians in tech. I’ve done deals with other Canadians in tech.

We go to tech conferences together. We go to evening socials and networking groups together. Of course, there are always hockey and baseball games to go to. We know each others’ kids.

We do a lot of things you’d expect a network of Canadians in tech would do, except for one. We don’t live in Canada – we live in Silicon Valley.

The value of pitching a return home to Canada’s tech expats

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