A formula for business development

Phew!  Today was an intense day of travel and meetings.  I’ve been preparing a tirade about Chromebooks but lack the energy to complete the story for today.  So instead I’ll post a few thoughts about business development.

For most consumer-oriented start-ups, business development can be a complete waste of time.

Example #1: A major phone manufacturer promised to preload feecha on their flagship phone — to the point of sending us stuff to sign — but then overnight became totally unresponsive.  We later learned a certain telecom company had a similar app and suggested we get dropped… yep.

Example #2: A public organization agreed to provide feecha structured data, but what we got was barely usable as it wasn’t to spec.

Example #3: A fast growing start-up wanted their content on feecha; but when our users tapped through (as we usually only post excerpts), they instead found ads to download the other start-up’s app.  Sigh.

Example #4: The very same start-up’s competitor proposed to work with us… but we soon realized all they really wanted was info on the competition.  Double sigh.

Example #5: A hospitality company wanted to provide feecha to their customers, but first we had to modify the app to make it more suitable for tourists.  We did; but they did not carry through their end of the bargain.

You’d think a person would want to punch a wall after going through all the above; but it doesn’t bother me that much because it’s part and parcel of business.  People pull out all the time and do things that aren’t in your interest.

That’s not to say all business development is bad.  We’ve had some successful partnerships.  But even with the good ones, none of them “made” our company.  They were nice-to-haves that did not make a deep impact on our bottom line.

Yet, each partnership takes weeks if not months to cultivate.  It’s a lot of time you wonder whether could be better spent elsewhere.

I have a new theory to business development, and it’s to do deals where your partner benefit more than you do.  Ironically, it’s in this kind of arrangement that you gain the leverage and power to ensure the deal gets completed faithfully.

YourUtility(1) x DealProbability(1) = YourValue(1)

Vs. YourUtility(2) x DealProbability(2) = YourValue(2)

while PartnerUtility and DealProbability have high R correlation.

So if YourUtility(1) < PartnerUtility(1) and YourUtility(2) > PartnerUtility(2),

YourValue(1) > YourValue(2)

The classic mistake is to try to maximize your utility such that it negatively impacts your partner’s and thus, the probability of the deal happening.  If you are willing to give away more such that partner utility is high, you will increase the probability of the deal happening such that the initiative’s value ends up better.

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