Principles of Successful B2B Strategic Partnerships

How do you approach partnerships with those adjacent businesses, in a B2B environment? Do you think it’s key for a partnership to get to scale, for your business?

There are a few basic principles of partnerships. The couple that I like to follow are, one, they should be material to the business. I’ve done a lot of partnerships in different businesses, over the years and the temptation is just to start doing partnerships. If you employ a partnerships person, they will do partnerships, because that is what their job is. But what you’ll find is, left to their own devices, they will spend half their time doing a lot of small partnerships that don’t really move the needle, that nobody really notices. Focus on a few partnerships that will make a big difference, instead of trying to do 50 partnerships that don’t move the needle. Every partnership you do, has a cost, in terms of overheads, time and energy.

The other thing is, both parties clearly need to win. This isn’t a trade-off between people. I always remember, one of my first meetings at Google, I was pitching a new partnership that I was proposing to do, to Larry Page, Sergey Brin and Eric Schmidt, who were the trio running Google back in 2004. I was a little nervous going into the meeting thinking, is this a good enough deal for Google? These guys are going to beat me up and ask me why I haven’t got a better deal for the company. Why are we only getting this percentage of revenue? What became apparent, in the course of the discussion, was they were coming from completely the opposite direction. They saw, immediately, that this was a good deal for Google. Their concern was, was this a good enough deal for the partner. All of the pressure from them was, are we being generous enough? Should we be doing more to make this partnership sustainable, to make it stand the test of time.

That win/win principle is genuinely important. What is the point of doing a partnership that is only going to last a few months? What’s the point of doing a partnership at the cost of your own reputation, as a good company for people to do business with? It has to genuinely work for both parties.

So the two principles that are important for partnerships are scale, so make sure it is material. The other is to make sure that it is win/win.