Second part of our deep dive into #businessdevelopment with Roy C. Vella. Roy has built Biz Dev teams in PayPal, Hive, RBS , where he developed significant strategic #partnerships for channels to market. He is now advising boards of prominent tech startups and F500 companies.
💡 In this episode:
0:00 – Coopetition
2:00 – How to identify your ideal partners?
4:00 – How to find internal champions?
6:00 – Why you should pitch your solution as an Iron Man’s suit not a robot
9:00 – How to get the most out of collaborations with innovation departments?
11:30 - How to build interpersonal relationships with potential partners
14:30 - How to negotiate, key contract points and fighting on behalf of the client
18:00 - Why you should roll out partnerships in stages
20:00 - Why exclusivity is your jet fuel
23:50 - Why you should consider co-opetition, PayPal + Paymentech case study
26:00 - And what are the underlying trends that drive partnerships?
How to identify your ideal partners?
Going into the process of finding new partners, you mentioned how you successfully did it in Paypal. How do you start searching for new partners? Do you map ecosystems, etc?
One tip that I think is valuable, is I often tell people to forget about the top 10. Here's my list of partner targets people I would love to do deals with. In general, the top 10 are pretty happy with themselves. Life is good, they're doing okay. I mean, definitely the top five, maybe 5 to 10 you could talk to. But 10 through 20? Pretty hungry, pretty eager to do something different.
Because they're not in the top 10 of whatever the vertical is, it doesn't really matter what the vertical is. And why do I say that? Because I know that my deal requires change on the other side. The deal didn't exist and the deal exists. And people are going to have to change behavior. And human history has shown that people who are fat and happy, don't change very much.
Here in the top 10, definitely the top 5, things are pretty good. The ethos of that group tends to be, we keep doing what we're doing, things are going to be okay. Whereas people in the bottom? The thing is, 10-20 or 10-50, they're looking for doing something different, we are not killing it.
Here in the top 10, definitely the top 5, things are pretty good. The ethos of that group tends to be, we keep doing what we're doing, things are going to be okay. Whereas people in the bottom? The thing is, 10-20 or 10-50, they're looking for doing something different, we are not killing it.
Depending on the industry, you’ve got to decide how deep that list is. Maybe you don't talk to the top three, maybe you talk to number four, number five, or maybe you ignore the top 10, 11, 12, or 13. It really depends on what the curve looks like. What I mean by that is, how fragmented is your market? Just as an example, when you look at the currency conversion market - massively fragmented. The 800-pound gorilla Western Union has I think 16% market share., and then MoneyGram, the next one has 9%. And then it's a tale. if you talk to number 20, in that market, that's a waste of time. It depends on how fragmented the market is, but the key point is that talking to market leaders for brand value might be a waste of time, because they're not going to change their behavior, even if you sign a deal. How much are you going to change Western Union's behavior by signing a deal with that as an example?
You definitely want to keep in mind that the target is going to have to do things differently and going to have an incentive to do things differently. You're looking for hunger, you want to serve people who are hungry.
How to find internal champions
That's a very insightful point. Imagine you found these 5 to 10, or maybe 10 to 15, and then you go and you pitch them. Who do you pitch? How do you pitch? What are your thoughts about that?
100% of the time, you need to find a champion on the other side of the table. You need to find someone who thinks:
1. this is really good for my company,
2. and it's going to make me look good.
You need to find that person in the target.
Should it be a senior person or it could be a bit junior?
9 times out of 10, the more senior the better. But senior and lazy or young and hungry again, the same thing applies. The senior guy doing pretty well, makes good money. I mean, there is a problem with seniority that the urge to not f*ck up growth. At the end of the day, these people aren't buying new things, new risky things, which is why risk? The risk appetite decreases over time.
If you're doing something that's brand new, but somewhat risky, I would find a younger person, a person, not younger, a more junior person in the organization who's willing to take that risk. Again, high risk high return.
If you're doing something that's brand new, but somewhat risky, I would find a more junior person in the organization who's willing to take that risk. Again, high risk high return.
But I mean, that's the other thing. People who have innovation in their title or digital in their title, or anything that indicates that they have a higher risk appetite are better for a deal that involves some level of risk. If it's not, if it's a volume deal, you want to find people who are driven by revenue. I mean, it depends on what you're selling. But more often than not, cost avoidance does less new deals than revenue generation. Revenue generation is more exploratory, most of the time.
More often than not, cost avoidance does less new deals than revenue generation. Revenue generation is more exploratory, most of the time.
Why you should pitch your solution as an Iron Man’s suit, not a robot
I would say one warning, that I see it all the time. I just can't get over how often I see this. I see people selling to someone a proposition that will replace them or their team. They go to a CTO, and they have a proposition that says ‘Oh, my God, we can do this so much more efficiently. You'll need half the heads, half the engineers you have on staff now’. And they think that's good for the CTO.
You have to understand what's driving the CTO, maybe more heads makes him happy. Maybe that's a power thing, a pride thing and having a large organization is good. I can tell you, you close the door, you never hear from that person again. Stay away from me! I have a funny example. I started talking to a company that has effectively it's a better programming language but they were pitching it like robots. They were saying you need less heads. This is a better way to do coding and maintenance and everything and you'll need less engineers because these effectively robots, and I was if it's true, you'll never gonna sell any. I said at the very least, the truth is you need engineers to use your software. You're selling Ironman suits. Tell them it's about enhancing the engineers, that you need engineers in the suit to make it work. And they're Oh, right. Okay, Ironman. That's a good id. You got to remember what drives people and then so often you see startups. In crypto, you see crypto players selling to banks. And they're saying, the message is often we'll do immediate, global, free transactions. That's the pitch. That's the worst thing a banker ever heard their entire model is based on slow, expensive transactions. But the bank, any global bank has no interest in money moving instantly around the planet for free. That's bad. That's really bad. When you get these crypto guys talking to bankers, they should want to replace their back-end systems and swift and wire transfers, money, translators should want to replace all that, because they can do it better. I'm like, that makes no sense at all. A bank does not want that to become true, because you just eliminated their whole.
How to get the most out of collaborations with innovation departments
Absolutely, I agree. Look, just going back to this innovation people, sometimes they are just absolutely amazing. And I had a chance to deal with many of them. But some of them are just screening a bunch of startups, and they are ticking boxes saying, ‘hey, we screened this many startups.’ How do you avoid this type of behavior?
They have to be driving revenue. Their remit has to be revenue. You do not want to do deals with scientists. It can't just be experimentation for experimentation's sake or learning for learning's sake, it has to be that they have a bottom-line objective, right? And you can explore that you can find that out in conversations. Past deals, how much have you driven to the bottom on? You can just ask. You need to be very willing as a biz dev person to be curious, really, really curious. Or you got to be asking questions. The 80-20 has to be 80% listening and 20% talking. You need to be asking questions to dig out what's driving the behavior? Why do they do what they do? How are they measured for success?
The 80-20 has to be 80% listening and 20% talking. You need to be asking questions to dig out what's driving the behavior? Why do they do what they do? How are they measured for success?
Are they looking to grow their organizations' headcount? I mean, sometimes an innovation guy in an organization has three people, and they're ‘I'm trying to grow the team, I want the team to be…., well, and you're not going to grow the team unless you drive bottom-line results, blah, blah, blah. You need to listen a lot. And people will tell you. The other interesting thing to me is people aren’t bashful about telling you what they need or want. If you ask them, they're happy to tell you. If you don't ask, they might not tell you.
How to build interpersonal relationships with potential partners
Sometimes you don't want to ask because you don't want to hear the answer. What are the questions that you typically ask? I think you just mentioned a couple of them, which are great. Are there any things that you would ask, and kind of wait for an answer?
Going back a step, everything's based on trust. And deals are based on trust. And you want to get to know the person. ‘Hey, what did you do this weekend? We went down…’, you explain what you did, you want to find common ground, and build trust on an interpersonal level. And then once you have that interpersonal trust, where the person you're doing a deal with, looks forward to talking to you. My first major deal at PayPal took a year. And the guy we did the deal with, Kevin Gallagher, great guy. We became friends and we were trying to do this deal for our companies. When you do a significant deal, you should become friends with the person you do deals with.
Usually, not all the time, but you want to have an interpersonal relationship in some regard. And then secondary, you'll start to learn what drives them. Sometimes it's status in the organization. Sometimes it's bottom line revenue, sometimes it's impressing their immediate boss, but you'll never get there if you don't have that.
Usually, not all the time, but you want to have an interpersonal relationship in some regard. And then secondary, you'll start to learn what drives them. Sometimes it's status in the organization. Sometimes it's bottom line revenue, sometimes it's impressing their immediate boss, but you'll never get there if you don't have that. I mean, we use the phrase ‘loosen people up’, the way you loosen people up is having a comfort level with you. I mean, that is why sales guys take prospects to drinks. Simple as that. Lunch and drinks loosen the tongue.
It's more difficult to do that on Zoom these days?
Totally. In fact, I honestly, I've said a number of times now like there's going to be a huge challenge moving forward where people go. "Why are you coming to town? It's fine. We can just do a zoom. We're fine, we don't need to."
The prospect side of the equation is to start to say:
A. I'm not coming into my office.
B. You're not coming to my house. C. Zoom is totally fine. What was the conversation?
And a bunch of sales guys are sweating. Because the way I build relationships is over a meal. We break bread with one another to build relationships and what is building relationships? Building relationships is building trust.
How to negotiate, key contract points and fighting on behalf of the client
Let's imagine that you found your person that you want to engage, a hungry person, you pitch them, and then kind of push you back. You start to negotiate. There's an argument being made that in some ways a partnership is about legalese. All these contracts and details and figuring out what is a small thing and so on. How do you negotiate and partnerships what they think are important and what is the best practice you can suggest?
I mean, one dangerous thing I would say is trying to pass the relationship over to the lawyers, this sort of thing. You definitely see situations where the commercial agreement has been made like ‘Okay, we're doing it. This is what we're gonna do. Let's get it onto paper’. And then the lawyers are fighting among themselves and they want to justify their existence and can really go off a deal if you let them.
It's important to bizdev people become the advocates for their partners in conversations with their own lawyers.
I think it's important to bizdev people become the advocates for their partners in conversations with their own lawyers. You need to be talking to the lawyers, "Oh, we need this. We have this in all of our agreements" or whatever may or may not be true, but you have to be the one fighting on behalf of the client. The client has their things, you have your things, you have to say, ‘look, is it really that important to us and are we going to crater the deal over this?’ I'm not saying you shouldn't negotiate hard and push back where appropriate, but I have seen deals fall apart because of stuff that really wasn't significant. But it was a legal thing, or it's like ‘no, we don't get that, we don't do the deal’. That's one aspect I would say.
The other is there's much more to negotiate than money:
There's the press release,
There's brand interaction. When we go to market, is it side by side as brands? Is it my brand doesn't exist and your brand does? Is it your brand powered by my brand?
There's exclusivity or lack of exclusivity, depending on your perspective.
There are milestones
The more material milestones you can build into the agreements, the better. It's better for everyone because the more you articulate what your mutual expectations are, the happier everyone's going to be. The more that's left up to your imagination, Roman was thinking that, Roy was thinking this. Oh my gosh. We didn't think that in advance.
And then also incentives.
Sometimes one group's incentive is volume and the other group's incentive is profit. That's got to be clear. In other words, one will charge a higher price for a lower volume. The other is "Screw price, I want to drive as much volume as possible. How about that?"
You want to articulate all of the factors that you can in the contract. You don't want to do too many, you don't want to make it unbearable so that there's so much in the contract that it's hard to understand the agreement. But the material elements of time and money and brand and etc., you want to be clear about those and not have to be left off to someone's imagination.
This is my point is that you want to articulate all of the factors that you can in the contract. By the way, you don't want to do too many. I mean, you don't want to make it unbearable so that there's so much in the contract that it's hard to understand the agreement. But the material elements of time and money and brand and et cetera, you want to be clear about those and not have to be left off to someone's imagination.
Because that's the other problem - you and I do an agreement and we understand each other, we understand what we want and it was all clear. And then I pass it on to my organization and you pass it into your organization. Now you're playing a big game of telephone. 'Oh, I thought you said Tuesday bla bla bla. '
It's worth it for both parties to have sort of crib notes. To have sort of an abbreviated version of the key material terms of the agreement. When you go into execution mode to get it done, as expected. You don't want your engineers, my engineers, some third-party integration part who just part set up because they just didn't understand.
Why you should roll out partnerships in stages
In terms of milestones and timeframe, you mentioned that the first deal that took you for almost a year in PayPal. When should be the first milestone, time-wise from the beginning of partnership?
I look at deals not unlike I look at startups. You should have a minimum viable product that you can get live as quickly as possible. I mean, if between signing and live, it's a long time, that's bad for everybody as well. You would love to have partnerships and integrations that can go to market in stages, and the stages could be different.
You should have a minimum viable product that you can get live as quickly as possible. If between signing and live, it's a long time, that's bad for everybody
It could be executional stages, it could be vertical stages.
Geographic. We're going to start on the West Coast and then we're going to expand in the US and we're going to expand in North America, then we're going to go into Europe.
It could be the depth of all of the engagement. We're going to start with this proposition, but then we're going further into your footprint and further into my footprint. It might be in a product, could be stages.
This stage of the product, that stage of the product.
I think of it like serving Thanksgiving dinner. If you put Thanksgiving dinner out and there are no plates, no one can eat anything. You need to plate it. You need to cut it into bite-size pieces that people can then get their heads around and execute on.
And there's just no scenario where large contracts, large agreements between parties just go from 0 to 100 immediately.
You got to have a path of acceleration, and it is important to the success of deals sometimes that's very clear.
Here's where we're going to start with, as of two months from signing, we're going to launch X Y Z. And then by the end of the quarter, we'll be doing this simple Y.
And also try and think of some worst-case scenarios ‘if this isn't working, we're going to reevaluate at this point and we'll see what we can do to accommodate’ all this kind of stuff. Again, you're not going to be able to predict the future 100%. But the more you can anticipate and the more you can set mutual expectations, the better it is for everyone.
Why exclusivity is your jet fuel
I'm a Silicon Valley guy. Speed mattered. Speed mattered a ton in my space, and because speed mattered, a period of exclusivity was sometimes very valuable. People want to be associated with a brand in advance of someone else being associated with that brand. And it can be a powerful resource, it can be powerful on two fronts:
brand power
speed to market.
I've never done a deal that was mutually exclusive for forever. They always were time-limited in some regard. And the tighter the time period, the more I tend to think of it like jet fuel. You're accelerating the deal by giving people a period of exclusivity in which to perform. We're not going to do any other channel deals for the first year of this deal. And in that period, you get X Y Z compensation. And then after that period, we're going to have other deals come to live and your profitability is going to go down. And that drives that drive.
I tend to think of it like jet fuel. You're accelerating the deal by giving people a period of exclusivity in which to perform. We're not going to do any other channel deals for the first year of this deal. And in that period, you get X Y Z compensation. And then after that period, we're going to have other deals come to live and your profitability is going to go down. And that drives that
I mean, the people who did the deal, who signed the deal recognize, look, this is going to be very valuable. And it also depends on the vertical and the cost of changing. Sometimes it's a race to the elbow and the early adopter is going to win. And so that exclusivity period is very important. And as an example, PayPal and merchant services, when an online merchant and e-commerce merchant does a payments integration, they don't want to do it again. No one wants to integrate twice or reintegrate to a new provider. That was a race whoever is bringing the merchants on board is going to get a cut for a long time. You don't want to goof that up or you want to use exclusivity as a tool.
Start with find someone who already sells to your customer
When you started thinking about partnerships and you advice startups, how do you prioritize different partnerships? For example, you would say, we should start with integrations or referral or channel. Or maybe you don't even think in these terms at all?
You'd like to find someone who already sells to your customer. As I said, trust is commutable. As an early start-up who has no brand and is an unknown entity. It's much better if you can readily identify, okay, here's my customer, here's what they look like. If you can readily identify people who sell to that customer, you'd much rather go to them and give them a lot of value. I mean, they're providing a lot of value in trust. When they refer a new customer, give them a 100% of the profit. Say, ‘you bring me a new customer. I'm giving you 100% profit on that transaction’ because that brand value and the commutability to trust is extremely hard to replicate. You'd rather hire mercenaries, in other words, someone else's salesperson than build your own army and give them value for the value they provided.
Coopetition [cooperation-competition]
My second thing is coopetition. Cooperation-competition. My first huge deal at PayPal was with the company called Paymentech. Paymentech at that point, this was in 2003, was doing literally half of e-commerce volume. The one company was processing that, they're a huge company. They got bought by Chase, now it's Chase Paymentech. But Paymentech was this company focused on online in 2003, early days of the web, doing massive amounts of card volume. And I said, “We are a payment type. Amex, Visa, MasterCard, PayPal. We should be on the menu. When you go to Paymentech to accept card payments online, PayPal should be a choice. We should be a box. Tick the box you want to accept Visa - Yes, MasterCard - Yes. PayPal-Yes. When I suggested that in PayPal, people like ‘Hey, Paymentech is the competition, are you going to use us instead of Paymentech? I'm like. ‘Yeah, maybe, but Paymentech also wants access to our volume’.
And that deal, I would characterize it as coopetition. We cooperate on certain fronts and we compete on other fronts. There were merchants who didn't use Paymentech and used PayPal, and there were merchants who used Paymentech and didn't come to PayPal direct. It depended, the type of merchant was important in the equation. But that coopetition both companies initially were like, ‘We're enemies, why would we compete?’ But when you look at it, PayPal was much more of a front-end, and Paymentech was much more of a processor. No one knew the brand Paymentech. and everyone knew the brand it depends. Sometimes when you look at the equations, they look similar. But when you dig in a little, you go ‘Oh yeah, you're more focused on this and we're more focused on that. You know what? We could cooperate’. And that coopetition is important.
What are the underlying trends that drive partnerships?
The last thing is, as you said, how is bizdev changing? I think one way that bizdev is changing is that everyone is building to APIs. Everyone is building to integrate the concept of integration has migrated over the years. Back 20-30 years ago, integration, spoke, unique, pain in the back. Once partners integrated, no one ever wanted to do that again.
Now, everything is built with a mind to plug and play. Zoom has opened up its API and says, ‘come, build on my platform’. The concept of platform, network, APIs, open services, web services, have evolved to the point where you’ve got to maintain your relationship. Bizdev used to be - we do the deal and then you send it in to the organization and the deal will last forever. And that is not true anymore. You can sell to people who have integrated with your competition already. And vice versa is also true.
Bizdev used to be - we do the deal and then you send it in to the organization and the deal will last forever. And that is not true anymore. You can sell to people who have integrated with your competition already. And vice versa is also true.
If you don't take care of your relationships with your partners that you build through biz dev? They can swap you out quicker and quicker every day. I guess what I'm trying to say is biz sev and account management have to get closer and closer. Such that as a biz dev person, part of your responsibility is to maintain that momentum and be sure that you're not neglecting the relationship because it's really easy to do a new integration.
Also one thing that I also see in some organizations now that products become more and more integrated. Essentially these business development and partnership people get more voice rights because they become more important for top line revenue.
Yeah, no question. Well, because integration is easier, you can do more and more partnerships. It's just easier to get them done. It no longer takes a year to integrate offerings. Now, it's more often the case that both organizations are designed to go to market through channels and partnerships, and integration is easy. It almost becomes way more plug-and-play, which is a plus and a minus. They can switch from you quicker, but they also integrate with you quicker. It's a double-edged sword as they like to say.
Awesome, Roy. It's been fantastic interview. A couple of things that I took away from it is frontloading value, scaling trust and not doing partnership for the sake of PRs are a couple of things that I think are quite compelling. What is the best way for folks to reach out to you? Is it LinkedIn?
Yeah, LinkedIn is fine. I mean, royvella at anything gets to me. Roy Vella on LinkedIn. @royvella on Twitter. Just take my name, eliminate the space and you can find me in no time.
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