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Why partnership is a strategic function

MUST WATCH E21 with Elsa Said-Armanet, who has held a string of senior Partnerships and Biz Dev roles in Stripe, Twitter and Google 💪. In part 1 of 2: how partnerships can define company success, why it is an exciting role to be in, which role is played by ecosystems and more.

In conversation with Roman Kirsanov, Founder and CEO of Partner Insight.

- Hi Elsa. You’ve worked in several amazing tech companies like Google, Twitter and Stripe in business development and partnerships. Can we start with talking about why did you choose business development and partnerships, and why you were excited about this area?

- When I made the decision to switch to working in partnerships. I had already previous experiences working as a software engineer for seven years. And then I had an MBA under my belt and I also had a couple of years of strategy consulting. I'm a software engineer, so I'm really interested in product questions and technical discussions. And at the same time, I'm someone who really enjoys building relationships with people. And at the time I had a passion for learning foreign languages for instance. And so, working as a software engineer, it's not really a role that enables you to fulfil that passion of interacting with people and speaking multiple languages. And so partnerships is actually a function that enables you to do both. You really need to be technically savvy, and really understand the products that you're dealing with your company. And at the same time, you need to be able to build relationships. And last but not least, I really wanted to have a very deep impact at a strategic level on the companies that I was working for. And you know, partnerships are all about that. It's all about thinking big, achieving massive impact, with limited resources. So that really also resonated with me a lot.

- With all this experience, what do you do now?

- I work with various investment firms or VC funds. And I advise the portfolio companies on a number of strategic issues that they face. This could be partnerships, but actually it's mostly product strategy, go-to-market strategy, sales strategy, how to think about going international. I do a lot of work with startups, which are at seed level pre-series A or series A.

- There's a lot of conversation right now about partnerships. Why do you think partnership all of a sudden became such a strategic function?

- When you think about partnerships and let's say more broadly, ecosystems in tech. If you're a startup, leveraging those ecosystems, really reduce the value of incumbency and empower you as a business to build a new proposition or a new product very rapidly. So right now, all of these ecosystems, if you partner with them, you don't have to reinvent the wheel anymore. So let's say you need a personal cloud. So you can actually work with AWS or GCP (Google Cloud Platform). And then AWS will do your hosting, will provide you with a server, will enable you to do machine learning training, and all kinds of things. You can work with payment service providers to get paid online. So again, you should work with Stripe or PayPal, Adyen, You can actually get paid very easily online. You need to manage your team - we also have tools to do that now. You have Slack or Trello. And so that really enables you to have impact much more rapidly than before. And at the same time, when you think about these ecosystems of startups, they represent the future, they really drive innovation in the specific industry. And even larger companies wanting that future vision and that innovation. And that's why those large companies often will build specific departments of digital transformation or accelerators to actually be able to tap into that innovation. So think about BMW wanting into the self-driving car innovation where they would build a startup garage and then they incentivize self-driving car solutions to partner with them.

- You've done multiple roles in different forward looking tech companies. You understand it really well. Can we talk a little bit about growth and distribution partners versus product partnerships? How do you map them, where do you see division and where do you see similarities?

- Partnerships as a function, really covers a large number or intersects with a large number of functions within a single company. And so some partnership functions will have the mission to support product teams. Some partnerships teams will have the mission to support sales teams or user acquisition teams or marketing teams. Depending on where your team aligns with, you will have basically a different type of role. I see actually four different types of partnerships roles that you can work in. There is product, there is distribution, there is also content partnerships, which is a bit similar to product partnerships in the essence. And then there is I would say even strategic partnerships or moonshot partnerships. Let us start from the beginning, you were asking me about product versus distribution. Product partnerships really are about partnering with a company to either develop a new product, leveraging the resources or the API's from an external company or to actually enhance an existing product with more functionalities. So an example of this could be, think about Google Maps. A few years ago, they entered into a partnership with SNCF, which is the company which runs all of the trains in France. And they worked with SNCF to provide them with data about indoor mapping of their train stations. So that Google could make available to end consumers information about how the train stations were mapped internally, when you were visiting a train station. Your way, which gate, which shop and so on. Now, if you're talking about distribution partnership, then the goal here is really to support your company's growth. Help your company grow revenue in particular. It could be also to help your company in user acquisition. And so here it's almost the other side of the coin of the product partnership. For the product partnership, you will want to integrate external resources into your company's product. If you're working on a distribution partnership, you actually want to distribute your own API's or products within a third party companies' products, such that you can actually sell to all of these platform companies' clients in one go. And so you're boosting basically your user acquisition or your revenue capabilities. And so to give you an example of a distribution partnership, think about Shopify. So Shopify is this large B2B software company, which enables a lot of SMBs to create their online store. And Shopify partners with them and service providers like Stripe or PayPal. They integrate Stripe or PayPal APIs into their own products. And in this way SMBs, which are using Shopify, can also very easily create a Stripe account or PayPal account within Shopify's products. And that really enables Stripe for instance, to sell to a large user base of Shopify users at the end of the day.

- When you think about how companies across different stages of their lives engage in partnerships, which partnerships make more sense in which stage? In terms of product vs distribution. For example, do you think that a company can actually start and launch a partnership function pretty early? Or do you think partnership is something that should be done later on when you figure out sales strategy, marketing strategy, and so on?

- I think every company is different. But as a rule of thumb, I would say that product partnerships or content partnerships should come earlier in the development process of your company than distribution partnerships. Because if you want to do distribution partnerships well, you need to have a really exciting product to distribute to start with. So focus on product partnerships to make sure that you have the required partnership, if you need to have an exciting product that you will distribute then longer term. And then in terms of how this map out more broadly, thinking about distribution partnerships to the company stage you're in. As I said, you really need to make sure that your product sells itself actually already, it is already successful in the market before you enter in such partnership. Because otherwise you will tend to rely a lot on your partner's resources to sell your product, and you won't be able to negotiate really strong terms with that partner. And that might even be a recipe for failure for the partnership longer term. So, again, here we think about, if you're a startup and you're brand new, or you're a completely new team within a larger company, maybe don't do partnerships. Because you might end up engaging with a large corporate and that corporate may not have the same rapid decision making capabilities as you do. They may not have the processes to pay you fast enough, for instance. And they may actually require a lot of resources from you to invest in the partnership. And so that effort for you as a startup will be very trajectory changing, but actually it might not be for the corporate at the end of the day. And if the corporate eventually changes strategy then you have a lot more at stake. you have a lot more to lose than the corporate do. Going back to the point of ecosystems and accelerators that may be why those large corporates are building those accelerators. It's because they're trying to train to actually working better with startups.

- But if you're saying that the product partnerships come earlier, what is an example of product partnerships that you may have seen in an early stage of a company lifecycle that actually helped them to to grow and defined their success later?

- Thinking about Stripe for instance, they make payment methods available to the companies which are using Stripe. They enable companies to get paid online. And one very fundamental partnership that they have here is partnerships with credit card networks like Visa, MasterCard. And without that very foundational partnership, it will be much harder for them to offer a product to their end users.

- There's a lot of conversations about partnership versus business development. Within a main activity of people who are in partnerships and people who are in business development? What is the biggest difference you would say?

- By business development do you mean sales, or do you mean, distribution partnerships?

- I mean, business development as a function that people put on CVs.

- So depending on which geography you're in, business development may actually mean that you are more in a sales role. And partnerships may mean that you are in a distribution partnerships role, or it may mean that you are in a product partnerships role. So it's not that straightforward to know. A possible definition could be also a business development means that you are sourcing and closing the deals and partnerships mean that you are managing the existing partners. Taking a step back, there are many ways you can interpret the term business development and partnerships. And so one possible interpretation could mean that if you are in a business development role, you are more of a hunter, going after relationships. You have to think really creatively about which partners you go after and how these partners can actually have a strong business impact on your company. And then if you work in partnerships, you will be more in the day to day management of existing partnerships. And it's going to be about building really deep relationships with very strategic partners for your company. And making sure that you're potentially renegotiating with partners on favorable terms. But also addressing eventual emergencies or conflicts that may arise from the partner relationship.

- So my last question would be so partnership is something that people intuitively understand. There's a new term which is coming into prominence called ecosystem. What is the deal with this ecosystem? What's your view?

- Ecosystems are these pockets of innovation, often coming from startups that help develop a new innovative solution in a specific industry. And so, for instance, if you are let's say Mars Petcare, and you're like the largest pet care company in the world. And so you're doing an amazing job at providing hospital services to pets and providing healthy food to pets. But when it comes to digitalizing yourself or capitalizing on one of these digital innovations around pets, you don't really have that knowledge. And that's where you actually really want to develop this ecosystem of relationship with innovative startups. So that you can benefit from the innovation. And so that's what Mars Petcare did. So they created this Kinship digital arm, they created the Leap accelerator, they created the corporate VC fund (Companion fund). And as a result, they acquired a company like Whistle Labs, which is a Fitbit for pets. And that was their first stepping stone towards themselves thinking about which digital products they could develop. And how they can leverage the solutions to create a better future for pets.

- I think it makes a lot of sense to distinguish that partnership is more about joint distribution of joint product. But then the ecosystem is about innovation.

- It's about fostering innovation in a specific industry.

- When you think about this kind of recent disruption, facilitated by COVID. It seems to be a wave of digital transformation. All digital companies are growing like crazy and non-digital companies are transforming themselves into more digital enterprises. How do you think this will influence partnership function or a dynamic between companies?

- It's really hard to anticipate what will happen in the future. It's really the million-dollar question. And everybody is facing a lot of uncertainty right now. And so the way to go here is certainly experimentation and learning by doing interactively, and seeing what works for you, for your team and for your partner. And if I were to give advice to partnership managers, I would say think about, try to anticipate how COVID will impact or think about how COVID impacted your relationship with your partner, and what you can do about it. And the second thing would be, think about how COVID is impacting your own business. And what can you as a partnership team or as a partnership manager do about it. The first angle here is, just anticipate how will COVID have impacted your partner. Is this a supply chain partner? Is it Deliveroo? An Uber? And therefore are they really unable to deliver certain services, because they're impacted by this crisis? And so then think about, will they experience strong changes in strategy? Will that distract from the relationship that they have with you? Can they even become litigious with your contract? And try to anticipate everything. The second point is, again, how do you make sure that you are even more visible to your partner in this time of crisis? And how you replace the interactions that you would have with your partner with online interactions. And that might be more challenging if you're dealing with a partner, which is in a country where business relationships are more personal versus transactional. So obviously, the switch to online might be easier to achieve if you're dealing with a partner in the UK versus a partner in Brazil or a partner in Russia or in South Korea.

And then the second point is really think about how your own business is impacted by COVID. And actually, these deep crises for business, more often than not are an amazing opportunity for a partnership team to raise to the occasion and really provide very rapid turnaround solutions for business. Because with a partnership, as we mentioned earlier, you don't have to recreate the wheel. You can launch a new business, vertical or launch a new product actually fairly rapidly by leveraging the partner solution. So here this is actually an example fairly recent that really struck me. It's how Starling, the digital bank reacted to the crisis. And back in May, they struck up a partnership with Funding Circle, which is one of the largest online lenders in the UK, to provide 300 million pounds’ worth of loans to SMEs. Under something which is called the CBILS scheme in the UK, which is the Coronavirus Business Interruption Loan Scheme. And basically by doing that, first of all amazingly fast response, they did that in May. And not only did they provide a very important service for a large part of their user base, which are SMEs, they anticipated or they saw that these SMEs were defaulting on their payments going out of business, and they came up with a concrete solution for their user base. So massively powerful for their users, probably massively helpful for Starling as a business to ensure business continuity. And best of all, massively helpful for the society that they live in as well.


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