Partner Types - How to Build a Startup

Summary

The video script discusses the importance of strategic alliances for startups, emphasizing the concept of the 'whole product'. It explains that startups cannot initially provide a complete solution to mainstream customers due to limited resources. Instead, they should complement their core product with additional services through alliances. The script uses the example of Starbucks partnering with Pepsi to distribute Frappuccino. It also cautions startups about the common mistake of targeting mainstream customers too early, highlighting the role of 'earlyvangelists' who are willing to assemble a complete solution themselves and provide valuable feedback on the product's feature set.

Takeaways

• 🤝 Strategic alliances are crucial for startups to complement their core product with additional products or services.
• 🚀 The concept of the 'whole product' is essential for startups to understand, as they cannot provide a complete solution to mainstream customers on day one.
• 💡 Startups often lack the resources to fulfill every requirement on a Fortune-1000 company's checklist or RFP, hence the need for strategic alliances.
• 🌐 Examples of strategic alliances include Starbucks partnering with Pepsi to distribute Frappuccino®, leveraging Pepsi's extensive distribution network.
• ⚠️ A common startup mistake is assuming they are selling to mainstream customers immediately after their first product release.
• 🔍 Early-stage startups are typically selling to 'earlyvangelists', customers who are similar to the startup founders and willing to assemble a complete solution themselves.
• 🛠 Earlyvangelists are valuable as they can provide feedback on what constitutes a complete feature set after they have built the product themselves.
• 📈 Startups should not rush to have all business development activities ready by the first customer ship; they can be deferred to after securing earlyvangelist customers.
• 🛑 It's important for startups to think about the order in which they develop and implement strategic alliances and business development activities.
• 🔑 The term 'earlyvangelist' highlights the unique role of these initial customers who are not only adopters but also contributors to the product's development.
• 📝 Startups should focus on building strategic alliances that can enhance their product offering and provide a more comprehensive solution to attract mainstream customers.

Q & A

What is the concept of strategic alliances in the context of start-ups?

Strategic alliances refer to partnerships that start-ups form to complement their core product with additional products or services from other companies. This helps start-ups offer a more complete solution to customers by leveraging the strengths of their partners.

Why is the idea of the 'whole product' important for start-ups?

The 'whole product' concept is crucial because it acknowledges that start-ups cannot provide a complete solution to mainstream customers from day one due to limited resources. It emphasizes the need to use strategic alliances to enhance the core product with additional offerings.

What challenges do start-ups face in providing a complete solution to Fortune-1000 companies?

Start-ups typically lack the time, money, and resources to fulfill every requirement that a Fortune-1000 company might list in a checklist or RFP. This is why they need to form strategic alliances to access the necessary resources and services.

Can you give an example of a strategic alliance that complemented a start-up's core product?

An example is the partnership between Starbucks® and Pepsi™ in 1996. Starbucks® leveraged Pepsi's™ vast distribution network to bottle, distribute, and sell Frappuccino®, enhancing their product offering.

What is the common mistake start-ups make regarding mainstream customers?

A common mistake is that start-ups often believe they are selling to mainstream customers as soon as they launch their product. In reality, they are initially selling to early adopters or 'earlyvangelists' who are willing to assemble the complete solution themselves.

Who are 'earlyvangelists' and what role do they play in start-ups?

Earlyvangelists are early adopters who are enthusiastic about a start-up's product and are willing to put in the effort to assemble a complete solution. They provide valuable feedback to start-ups on what features and services are needed for a complete product offering.

Why should start-ups not rush to have all business development activities ready by the first customer ship?

Start-ups can defer certain business development activities until after they have secured their first earlyvangelist customers. These customers will often build the product themselves and then provide feedback on what constitutes a complete feature set.

How should start-ups approach the order of business development activities?

Start-ups should think strategically about the order in which they implement business development activities. Instead of trying to have everything ready by day one, they should focus on what is most important to their earlyvangelist customers first.

What does the term 'earlyvangelist' imply about the customer's attitude towards the start-up's product?

The term 'earlyvangelist' suggests that these customers are not only early adopters but also advocates for the product. They are willing to invest time and effort to use and promote the product, even if it is not yet a complete solution.

How can strategic alliances help start-ups in the long run?

Strategic alliances can provide start-ups with access to resources, expertise, and distribution channels that they might not have otherwise. This can accelerate growth, enhance the product offering, and ultimately help start-ups reach mainstream customers more effectively.