When is the ideal time for a tech startup to invest in partnerships?

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Franz-Josef Schrepf, Partnerships @ StreamYard & Hopin I posted this poll that received some interesting results...

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Why is that interesting?

Conventional opinions (the majority of CEO's in tech) will probably tell you to wait until you have proven your sales systems before launching a partner program.

This is the way... so to speak.

But the timing of partner programs in traditional software sales - waiting until after series A, sometimes series B (or high-growth periods) - was for good reason:

  1. Traditional saas GTM motions could be successful without partnerships.
  2. They did not have the self-onboarding and product-led growth tactics that enable today's saas to grow without salespeople.
  3. Agency partners were not as necessary in the retention strategy because the agencies were not trying to be strategic service providers - instead focusing on campaigns, development, and implementations - leaving strategy to the large internal product / sales / marketing teams. Today's agencies are being sought after for their strategic guidance more than before.
  4. Software was very difficult to implement, which means very difficult to rip out. The retention moat for these old software was the complexity of implementation.

For those reasons and more, the software did not need to bring in partners early on in their GTM.

Let's unpack the results of this poll

56% of responses stated partnerships should be a "Day one" strategy.

32% stated seed stage (the stage of a tech company with growing paying customers, but still under 3 years old typically).

12% said partnerships should wait until series A (the stage after product-market fit and high retention).

To unpack this by talking about Agency solutions partners

Speaking to the majority of those who responded - it is very very difficult for a new to the scene (“day one”) product to convince an agency to partner. Partnering with tech requires a tremendous investment from the agency in the CEO's time, employee training hours, GTM campaigns to get shared deals... Not to mention the risks involved (something like only 5% of year 1 saas companies end up making it to year 5).

So to me, the 56% of respondents who said "Day one" were clicking that option for their own job security.

However, the one way I have seen partnering with agencies work from day one is when the founding team has tremendous clout with agencies because they had their own successful agency in the same space of their new startup. i.e. Dylan Whitman and Inveterate, Inc launched their beta with agencies they eventually would partner with in their GTM from day one.

But again, very very hard for most startups to find and train eager solutions partners in their first few years in business, let alone from day 1.

It's important to note that when I speak to a Shopify or HubSpot app specifically, no matter how long they've been business, I suggest they put up a splash page on their website talking about how they work with agencies because their product is going to be vetted by agency before it is implemented for their clients. For these saas products who's ICP's are almost certainly going to have a relationship with a hubspot or shopify expert, it's crucial their website has a landing page mentioning how they work with agencies, what’s in it for them, and that their team are all trained to support users through their agency rep. This will ease the concern for those agencies vetting the early-stage products.

In short, with agency solutions partners, it’s not about the stage, when you implement partnerships with agencies depends on your:

  1. GTM capabilities,
  2. your ICP's current association to agencies,
  3. and product implementations dependency on third party support.

For respondents thinking about tech partners

My answer to that is - all new saas must integrate with at least one ecosystem, but those are not your “partners” until they reciprocate resources.

And finally, strategic alliances

I do agree all companies should have strategic alliances set up prior to their launch - associations, influencers, lots of co-branded content and events with these individuals in their day one GTM.

But that’s just marketing 101 these days. I don’t think anyone goes to market without in-market relationships and co-marketing anymore.

Franz-Josef Schrepf replied:

Thanks Alex, you got a new blog post right there!

I'm 100% aligned on the agency side - agency founders need to make money and retain their customer base. If you pitch a new, unproven startup it'll be too risky for them to implement (unless you have serious clout).

On the tech side..... integrations ≠ partnerships. My fav approach is to get a zapier integration setup, see what people connect with, and then double down on a select few to build integrations and larger partnerships. But this often takes months to pan out.

Sunir Shah, CEO at AppBind said:

"I sense there's an equivocation going on in this discussion that is conflating two useful definitions or sets of expectations. On day one, a company has an objective to do customer development, which means getting information from the market and identifying potential market opportunities. You have to go where customers are to begin your cycle of customer development. These are often other companies. Are these "partners" yet, in the sense they will do any work for you? Some will certainly in the cases where the potential partner has a need to fulfil. If you have relationships, they can also give you valuable information. If we define "partners" as other companies that impact revenue--which I do believe is a reasonable definition for business planning purposes--then ok. They aren't partners yet. However, for product market fit, you also have to develop a sense of the market opportunity, so it does makes sense to suss out what potential distribution chances you'll have."

Asher Mathew CEO @ Partnership Leaders said:

"+1 you can start thinking about Partnerships from Day 1 but unless your customers want to only buy through partners it is dangerous to invest in partnerships from day 1. The above might sound strange coming from me and my goal is to make sure partnerships teams are setup for success"