Most startups dream of striking a deal with a Tier 1 company—be it Apple, Google, Microsoft, or some other Fortune 50 company. However, the process is never as simple or straight forward as founders imagine, nor are the deals typically as lucrative as the media highlights. No matter the industry, successfully closing a transaction with a major company is a difficult, multi-step process.
That said, with the right product at the right time, it’s very doable. In my opinion, there are 5 rules that entrepreneurs should follow if they want to build a strong relationship—and close a deal—with Tier 1 companies.
1. Remember that relationships take time
As a startup, let's face it: you're a minnow in a big ocean. Fortune 50 companies don't know you and you don't know them. You’re going to have to go through layers of bureaucracy, building relationships at every level, to eventually get to a decision-maker who can actually negotiate terms of the deal. This is why big companies typically move slow when it comes to joint ventures or acquisitions.
2. Don't be presumptuous with your marketing
If you’re fortunate enough to pitch decision makers at a Fortune 50 company, avoid creating custom marketing materials that imply a partnership (i.e. their logo / color palette on your product). While entrepreneurs may think this demonstrates initiative, the reality is that it comes off presumptuous and potentially even egotistical. Sharing your vision with people through strong marketing material is one thing, but appearing to decide that vision for others—a Fortune 50 company, no less—is another thing entirely.
Be proud of your product while practicing humility. As an outsider, you cannot understand the potential ripple effects that the acquisition of your company could have on a bureaucracy—it can be disruptive; jobs can be lost and your innovation can undermine some of their current initiatives.
3. Protect the reputations of Tier 1 stakeholders
As conversations progress, it will take greater votes of confidence to move up in the chain of command and get to a decision maker.
No employee wants to be responsible for wasting a superior's time—or worse, making them look foolish. Appreciate that if you are moved up in the chain of command, someone had to put their neck out for you. Protect the reputations of stakeholders by being extremely prepared and ensuring your presentations are straight to the point, easy to understand, and informative. Make sure you leave time for questions; how you answer their questions will make or break the opportunity and improve or damage the reputations of the people who vouched for you.
4. Understand that they may have their own agenda for your product / service
Your vision for your product or service may be completely different than what the Tier 1 has in mind. You may think it’s ready for commercialization, but they may plan to spend another 5 years on R&D with it—or it could be used internally. For all you know, your technology could even be shelved. Come to terms with the fact that when you make a deal, the future of your product or service is likely out of your hands.
5. Be willing to compromise and make a deal
Don't get delusional about the importance of the product or service you have to offer. I've seen entrepreneurs become needlessly difficult—even entitled—when faced with the prospect of a deal with a Tier 1. Don't lose sight of why you're in talks in the first place: to make a deal. Sometimes, that means compromising more than you originally planned. Whether you want to admit it or not, you need them more than they need you.
Human Connection Is Key To Any Relationship
The aforementioned rules (i.e. a willingness to learn about others, be patient, and compromise) aren't just helpful when trying to build relationships with Tier 1 companies; they form the crux of any meaningful human relationship, be it with family, friends, or colleagues. If you have aspirations of reaching a deal with a Fortune 50 company, make sure that both you and your product / service enrich the lives of its stakeholders and those that helped open doors.