“One of the most successful ways of thinking about a partnership is not just “what can I get from the company, it’s more “what does the company or individual need that I can offer?”
On June 12, 2024, we sat with Fola Olatunji-David to discuss about evaluating partnership opportunities, common mistakes that Founders make in business among other things. Here are some takeaways from the session.
What is the critical factor to consider when evaluating potential partnership opportunities
Consider your Northstar: It’s important to define what you’re building and who you’re building for so you’re able to compare and contrast offers that come your way. One useful model for thinking in quarters is the OKR (Objectives and Key Results) system. When you have quarterly objectives, you can determine if the partnership will help you meet your goals. This way, you don’t just get excited about the vanity metrics like logo on a billboard or backdrop.
What would you say are the common mistakes Founders make and how should they mitigate them?
It’s important to know that the default action for a business is to die. If you let a business go on its own, it’s more likely to die than to succeed. But here are some common mistakes Founders make
- Not focusing on the financial bottom line: Businesses don’t die because of competition, they die because of cash flow. No matter how big your competitors are, as long as you are able to identify who your customers are, you will be able to serve them. But at the point where you are unable to find customers to serve and cash flow isn’t coming in, your business begin to die. You must understand the numbers, the unit economics, your cost and revenue drivers, acquisition costs, etc
- Jurisdiction: Understanding the tax laws that apply in the industry you are in helps with dealing with tax situations or potential liabilities in the space.
- Building what nobody wants: Product Market Fit is basically your product and the market fitting each other but the market is fickle and may not want tomorrow what they did today, so you need to either chase the market to use your product or build a product that the market can migrate towards. Building things that the market has moved away from or what the market no longer needs is a common mistake. Founders always have to know the pulse of the market they’re serving so they can build for it.
When you meet a Founder trying to pitch to you, what three things would make you go “I’m going to back you?
- The opportunity: Because I don’t know everything about every sector, I want to hear that you understand the opportunity available and why it’s a viable sector and once I hear there’s an opportunity and you’re knowledgeable about that, it’s exciting for me.
- The route to it becoming a business: Sometimes Founders have an idea and are stuck between converting it from an idea to a product and from a product to a business. You may not have the exact answer but you need to know the route to making it a business. It could be that you know the market, you have unique insights or you’ve worked in the space and built relationships.
- The right type of Founder: Are you the right type of founder? Someone I can be in business with? Investing in a founding team means that I have to like you, your incentives for building are right and your value system is right.
A lot of Founders are excited about ideas but when you enter the market, you’ll understand why there are many dead businesses. A lot of people struggle with getting a business off the ground because it’s tough and the market has a way of punching you in the face. Getting the idea is the easiest part, but being able to go from idea to what can become a product and then a business becomes the hard part.
Final takeaways
- Don’t die: Your goal in business is to survive. When you’re in a dire situation where you’re struggling to get revenue, the biggest thing is to not die and find businesses aligned with your current vision of not dying. So you need to focus on a partnership that’s symbiotic and not lopsided. Focus on relationships and partnerships that will help you stay afloat.
- Be able to identify the opportunities important to you at every point and ensure that the partnership you say yes to ties to your business goals at the point. Be able to walk way from deals and count your losses if it doesn’t align with your business or organizational goals.
You can watch the webinar replay by following this link.
Watch out for the next webinar in the Norebase Startup Growth Series. You can also catch up on previous episodes here and here