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If it’s going to survive, a startup needs to grow.

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If it’s going to survive, a startup needs to grow.


In my experience, strategic partnerships are the best shortcut to the kind of explosive growth a new business needs, to get going. Case in point: When our startup, CrayPay, aligned with key influencers in vertical markets, we gained 15,000 new users
for our app in only four days.

Of course it’s important never to chase a strategic partnership if the end goal is only about money. That kind of thinking gives one partner an upper hand that can limit mutual opportunity in the long run.

Instead, focus on maintaining authenticity and finding the right fit. Steve Case, founding CEO of AOL, pointed to a culture clash as the biggest reason for the historic failure of his company’s partnership with Time Warner. AOL’s aggressive style was in constant conflict with Time Warner’s more conservative, corporate outlook, multiple observers pointed out. 

So, if your potential partner asks for terms that don’t align with the company’s values, brand or products, walk away.

Strategic partnerships, in short, can galvanize a startup’s growth. Starbucks’s recent partnerships with Uber Eats and Alibaba demonstrate how companies with different capabilities can extend the reach of their respective brands by teaming up. In Starbucks’s case, these partnerships are helping the coffee behemoth grow its delivery capabilities and expand its market dominance even further.

Teaming up with Alibaba, meanwhile, was a particularly strategic move — one that may well transform the coffee market in China.

Just as Starbucks did, associating your own company with a partner-brand can increase your reach and enhance your business’s reputation. As it happens, these can also be potential drawbacks to strategic partnerships.

The reason is that partnerships are more concerned with mutual opportunity — access to market share or intellectual property rights — than they are with hard numbers. Even if they don’t make sense on paper, strategic partnerships are forged because each partner sees a potential win in the relationship for its individual business.

Partnership wins and warnings

Mutually beneficial partnerships often grow out of supplier and distributor relationships. These types of vertical alliances exchange experience and relationships for involvement in product design or exclusive, discounted distribution arrangements.

Vertical partnerships are your best bet, because teaming up with a horizontal competitor is asking for conflict. Aligning with key influencers in vertical industries gave my company enormous access to a qualified audience of potential new customers. As a result, we saw the explosive growth that quickly increased sales and made us more attractive to future partners.

Establishing a productive partnership that takes on some of the workload can give startups much-needed flexibility to explore additional growth without the opportunity costs that come with being a smaller operation. Below are the lessons I learned about how to make a strategic partnership work before, during and after its initiation:

1. Imagine the past obvious
To succeed, a partnership must be grounded in strategy and enlivened with imagination. In other words, don’t limit the scope to obvious partners. Some of the most successful partnerships start outside the box.

For example, the partnership between BMW and designer Louis Vuitton isn’t an obvious choice. However, ultimately it was a match because the companies target similar upscale clients. BMW’s contribution to the partnership was its i8 sports car, and Louis Vuitton’s was that it not only created a four-piece luggage set that matched the car’s style, but its luggage design fit in the car’s trunk. Each component added further exclusivity to the other luxury brand.

2. Get beyond ”CEO to CEO”
It’s never a good idea to announce a partnership negotiated between leaders and expect the two teams to seamlessly integrate to execute the vision. Strategic partnerships may begin and end with each company’s senior leaders, but engaging the entire team is vital for success.

To that end, bring members of your team along throughout the negotiations as much as possible. Getting to know the different players and defining their roles not only expedites the launch, but builds trusting relationships that are essential for optimizing the partnership.

3. Stay true to the product and team
Never chase a strategic partnership if its value is only about money. That gives one partner an upper hand that can limit mutual opportunity in the long run. Instead, focus on maintaining authenticity and finding the right fit. If a partner asks for terms that don’t align with the company’s values, brand or products, walk away.

To ensure a win-win, spend time defining the value each partner brings to the alliance and structure the agreement accordingly. Establish a governance process to manage, develop and assess the relationship. Too often, strategic partnerships struggle to get off the ground after the initial fanfare. Treat the partnership like a customer relationship, monitoring partner satisfaction and adjusting processes according to the insights.

4. Scout ahead for weaknesses 
The rapid growth that came from my company’s early partnerships was a real-time stress test of both technology and product. In our case, the growth exposed a few holes.

Ultimately, the fixes were simple, but the oversights were an embarrassing hitch to our first major strategic partnership, causing dings to customer satisfaction and reputation. To avoid this, I recommend scrutinizing exactly what a strategic partner will plug into the business.

After that, triple-check every bit of code and the user experience across multiple variances to avoid messy cleanup and relationship repairs after a launch.

Another piece of advice is not to be judgmental in the extreme: Strategic partners tend to judge the relationship as a “100 percent success” or “100 percent failure.” Unfortunately, that leaves no middle ground, which can be a frustrating experience for a startup still working through its product development.

And, speaking of product development, if a strategic new partnership — and the growth it brings — exposes major weaknesses in the partnership’s product, that can be a major setback in a company’s development.

Certainly, a startup can recover from a setback like this. But a partnership has more on the line: It has to carefully evaluate its product or service’s readiness for exposure to a major audience.


5. Avoid the blame game

As they say, success has many partners, but failure is an orphan. If a strategic partnership doesn’t go as planned, it’s usually not the end of the world. Resist the urge to respond emotionally. Avoid finger-pointing or creating false narratives to save face. Instead, focus on the bigger picture by remembering that every relationship builds on another. The lessons from an undesirable outcome pave the way for better and stronger strategic partnerships down the road.

The ultimate key to successful strategic partnerships is imagination. If you are open to new ideas and creative avenues, a partnership can have tremendous value for both companies. If you think bigger and take each opportunity to figure out the value you bring to a partner, you’ll grow your company and enrich your work.