Partner Or Perish
The Art Of Building Strategic Relationships In The Digital World
MD - July 22, 1999) "Partnership is the new frontier of American business," said
Glenda Dorchak, speaking at this morning's Netpreneur Program Coffee & DoughNets
meeting. Dorchak is President and COO of Value America (http://www.valueamerica.com),
the Charlottesville, Virginia-based e-retailer that sells consumer products in categories
from apparel to major appliances, and partnerships are a primary part of how Value America
|Glenda Dorchak's Four Pointers For Evaluating a Potential
1. Make sure that
you have a clear business plan. You must know what you want to accomplish before
entering discussions with a potential partner, including an honest assessment of your
abilities and theirs.
2. Know how to measure it.
Underpinning a great partnership of any sort is a clear and mutual understanding of
3. Do business with people who
have a core competency in the area you need. Organizations which say they can do it
all probably can't. Partner with the "best of breed" at what they do.
4. Do business with people whose
values are common to your own. At the end of the day, you are going to be under
pressure; everything won't always go well and there will be confrontation. You need shared
standards, ethics and values, and you need to respect your partners in order to overcome
those hurdles and make a partnership truly successful.
"You'll have to co-exist to be
able to exist on the Internet," she assured the audience of over 300 Internet
entrepreneurs who assembled for networking, education and discussion at this meeting
focused on the how's and why's of strategic partnerships between businesses, especially
Dorchak was joined on the panel by
Gary LaFever, Senior Vice President of womenCONNECT.com (http://www.womenconnect.com),
the online community site for business and professional women. Partnerships have been
equally important to womenCONNECT.com, which has formed relationships with a number of
companies large and small to achieve a variety goalsfrom content relationships with
CareerBuilder and CNNfn, to technology relationships with Proxicom and the Sapphire
Group, to traffic building relationships with Lycos and CompuServe. In fact,
womenCONNECT.com and Value America have a partnership of their own.
Exactly what do Dorchak and LaFever
mean by a partnership? The term has become something of buzzword that's been stretched to
include almost anything, even the acquisition of a new customer. For Dorchak, businesses
form partnerships in order to create or gather skills that exceed their own
abilitiespart of the classic "buy or build" decision. For LaFever, a true
partnership has clarity, and it's akin to the difference between sales and business
development. A sale is a one-time transaction, but a partnership has ongoing benefit that
takes on a life of its own. In that regard, customers can certainly become partners.
That's why both speakers reiterated
a common themewhen approaching potential partners, talk about what you can do to
help them. Dorchak told of how Value America's discussions with Federal Express
focused on that company's needsfinding ways to address the challenges of high
density consumer distribution. LaFever agreed and emphatically urged everyone to eschew
one "me-focused" technique that has unfortunately become a common tactic in
negotiations, "If you don't do this deal with me, your competition will."
"What you want to do,"
said LaFever, "is show that you know the potential partner and its competitors by
showing them how this relationship is best for them or most consistent with their
business model, because the competitors' business models are so diametrically different.
That subtle difference says you have done your homework, you know the competitors and you
could do business with them."
That kind of real-world, practical
advice was delivered throughout the presentations and discussion, moderated by Esther
Smith, principal of investor relations firm The Poretz Group (http://www.poretz.com)
and founding publisher of Washington Technology and Washington Business Journal magazines.
Questions, answers and advice covered such topics as dealing with equity investments by
partners, the need for written agreements, negotiating content deals, exclusivity and even
how to escape from a partnership that isn't working.
Assessing how a partnership is
working was a key theme that both speakers emphasized. Knowing your metrics and building
benchmarks for success into any agreement is essential for LaFever, and Dorchak warns that
you must have a clear business plan and know what you are trying to achieve if a
partnership is going to be successful. LaFever cited two womenCONNECT.com partnerships
which, depending upon how you look at them, were both successes and failures. One
with IBM offered a co-branded ISP service that failed because market conditions changed;
however, the credibility that womenCONNECT.com gained from its association with IBM was
indispensable. In another case, the company formed a relationship with a publisher that
targeted the same demographic as womenCONNECT.com in print media. The partnership fell
apart, but it bought womenCONNECT.com a one-year online headstart against that company,
which is now a competitor. In the Internet world, a single year can be an eternity.
When it comes to success, remember
that the work doesn't start until after you've negotiated the deal and sent out the
press release. Once the adrenaline rush wears off, it's execution that achieves your
objectives. In that regard, Dorchak advises, "Look for people who have dedicated the
resources to helping make the partnerships move more effectively."
And, once again, know your metrics,
no matter what they are. One of LaFever's mantras by which he assesses potential
partnerships is TRBE Traffic, Revenue, Branding, Effort.
"Come up with something," he said, "that any time you are looking at a
partnership, you can quickly say 'this works, that doesn't.'"
In the Internet world, it's clearly
not a question of whether to partner, but who to partner with. For Value America,
Dorchak predicts that, "we will be connected to every site of any substance in terms
of traffic that exists on the Internet within five years." And for womenCONNECT.com,
LaFever said, "We cannot suffer the time and expense necessary to build everything
that we would need, so we look for partners who have an objective that's very consistent
with ours who we can work with. One of the beauties of the Net is that it's very
collaborative, so that's why we live and die with partnerships."