Partner Or Perish
The Art Of Building Strategic Relationships In The Digital World

(Bethesda, 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 does business.

"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 Internet businesses.

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 goals—from 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 abilities—part 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 theme—when 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 needs—finding 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."