In the startup world there’s a great deal of discussion around “storytelling.” And yes, as a startup founder there are many situations where it’s important to nail your narrative. In these stories there’s a journey, a hero, and a unifying theme. It’s a self-contained story with a beginning, middle, and a vision towards an end. The story is the container for your efforts. However, when you’re seeking to develop a relationship with a potential strategic partner (“PSP”) there’s an equally — and arguably more — important muscle to develop: conversation.
As you get deeper into your relationship with a PSP there are a few conversations that they will almost certainly initiate. I want you to be ready for those conversations. When you’re building Partner Big Ideas (”PBIs”) everything matters, everything is priced into the deal. The conversations I’m going to outline in this piece will almost certainly come up. Each is an opportunity to both expand the vision and build excitement.
These conversations are important, so much so that a significant part of the kick-off of my advisory practice is getting clients ready for them.
What’s a conversation?
Merriam-Webster’s definition of a conversation is an “oral exchange of sentiments, observations, opinions, or ideas.” We can use this definition as a baseline, but I’d make a few tweaks for our purposes here. I’d drop “oral” as I see conversations happening over any number of modes. I also think “oral” implies the conversation is a single event vs. a series of events. I could envision a conversation that consists of an ongoing series of exchanges that spans years. I also think this definition lacks purpose. A conversation should be driven by the intent to reveal a truth. Lastly, and maybe this goes without saying, but a conversation should be collaborative. Lots of interactions lack collaboration, but a conversation should be an effort to unify ideas.
Let’s posit this MBP definition of conversation: a collaborative exchange of sentiments, observations, opinions, or ideas that can happen in one or a series of events with the intent of aligning on an understanding of one or more truths.
Embrace and extend
Startup founders (at least the good ones) are brutally honest with themselves. By extension they see the world in brutally honest terms. However, brutal honesty isn’t always the best way to start a conversation. For example, I’m often asked some variant of the question “how do I tell the PSP their current approach to XYZ is garbage and we could do it way better?”
The answer is: you don’t.
What you do is “embrace and extend.” Rather than saying “how you’re going about XYZ is dumb, because …” instead say “there’s a tremendous opportunity in the area of XYZ, around …” Don’t try to uproot their current approach, more often than not that’s going to create friction. Instead extend on their approach. Embrace the opportunity to discuss the topic, and push forward into a new vision of what would be possible together. They may well end up adopting your approach entirely — but let them arrive there themselves. You’ll find that the embrace and extend strategy works in all manner of conversations as it puts you on the same side of the table with the PSP and gets you both looking in the same direction. Applied more broadly: every conversation is a chance to learn their view, share yours, and build something new.
The entrance, not exit, mindset
Effective MBP conversations are about building something new and substantial together, something that’s going to take significant effort, but will yield a massive return. As I say in the MBP book, you have to be open to the idea of entering this new phase together vs. focused on the idea of exiting your startup. You need an entrance mindset.
Exit mindsets have a way of exposing themselves. If what you’re really after is a fast exit and the quick launch of your next thing then the MBP really isn’t for you. Find a buyer for the thing you’ve created (if you can), set a price, and get on with life! Don’t try to fake it. M&A is slow. It’s grinding. There are thousands of little signals. M&A has a way of exposing the truth. If you have plans to get on to your next thing, and you’re not excited about building the PBI with the PSP’s team - then just come out with it and let the chips fall where they may.
However, when you take an entrance mindset you’ll find the conversations are infused with energy and creativity - and real value can be created. You’re the key co-collaborator, maybe even instigator, in the development of a game-changing big idea.
Getting ahead of the conversation game
Every PBI is unique, as such many of the conversations you have with the PSP are going to be highly contextual to the matter at hand. For these broader conversations I’ve written a great deal in the MBP book, and here on MBP.co, about PBI construction. Additionally I’ve covered how to achieve PSP conversation liftoff, and how to use the MLP to frame overall PBI context. If you’ve read the MBP book, and been following MBP.co, then you’re well trained in how to order the flow of PBI development.
But there’s another set of conversations we need to discuss. These are the conversations that are the companions to the PBI process. They’re conversations you want to be ready to have (or in some cases make sure you do have). These are the conversations that top-shelf advisors will make sure you’re ready for, the ones that can make or break a strategic deal.
Let’s get ahead of the top 10 conversations that are for sure going to happen as you build powerful PBIs.
#1 - Conversations around market forces
Per usual, the first item on this list (and pretty much any list in the MBP world) is market forces. Market forces are the “why” of the entire effort. This is the foundational conversation upon which all the other conversations are built. The set of market forces that are creating the opportunity space for the big idea. These forces can be economic, technological, social, regulatory - or changes in supply and demand dynamics - or evolving consumer expectations - or… You need to identify the critical ones and align with the PSP on a shared view of how those forces are manifesting and shaping the big idea. You’ll want to have an initial position on the primary forces you see at work. Take every opportunity to learn about what the PSP is seeing, and synthesize your key forces with theirs. Harmonizing your positions and coming to a shared view of the emerging market is the first critical step in laying the foundation for the big idea. Once this foundation is laid, you’ll then want to infuse all other conversations with this why. These forces should become the conversational vector for all other conversations - the underlying reason why you made this-or-that decision.
#2 - Conversations around product development
Startup acquisitions are virtually always about building amazing new products. They’re future oriented. You are being acquired because you are the kickass product team in this arena. More than your financials, or your customers, or your metrics - the thing that has the PSP excited is your ability to help them build game-changing new offerings. To this end you want to develop a framework for discussing your product development strategy. Everything from design ethos to technical architecture. How do you think about product development? How does your product team work? What are your first principles of design? This is why they’re interested in your startup. They will be highly interested in your opinions and approach.
The way you work will be very interesting to the PSP, but it will also be a point of comparison. If they determine your way is just way-off from their way then you’re likely going to have a problem. So this conversation is as much art as it is science. You want to have an opinion, but you also want to approach the topic with an openness to learning theirs. Look to learn about their approach and map key elements to similarities in yours - and maybe even absorb a few adaptations to yours based on elements you see as being critically important to them in theirs. In MBP speak, this is essentially the meta conversation that sets the context for the Method layer of the PBI.
#3 - Conversations around team
To some degree every startup acquisition is an acquihire. Your team are purple box builders. They are the catalyst for the capture of the massive opportunity represented by the PBI. I discuss team in some detail in the MBP.co post Valuation = Opportunity / Scarcity. As I say there, I’ll say here, you’ll want to be ready to discuss the core competencies of your team. What are the organizational muscles you’ve developed? If your team was a person, how would you describe his or her skills? What’s your team exceptionally good at?
Drilling down a bit further, what are the backgrounds of key members of your team? Notable places they’ve worked? Impressive academic achievements? How can you link those work experiences, academics, and accomplishments to the core competencies they’ve developed?
How would you describe the culture of your organization? What are the norms and values of your team? How do those norms manifest in practice? How does the culture you’ve developed map to the PSP’s?
Add to all of these points a discussion around meaningful accomplishments of the team as a unit. Where has the team excelled, outperformed, slain the dragon? What are stories you can tell about impressive breakthroughs, or launches, or clever solutions to problems? Stories of heroism are powerful.
And as with the theme of all of these conversations, this all sets up the conversation around how your team is going to blend with the PSP’s to accomplish amazing things in the future. The story of your team isn’t just a list of credentials, it’s a narrative of scarcity. You’re inspiring the belief in the PSP that this particular collection of people, assembled around this particular problem, at this particular moment, with this collection of experiences, cannot be easily replicated.
#4 - Conversations around your personal motivations and commitment
Invariably the topic of you will come up. This conversation is loaded with import. It’s both directly related to you, and also a signal for the overall sentiment of the team. You will be seen as a proxy for everyone else. What are your priorities and desires? Are you interested in working at the PSP? Are you comfortable being part of a bigger team? Are you in this for the long-run?
Let’s recall the grand unifying word of startup M&A: impact
You want to speak to
