Scaling user growth: don’t bank on partnerships

Andrew Chen has a great post up detailing the ways to scale user growth. He lists the four (paid, viral, SEO, sales – for B2B) and then ‘other’ in which he says:

There’s the odd partnership, like Yahoo/Google, that can help make or break a startup – but these are rare and situational. But sometimes it happens!

Partnerships are seductive because they promise big returns based on little work, once the deal is closed. Moreover the big company you are talking to is probably promising big things. However, as Andrew says, they rarely come off. Usually the deal doesn’t close, even after endless meetings, and then the next most common outcome after that is the deal is signed but for some reason doesn’t deliver the promised growth.

Almost without exception the right strategy is put in the hard graft to find a paid, viral, SEO or sales route to market think of partnerships as a small effort high risk/high reward endeavour. If partnerships look like the most viable way to grow then it’s probably time to look again at the fundamentals.

Finally, if you got this far (or even if you haven’t) then you should go read Andrew’s post in full. His advice on how to balance non-scalable customer acquisition with scalable acquisition at the early stages is spot on.

  • Hi Nic, I often find the bigger partner’s primary role is offering a ‘route to market’ which looks great in theory but in practice there can be numerous challenges. The ‘displacement effect’ is one – if the ‘big companies’ staff are promoting something else already why should they switch? Similarly, if precious real estate on key traffic pages are already occupied why the switch? The existing occupant is likely to resist for one.

    Unless their is strong demand for the new (usually innovative) offering alongside higher margins (than the existing product/ service it is hard to justify)…Of course if the demand was strong in the first place the smaller co is likely to be more focused on optimizing direct channels. As always there will be a few exceptions but as a rule of thumb I tend to agree that most partnerships fail to deliver, no matter how tempting they appear. Alan

  • Yes. When partnership deals do get signed they often founder because whilst they make sense at a strategic level they don’t make sense for the person takes with implementation.

  • Kenny Fraser

    The key here is that a successful partnership is not easy or free. You are effectively using someone else’s sales engine and you need to find a way to motivate the people who do sales for your partner when you are not paying them or controlling them. You also need to deliver value to your partner – its a partnership not a free ride. It can be great but it is tough just like every other option to scale a startup.

  • I agree with all that. The challenge is that most large partners can’t tell you what you need to do to make it work for all the relevant constituents in their organisation.

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