Ep. 3 - Should I do an exclusive partnership deal?
•Mark Sochan & Wesley Coelho•Season 1•Episode 3
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Partners may ask you for an exclusive right to sell your products, sometimes limited to a specific geography. Should you do an exclusive deal? Check out this episode for a discussion of the pros and cons.
Hello and welcome to the partner strategy network podcast. I'm Wesley queloz. I'm here with mark[inaudible] and today we're going to be talking about exclusive partner deals. Mark, can you tell us a little bit about what an exclusive partner deal is
Speaker 2:
Any, and I used to talk to you about partnership stuff again this week, and wow. This is one of my favorite topics, exclusivity, and I am very, very strong views on this. I believe well, to set the context often, if you're a startup and you're partnering with another partner, especially the big guys, you might get asked for an exclusive partnership. So what is an exclusive partnership that would be where you commit that you are only going to work with that partner for a region or in a particular market, or maybe for everything. That's my definition of exclusive and love to share more with you about why I think that's a terrible idea
Speaker 1:
As because it's a good idea. Is this a bad idea that it seems like you're passionately in the camp of terrible idea? Why is it so bad?
Speaker 2:
Well, I'm definitely in the camp, a terrible idea, because I've seen this happen. First off, you should be approaching your partnership strategy in a portfolio approach. You don't know which partners are going to produce great results and which ones are going to be duds and which are the ones that are going to be somewhere in between. So you take a portfolio approach because you just don't know where the best made plans often fall by the wayside and things change. And it's just, you don't know. So to do an exclusive means that you've locked yourself, you've hitched your wagon to one partner and that's just a huge risk. I just don't think it's a great idea.
Speaker 1:
All right. Fair enough. And yeah. And I'll add to that and highlight that a lot of times you don't know who that customer wants to buy from. They might have a trusted partner and that might not be the partner that you selected as your exclusive partner. And then you've got a lot of unnecessary deal friction.
Speaker 2:
Yeah, I would add to that, that sometimes it's a healthy competition that keeps everybody honest and keeps people working for the partnership. If there's an exclusive, I have seen it. We're kind of like things become complacent. And especially when it's a partnership between a small startup and a big elephant, as I call in my book, the art of strategic partnering, dancing with elephants, you get squashed trampled by that elephant. And that's an exclusive just really, I think, creates a bigger situation where that's likely to happen.
Speaker 1:
Got it makes sense. There's always exceptions to the rule though. And maybe there's a certain situation that comes up where you feel it's warranted to do an exclusive deal. If you're going to do a deal of this type, can you give us some advice on what are some precautions that you should take in that case?
Speaker 2:
Yeah, absolutely. Well, I remember doing this big negotiation with Cisco and they had really wanted an exclusive deal, that particular product unit group that we were negotiating with and we wanted this deal desperately. So believe you me. It was hard to say no. And my argument would be that exclusive is effectively buying the company because you're constraining our ability to be independent and to grow and acquire other customers, which would all be to their benefit by the way, to have a healthy, vibrant, independent software vendor that they've partnered with. But ultimately what we compromised on is we did a very limited exclusive, which was time limited for a very narrow period of time, just to a few specific vendors that were direct competitors. So they wanted to have that kind of four month, five month, six month headstart, which was something we were able to do because that time goes by pretty quickly. But that's really the extent of how far I would say you should go with an exclusive,
Speaker 1:
Yeah, that makes a lot of sense, mark. Thanks for sharing all the guidance on this. My
