How Does A Small Company Make A Big Company Successful?

tl;dr: As a small company, focus on two things with big companies: “1. What can we, the small company do, to make the big company successful? 2. What can I do, as a leader of a small company, do to help the people I’m working with at the big company be successful within the big company?”

I was on the phone yesterday with the head of corp dev for a very large tech company. He and I had never talked before so it was an intro meeting, although brokered by a long term colleague at that company. It’s a tech company we’ve had many interactions at many levels with over the years – some good, some bad, some complex, and some perplexing. Over a long period of time, these interactions, and many others that I’ve had with other big companies, have shaped my view on interacting with large tech companies.

When I started investing in 1994, I was involved with a few large companies. My first company (Feld Technologies) was one of the first Microsoft Solution Providers (Dwayne Walker, are you still out there somewhere?) At the beginning I was still working for AmeriData when I started investing. AmeriData was a public company, a voracious acquirer (we acquired 40 companies in three years), and a very fast growing business (they were less than $50 million in revenue when they acquired Feld Technologies and over $2 billion in revenue three years later when GE acquired them.) For a short time I was connected into GE via their acquisition of AmeriData (I still have my GE business card with the “meatball logo” on it.) During the same time, I started working as an affiliate to Softbank which was a large Japanese company acquiring minority and majority interests in lots of US companies. By the time I co-founded what became Mobius Venture Capital, Softbank (our sponsor – at the time we were called Softbank Venture Capital) was the key investor in Yahoo, E*trade, and a number of other large US-based Internet companies.

I used to think that these large companies had a clear view on how to help small companies. I was seduced by Microsoft’s Solution Provider program into thinking that Microsoft had the long-term interest of Feld Technologies (and then subsequent companies that I invested in, including ePartners, Gold Systems, and NewsGator) at heart. I participated in a number of meetings with Yahoo in the late 1990s as a member of the Softbank team and listened to the vision of what Yahoo wanted to do to help the ecosystem. I spouted all kinds of garbage and nonsense about what we were doing as part of the broader Softbank ecosystem to help advance the cause of Softbank while at the same time helping startups everywhere, especially the ones we had invested in. I had the notion that whenever I ended up in a meeting in GE, I could get GE to do something with one of the companies I was an investor in to help them out. When I invested in the Feld Group, we even set up an initiative to help startups getting connected into the very large Feld Group clients, which included companies like Southwest Airlines, Delta, Home Depot, First Data, and Burlington Northern.

For over a decade, I heard and made happy talk from two directions – that of the investor in a startup and that of the partner of a big company that was looking to work with startups. That we were building an ecosystem. That we’d do all kinds of vague and unspecified things together in the name of innovation. Many drinks were had, many conversations were enjoyed, and many plans were hatched. And very, very little got done.

Around 2004, after the dust on the mess that was my world post-Internet bubble settled and I shifted into a mode where I grinded it out at Mobius until we started Foundry Group in 2007,  I decided I was thinking about it completely wrong. I came to these conversations wondering what the big company could do. Sure, I considered the skills and capabilities of the startup, but I was always trying to figure out and anticipate how the big company could help the startup.

Wrong, wrong, wrong, wrong, wrong.

My first adjustment was realizing that whenever I counted on a big company to do something to help a startup, I generally was disappointed. Often, even if the big company wasn’t trying to harm or limit the small company, they often did. This is what causes so many VCs to be wary of corporate investors, especially ones who come to the table with strings attached to a financial investment. But I saw it in all of the partnership dynamics, product roadmaps, build vs. buy decisions, shifting leadership and goals, and conflicting big company product teams. It’s not that the big company couldn’t do something to help a startup, it is just that the startup shouldn’t count on it as a critical input into its success.

Then I realized that the big company has no fundamental obligation to the startup. For a while, I carried around a purist thought of mutual innovation. I got involved in huge investment efforts on small companies to try to satisfy the needs of a big company in the context of a partnership. I’m not talking about a sales situation – separate that out – but rather a long-term business partnership, joint development, or technology partnership. In these cases, the large company puts up no money, but people engage to work with the small company. And the small company puts huge effort into the project for free with the hope of a payoff at the end. The opportunity cost for the big company is tiny while the opportunity cost, and often the direct costs, for the small company is enormous. In hindsight this is a clear imbalance. It’s easy to fix and align the parties, either through money flowing from the big company to the small company, or via clear rules of engagement between the two, but if you assume the big company has no fundamental obligations to a startup, you can’t get hurt too badly.

The turning point for me was a specific time I experienced a large company totally fuck over a long-term partner that had gone all in on their relationship. This large company benefited enormously – both directly (via product sales) and indirectly (via market reputation and customer love) from the small company over a period of several years. But, one day, the large company decided to do something that drastically undermined the business of the small company, and no level of effort could generate a discussion between the two companies about it or a path forward that was supportive of the small company.

I realized that was a consistent pattern in my world. Large companies have whatever agenda they have. They have no responsibility to the small company beyond whatever legal contract exists, which often is heavily weighted in favor of the large company. Strategies change. Executives change. The macro changes. Exogenous forces, that the small company can do absolutely nothing about, regularly cause havoc for the large company.

Rather than be mad, hate the large company, feel like a victim, or behave like an abused spouse or child that sticks around and keeps coming back for more, accept that you are fully responsible for your own destiny. And that instead of expecting something from the big company, you should be focusing on doing specific things that help the big company while advancing your goal as a small company.

It was subtle to me at the time, but totally obvious to me now. In the conversation I had yesterday, I gave some direct, constructive feedback on situations where startups I’m an investor in had felt abused, mistreated, or deceived by the big company. But I was clear that none of these were fundamentally issues for the big company. They hadn’t done anything illegal, but they had damaged their reputation with me and with many VCs and entrepreneurs I knew. I was willing to give feedback from my perspective, but I had absolutely no expectation that the company would do anything about the past or behave differently in the future.

This corp dev leader was gracious. He listened, accepted the feedback constructively, suggested that the reputational dynamic mattered a lot to him and the company, and acknowledged that the only way to improve was to keep trying. I said I was always happy to start with a completely clean slate and try again. But for me, this doesn’t mean having false hopes and expectations that something magical will happen. Instead, I start from the focus with every engagement point of “what can we, the small company, do to help you, the big company, be successful.” If I can’t figure that out in an unambiguous way that we, the small company, can afford to try, then it’s not worth the engagement.

JFK’s words, “Ask not what your country can do for you – ask what you can do for your country” echo in my mind. Modify it slightly as startup: “Ask not what big company can do for you – ask what you can do for big company.

  • Replace BigCo with “Customer”… repeat

  • Great point Brad. We have the opportunity to meet many people from “BigCo” and the way we win is by doing a free pilot and proving we can make them more successful than they are today.

  • yazinsai

    Loved it! A couple of great examples come to mind .. Epipheo, a video production company, made a video for Google Wave (back in the day) without them asking. It became an overnight sensation, and Google called them up 8 times the next day to ask for their business. The rest, as they say, is history. I managed to dig up the video: and the article here:

  • mattblumberg

    Isn’t there another strategy here, which is to do something that annoys BigCo? Or if not annoys, then at least attracts the attention of BigCo’s customers such that they start asking BigCo for the product or an integrated version of it?

    • That’s brilliant too. It’s the reverse polarity to Brad’s advice. BTW, I find your CEO book to be very comprehensive and useful, thank you.

      • mattblumberg

        Thanks so much, Mario – glad you got some value out of it!

    • Well said. This is the inverse approach. I don’t like this approach as much at the beginning – I think it’s a lot harder to execute well, especially if you are a LittleCo. Once you get bigger (?MediumCo?) it can be pretty powerful, especially if you can’t get BigCo’s attention.

  • …then there is Apple…one too big They listen to no one. Internally one department does not know what the other is doing. How does one work with that?

    • It’s really really hard. As most people who have tried to work with Apple over the years have discovered. In my experience, focus on ONE department – whichever team is relevant to you. That’s in. Treat that time like a LittleCo and work closely to enhance their world.

      • Thanks. I’ve tried but they are hopeless. I produce tour apps for the iPad ( I would not recommend anyone make apps other than perhaps games or productivity. Apple has filled the store with free junk ad apps that crowd out the good apps. I personally know a few competitors who have gone broke over the store mess. I didn’t love them as competitors but they were producing quality apps. Tiz a shame.


    “As a bonus, this works for sales also. But you probably figured that out already.”
    Nice! Good point.
    One thing I learned is you must be doing things people can understand. When I did my EHR system I was at the end of my ability to get excited about programming. I couldn’t bring myself to write code no matter what the project was. Then I thought “What if the project was way out innovative and far into the future.” That sparked my interest. So I started by telling myself I’ll create a system that doesn’t take any of today’s restrictions into account and instead I’ll just create what I think is the best system for the problem domain.
    It worked… My interest was enough that I could code again and I created a great system. But that system was so far into the future, with things like live objects and full system copies that run locally but are also still a small part of the whole, it made it impossible for prospects to understand. Hence no sales!
    I created my EHR system about 5 years ago. I’m just now starting to see other products advertising new features that my system had in version one all those years ago. Some systems are still not even close on most of their features.

  • The key is “clients make partners”

  • buzzbruggeman

    We have lots of big company customers. We routinely start with an individual, then a small team, then a bigger group. We recently went from a 26 person team to a 500 seat license. But it is a long, slow process. Your support and responsiveness need to be extraordinary. You need to almost never fail in responding to every request, from the BigCo, notwithstanding how stupid it might be. I’m frankly shocked at what little training and internal support seems to exist at lots of BigCos for their employees. But it is really gratifying to see your product migrate from a single user to a very large team. This stuff is largely not magic, just very hard work.

    • Great great approach.

  • AndyGCook

    Great post, Brad. This aligns with a presentation I saw Jason Cohen of WPEngine give at WordCamp Austin this past April. He basically said all these people in the WordPress ecosystem come to WPEngine offering to give them 20% of the new product sales if WPEngine emails their clients about Company X’s offering. To WPEngine, a one time shot of a couple hundred or thousand dollar isn’t worth losing customer’s trust by spamming them with offers.

    Instead, Jason suggested a much better approach is to contact WPEngine and show them that your product can help bring in new WPEngine sign ups, which gives WPEngine a much more predictable revenue stream from the partnership.

    This about sums up the entire strategy and thanks for sharing:

    “Simply go do some shit for BigCo. Be precise. Execute well. Communicate it to the people you know at BigCo. Do it without any formal arrangement. Show BigCo why they care and why you are the one that will move the meter for them.”

  • Great post! Thank you. Definitely a conversation we’ve been having lately at my LittleCo.

  • Replace “Big Co” with “government agency” and its still mostly relevant.

  • Timing matters. Skate to where the company is going in 6-9 months. The 3 little bears sweet spot.

  • Watch out for the valley of death. Getting through the CEO of Big Co is just the first step. CEOs are optimists, VP are pessimists.

  • Drew V

    Interesting post Brad. I’ve been throwing around a product idea (currently conducting a patent search) with hopes of filing a PPA. The big decision that I’ve been going back and forth on is whether to build a company around this product or to try to license the product to a company. I read this post from this point of view and it seems like you would be against licensing. Is this true? At what point would you recommend licensing vs. forming a company?

    • Create a company. You can always license / OEM your tech / product later.

  • Great post Brad! Though I understand core points in your post, one question I am not clear is, at what stage of company we should start working on this? is it idea stage (or) beta testing (or) with good number of user base? how much each effect stage of the company may have in executing your suggestions?

    Any suggestions on this confusion?

    • I’d wait until later – get your product built, get product-market fit, and start having momentum with real users / customers. Don’t waste your time with BigCo until you know what you are doing and where you are heading!

  • This is a great post.

    One “it depends” is when the BigCo has their hair on fire because of poor performance; or an entirely new mgmt team has come in and wants to shake things up. There are some companies that need to get into BigCo supply chain, and I agree with Matt Hixon that free pilots are sometimes an avenue.

    When I have had bad experiences with BigCo-it’s exactly as you say. They don’t care about you and discard you like a cheap suit as soon as they are done with you. Meanwhile, you have built up all this infrastructure to deal with them-and that doesn’t transfer to the broader market. Might even screw up your product market fit.

  • Interesting. What do you think of approaches to systematically connect startups and corporates. On we now have 4 founding corporate partners, all of them willing to invest time, resources and sometimes even money to start working with startups. The site is not public yet, so the profiles are protected.

    • I tend to think efforts like yours are great for helping corporate partners bridge the gap and gain much needed visibility into fast moving markets + early stage companies. This works especially well for anyone focused on strategy / Corp Dev / BD at the corporate.

      Having sat briefly on both sides of the equation — the difficulty comes when you’re hoping to build partnerships (focused on product or sales, not investing). For an early stage startup with limited time / resources, I think it’s critical to make sure you have early buy-in from the folks who own that product / business on the corporate side. They need an early seat at the table. If they drive the partnership, great. If the program leads to a series of Corp Dev / BD discussions taking up a founders time without actual progress or buy-in from the business…that’s a slippery slope.

      …and I say this as a current Corp Dev / Strategy guy…not talking my own book too well here 🙂

      • Thanks for sharing your thoughts on that. Our approach is to make the first intro and only jump into the process when we were asked and it gets serious. So we more or less leave them alone.:) However we make sure the corporate guys are very clear in what they want (I can pass you login to review the profiles), we have the right level in the org chart and a trustful relation (actually if we don`t know them in person we ask them to prove that they are trustworthy and A is A. Not “maybe B” or a long term C:)). On the startups side our promise is to get the intros to the relevant stakeholders and save them a lot of time. We also might help them tune their pitch to get their message through but pass them immediately on to the corporate once we think it`s a fit. We have a clear playbook that the corporate has agreed on on how to communicate with the startups and what the funnel is. So far only handpicked intros, so we`ll definitively learn a lot from the first 50 intros we can make.

        • All makes perfect sense to me — and starting with the handpicked intros is a great way to prove the model / ensure quality. Good luck!

  • Rick

    This post was pretty complete.
    It seems to me that if larger companies would view their smaller company partnerships as more important assets. The larger companies could get more out of those relationships. That’s not to say it would work every time. But it sounds like the larger companies don’t see what they have or the smaller companies aren’t willing to be all they can be to the larger company.

  • Sebastien Latapie

    What a great post. It does an incredible job of crystallizing years of experience into some easily digestible content that is worth sharing.

    The biggest challenge is that at the start, the conversations are all positive. The people who are driving these partnerships within the big organizations are all in and truly believe it can be a fruitful partnership for everyone involved. Yet, they are not in control of the entire organization and as leadership/strategic objectives shift, so does the relationship with the big company.

  • Great post: looks like you’ve been thinking about your upcoming corporate venturing and innovation partnering summit input.

    Might see u there.

  • Alex Teu

    Brad totally nailed it. I would modify the advice a little bit. “Ask not what big company can do for you — ask what you can do for big company without requiring it growing a 3rd arm.” If the value add of the partnership/integration requires the big company to start a new unit or sell in a substantially different way, it is not going to be successful. Big Companies are inherently slow moving or unwilling to devote significant resources to an outside company. Also significantly, its sales force will look at you like an alien unless you can neatly fit into their current playbook.

  • Blake

    Excellent analysis of the small corp/large corp symbiosis, Brad. Having been a consultant to small companies for the last 13 years, I can certainly said “been there done that” a few times while reading this…

  • AfterTuesday’s post, I have to ask, how long your call was with the gentleman from corp dev?

  • Matt Smith

    Never bet on the big company doing something awesome for you in the future in return for value you provide for them today. Never bet on a big company doing something out of the goodness of their hearts. Never bet on the big company buying you in the future – that’s completely unpredictable. Stay on their good side where possible, but don’t give away value without getting value in the return. Always find a way to create significant value for the big company that simultaneously delivers value to your smaller company. Then, rinse and repeat.

  • SD

    Asymmetrical relationships are difficult. problems with scale, shifting priorities, changing personnel.

    the cleanest arrangements seem to be basic “sourcing” deals, where there is a clear service or deliverable being provided.

    The challenges come when there is an expectation of a “strategic” relationship – eg: helping a big company address a new customer segment or acting as an outsourced Dev team.

    This is where the outcomes are hard to define up front, and there is a high probability that the 2 companies are talking past each other in “happy partner talk”.

    my sense is that these asymmetrical relationships can also work if they are viewed as a mutual experiment- testing a new business model, approach, product, execution, etc… But there needs to be a clear endpoint for the experiment, a way to evaluate the results, then a conversation about what comes next.

    This is tough though, because no one has time for experiments- they seem like science projects. But if they can be contained, then the companies can both really get something positive out of it.

  • JamesHRH

    A wise colleague once replied, when asked what we should look for in a large company partner, “Willingness.”

    When asked to explain, he said. “Can we find any direct obvious reason why they would be willing to do business with 12 people who have no revenue? If we cannot, we are both just spinning our wheels.”

    Put your sales hats on kids – go find a big company with a need and see if you can convince them that you can fill it.

  • agree. thought we had a deal with big company. went down the path. everything looked good. then they totally shifted the terms at the end, and deal fell apart. hurt the startup, but big co is fine.

  • Tim Bernstein

    Also love this theme. If you want help writing the second half of the article, the part about the people within the large-co, happy to contribute. We’ve found that the principal-agent issues around the incentives and contexts of the individuals you’re dealing with are at least as important as the incentives and contexts of the large-co as a whole.

  • In the gaming segment, big companies (publishers) and small companies (developers) have undergone a big relationship shift. Prior to the rise of mobile and social games and the F2P model, developers were valued as reliable sources of content that would have a direct impact on publisher success. Today the developer has much less real value to the publisher – discovery is so difficult that most publishers can only afford a very wide net to catch distribution deals. Since production costs have only risen, developers produce less compelling content. The race to the bottom is getting so big that the starting line is elbows-to-elbows with out-of-shape runners. Hence developers only help publishers be successful to the extent that they incrementally increase the probability of a hit game in which profits are shared equally.

  • Jeff Epstein

    To paraphrase Lord Palmerston, large companies have no friends, they have interests. It’s in their interest to work with you as long as, and only as long as, you can add value to them.

  • Saul_Lieberman

    Some similar themes in pmarca’s Moby Dick theory of big companies

  • Great discussion and a bit of personal reflection around the Solution Provider days at Microsoft with DW. I tried to fix the problem objectively by creating a partner opportunity/ design win matrix that made too much sense. (Brad knows which path it went)
    Totally agree with presenting what you can do for the larger company. The experience required is very complex as Brad alluded to; it’s not all technology or sales or marketing or strategic partnership management-it’s a blended skillset that is hard to teach.