For many early stage companies, partnering or working with a Fortune 500 company may feel like being accepted to a top fraternity. When you put on that jacket emblazoned with its logo, all of a sudden you start getting noticed and doors begin opening.
At the same time, with added opportunity comes responsibility. Being part of the team means following strict codes of conduct, adopting outside processes, and involving others in decision making from day one. For independent entrepreneurs, agility is key here – working with a Fortune 500 company means taking both hands off the wheel, and being open to other ways of thinking.
Having been a part of startups for a long time, we’ve seen both sides. Partnering with Fortune 500 companies has done wonders for our company in terms of reach and reputation, and it’s also driven us to adapt to new way of communicating with clients, rolling out campaigns, and navigating global enterprises.
In our experience, the positives clearly outweigh the negatives. Here’s what startups should expect if they partner with a big company:
There are countless benefits to working with Fortune 500 companies, especially if you’re a company that specializes in SAAS or B2B applications. While big corporations may have the reputation and reach, they are constantly looking for innovative ideas from startups, which are more agile and better at taking risks.
Over the last decade we’ve seen corporate titans such as Microsoft, Samsung, Barclays and Cisco launch accelerator programs that aim to bring startups into the fold at an earlier stage, rather than simply acquiring them when the going starts getting tough or they hit the dreaded A-round crunch.
One huge benefit to working with the Fortune 500 is longer-term contracts. Since procurement at larger companies can take more time, annual contracts are usually the standard. This is opposed to month-to-month contracts, which small and medium sized businesses may feel more comfort with.
So why are we fans of annual contracts? Well, they provide a huge degree of stability – something that almost every startup craves. Longer contracts enable companies to build strong relationships with their clients, develop personalized services, and even test out some processes along the way. Considering the amount of expertise and resources Fortune 500 companies are willing to invest, they are looking for partners who can help them 5 steps down the line, not just one. Annual contracts foster those long-term relationships.
Just because a Fortune 500 company has big plans with your company, doesn’t mean they are going to offer you full access to their inner circle. Fortune 500 companies have large numbers of teams, and networks of shareholders whose interests they need to protect, and are unlikely to notify partners of all of their decisions.
Jason Hardi, founder and CEO of Muzik, a startup which has partnered with leading enterprises, explains a little about the challenges of working with corporate partners. When asked what, if anything he would change about the relationship, he said, “I think transparency, seeing a little further out in the future… Not knowing certain things exist until we are already two feet into something, means that I get a little frustrated. Having transparency allows us to make better decisions.”
Startup founders – who are so used to having the finger on the pulse of every aspect of their businesses – can often find it difficult to adapt to the fact that corporates may keep plans for expansion, providing extra resources, offering experts, or launching new projects close to their chest until the last minute.
Still, working with Fortune 500 companies proves your company is trusted to keep projects under wrap and stay tight-lipped on NDAs. They’re confident you’ll deliver on deadline, and are always available to work out any last minute kinks. Unless you’re an employee of the corporation, you’ll never be in the ‘inner-circle’. But in partnering with them on certain projects, they’ll certainly trust you like you are.
Additional layers of approval
Startups are known for being agile – decisions are pushed forward with a flick of a pen. However with Fortune 500 companies, a number of approvals are usually required to take action. At the beginning, multiple sign-offs from accounting, tech, and executive-level teams will be required to integrate your startup. And as the work continues, every process is likely to be slow due to bureaucracy – regardless of how insignificant a change might seem.
The Co-Founder at Reboot Accel, Diane Flynn, has worked with Visa, and is now partnering with Walmart and Facebook. “The sales cycle can be very long and it requires a great deal of patience,” she said “This being said, we love working directly with these companies.”
The thing is, Fortune 500 companies don’t necessarily have the luxury of making quick…