Four Things To Consider Before Partnering With A Startup
According to the Bureau of Labor Statistics, less than 80% of new businesses survive to their second year, and of those, only a little over 50% make it to their fifth year. Although it’s not clear how many of those are e-commerce businesses, reasons for failure are easier to track. Quite often it’s a combination of factors, such as lack of management, skill and funding, or poor execution. And sometimes, you have all it takes to run a successful business, but you just need that first big break — someone to take a chance on you.
It seems like a pay-it-forward chain of events, but the reality is that the small players are often the ones helping large tech companies enforce their positions in the market. While our company isn’t on the same level as Amazon or Google, we were quick to understand the benefits of working with startups to develop and implement new technologies that enhance our consumers’ experience. Here are four things to consider before partnering with a startup:
1. New disruptive players may have a big impact. Always listen.
Having a business model is one thing; constantly improving it is another. It’s of utmost importance to keep track of your relevance in the market and see where the gaps lie in your business. Are you offering the ultimate customer experience? Is the product still addressing today’s consumer? What is your positioning versus that of your competitors? All these questions deal with the usual challenges and obstacles most businesses experience.
For us, it went a step further when an undiscovered threat was presented to us by a software as a service (SaaS) company that helps online businesses prevent what it calls “online journey hijacking,” which is when unauthorized product ads are injected into consumers’ browsers and devices and divert customers away from your site to competitor sites. The company supports e-commerce brands by removing these invasive promotions so that customers receive the experience they’ve designed and maintain focus on the platform as intended, which helps them recoup lost online revenue. This problem was entirely unknown to us, but it had an even larger negative impact on our business than the challenges we did anticipate, such as fraud, funnel abandonment and user experience interruption. When the company introduced us to its concept at the start of 2018, it was still a startup in every sense, but nonetheless, we took the time to listen and rapidly understood the importance of its service for our business. We learned that our overall site traffic had an infection rate of 12%, which means that 12% of users coming to our site had digital malware detected on their devices and were exposed to some kind of competitor content. So far, our efforts to block digital malware have resulted in a 10% improvement rate for those users. This improvement rate is visible in almost every key performance indicator we measure, including time on our site, page views per user and conversion rates.
2. Always make sure the startup has the right team.
Working with startups can pose several risks. For example, the product it offers might be revolutionary, but who’s bringing it to life? Are you sure the startup’s team has the skills to execute it accordingly? The product alone is not reason enough to team up with them. When dealing with a startup, always make sure it has the right people with the appropriate experience to bring the project to life successfully. Before engaging with a startup, learn about the capabilities, background and experience of the project managers.
3. Always filter offers based on what your company needs.
Picture this: A startup presents a new technology that’s attractive and groundbreaking, and you can be the first to try it out. Sounds like a dream, but not necessarily one you need to make a reality. Stay focused, and ensure you have your company’s best interest at heart. We get numerous offers from brilliant developers and startups that can be very tempting but are entirely out of context for our company. Remember, you need to find the gaps in your business and see how the startup can contribute and positively impact your growth. Don’t be the kid in the candy store.
4. Time is money, and not just for you.
If you’re undecided on whether its technology is the right one for your business, discuss this openly with the startup. Both parties will gain more when there’s full transparency on the pros and cons of teaming up. If you know from the start that you’re not interested, don’t stretch the conversation. Be straight with them. The sooner you let them know it’s a no on your end, the quicker they can move on to the next option.
It’s easy to get so caught up in your own strategy and objectives that you fail to see what else is going on in the industry. From personal experience, I feel that online businesses — more so than others — have to shift and adapt to the fast pace of the constantly evolving digital trends and needs. Competitors and customers are the ones who keep you on your toes. If you want your business to survive, step away from your five-year plan in the traditional sense, and stay informed with new technologies and the new players offering them. Giving the little guy a chance could be just the thing to help you stay in the game and lead it.