When should a startup hire a partnerships leader?

Jun 15, 2022

Dear Remora - what signals should a startup founder look for to indicate it is time to hire a leader dedicated to business development / partnerships (separate from direct sales)?

To answer this question, I tapped an incredible collection of seasoned founders, VCs and operators who collectively possess more than 5,000 years of startup experience … in “startup years” …

Adam Bain, Co-founder & Managing Partner, 01 Advisors (fmr Twitter COO)
Anjali Jindal Naik, Co-founder & COO @ Cartken (seed stage)
Auren Hoffman, CEO @ SafeGraph (Series B) (co-founder @ LiveRamp)
Bob Meese, Chief Business Officer @ Duolingo (IPO in 2021)
Elizabeth Yin, Co-founder & General Partner @ Hustle Fund
Insiya Lokhandwala, Partner @ a16z
Nathalie Walton, Co-founder & CEO @ Expectful (seed stage)
Rachel Wolan, VP Product @ Dropbox (IPO 2018)
Ross Siegel, EVP MediaLink
Sim Blaustein, Partner @ Bertelsmann Digital Media Investments

This common reader question is particularly timely. Founders today that are not laying off members of their team are carefully scrutinizing any new hire - more so than just a few months ago.

Great companies emerge from economic downturns stronger, more lean and focused. And partnerships can change the trajectory of a startup. Think Google and AOL. Instacart and Whole Foods. Pfizer and BioNTech.

But when should a founder invest in partnerships?

1. Slightly before product market fit.

Adam Bain: The most linear answer to your question is: “You hire the business team *right* after you have found product/market fit.” But most businesses are not linear equations. Treating the business team as the arm of the organization that merely “communicates value” is usually a signal that the org is going to be tardy to bring in biz leadership. Because those founders are equating “communicate value” with talking. In other words, they view the partnerships and sales organizations as the “talkers” at and for the company. But the most elite partnership and sales leaders aren’t the “talkers” at all— they’re the “listeners” and “understanders.”

So, in non-linear situations, the time to hire partnership and sales leaders is slightly *before* product-market fit because they can help you advance along the spectrum of market fit.

2. After the company finds product-market fit.

Anjali Jindal Naik “the easiest is when you have product market fit and you see opportunities for partners to be extensions of your sales team.”

Nathalie Walton: “If the founding team lacks partnerships and sales skills, and partnerships are a core part of the growth strategy, it makes sense to bring on a business development leader shortly after establishing product-market fit.”

3. After the founder has closed the initial partnership deals.

Elizabeth Yin: “In general, the founder should document a playbook and hand that off to the new hire who can then optimize it from there.”

Sim Blaustein: ““Usually the first BD / partnerships are led by the founders/CEO…. So once they are spending a significant amount of time (10hrs/week? Or more?) responding to inbound or pursuing outbound requests, it makes sense to start a partnerships team”

Rachel Wolan added “[Once] one or more of the founder-led partnerships are starting to drive meaningful ($500k+) revenue.”

Nathalie Walton: If the founders are experienced in partnerships and have relevant domain expertise, it's possible to postpone hiring a business development leader until post-Series A or maybe even Series B.

4. It depends on the company and the product.

Bob Meese: [At Duolingo] we tried smaller partnership opportunities earlier in our history and they failed. We hired a BD leader 2 years ago and that's been successful. Reasons for success = (1) started partnerships in a very specific high performing part of the company (goal was to take something that was working and make it even bigger), (2) partnerships drove value that was easy to measure. All else equal, you can start earlier with a partnerships leader who's great at working with product teams.”

Ross Siegel: When a brand or services company can no longer grow through paid media and boots-on-the-street sales.”

Rachel Wolan: “You have APIs that are suitable for distribution and need to get partners excited to allow you to build into their ecosystems, or you are developer-led and need to get other partners building onto your product.”

5. It’s always difficult to know when.

Auren Hoffman: “you never know. you are either too early or too late. and since most BD deals take 2-3 years to show big results, you never get a sense that BD is a priority in the early days.”

More important than “when”

I set out to investigate then “when” of partnerships but the search led me deeper. The more important issues are “what” questions. What is partnerships? What kind does your company need?

Insiya Lokhandwala “The bigger question I like to ask is ‘what type of growth are you trying to drive?’ Because partnerships are more critical for certain products than others.”

Adam Bain: High-performing teams use partnerships and sales leadership to help better understand the customer need both at a macro and a micro level. And these leaders provide a really valuable role when done right: they are able to effectively synthesize the needs so the company can better dial in product-market fit.

But what if I’m not a founder?

Even if you’re not a founder, the insights above are useful if you are evaluating a partnership role at a startup. Part of your task in assessing a partnerships role is to determine if the company is actually ready for partnerships. To uncover this, use your job interviews to probe into questions like:

What kind of partnerships does the founder view as key to scaling?
What role has the founder already played in early partnerships?
What has the founder learned that partners need in order to be successful?

If you struggle to get clear answers, then the company may not be ready.

As a reminder, Dear Remora is a business advice column named after the Remora fish - whose partnership with sharks is the kind of partnership This for That is here to highlight: durable, creative, win-win.

Full quotes from the panel below for more gems of wisdom.

Auren Hoffman, founder/CEO @ SafeGraph (Series B)

“You never know. you are either too early or too late. and since most BD deals take 2-3 years to show big results, you never get a sense that BD is a priority in the early days.”

Anjali Naik, COO/founder @ Cartken (seed stage)

"There are a few signals to look for depending on your goals. The easiest is when you have product market fit and you see opportunities for partners to be extensions of your sales team. If you don’t have product market fit, a great business development person early on can explore the market more broadly and bring creative ideas for product applications or even find launch partners."

Bob Meese, Chief Business Officer @ Duolingo (IPO in 2021)

“[Duolingo] is very product-centric company. We tried smaller partnership opportunities earlier in our history and they failed. We hired a BD leader 2 years ago and that's been successful. Reasons for success = (1) started partnerships in a very specific high performing part of the company (goal was to take something that was working and make it even bigger), (2) partnerships drove value that was easy to measure. All else equal, you can start earlier with a partnerships leader who's great at working with product teams.”

Elizabeth Yin, General Partner @ Hustle Fund

“A startup founder should try to do all partnerships in the beginning just to understand whether it's the right path and what is required to make a partnership a success. After a founder is pretty sure that he/she knows what a successful partnership looks like (what type with which company and in what format), then it's time to hire someone else to knock that out of the park. In general, the founder should document a playbook and hand that off to the new hire who can then optimize it from there.”

Insiya Lockhandwala, Partner @ a16z

First, you have to have a product built. And then, you have to be ready to focus on more than product-led growth. And once both of those are true, then it’s time to think about BD. Now it becomes a question of what kind of business development does your company need. What kind of growth are you trying to drive? Do you [actually just] need a salesperson? Do you need a bunch of influencer-marketing campaigns? You need to really ask what you’re trying to do. The bigger question I like to ask is what type of growth are you trying to drive. Because partnerships are more critical for certain products than others.

Nathalie Walton, CEO @ Expectful (seed stage)

If the founders are experienced in partnerships and have relevant domain expertise, it's possible to postpone hiring a business development leader until post-Series A or maybe even Series B. However, if the founding team lacks partnerships and sales skills, and partnerships are a core part of the growth strategy, it makes sense to bring on a business development leader shortly after establishing product-market fit.

Rachel Wolan, VP Product @ Dropbox

One or more of the founder-led partnerships are starting to drive meaningful ($500k+) revenue.
You have APIs that are suitable for distribution and need to get partners excited to allow you to build into their ecosystems
You are developer-led and need to get other partners building onto your product

Sim Blaustein, Partner @ Bertelsmann Digital Media Investments

“Usually the first BD / partnerships are led by the founders/CEO…. So once they are spending a significant amount of time (10hrs/week? Or more?) responding to inbound or pursuing outbound requests, it makes sense to start a partnerships team (whether this is a leader or a less-experienced but hungry individual contributor).”

Ross Siegel, EVP @ MediaLink

"When a brand or services company can no longer grow through paid media and boots-on-the-street sales, but would like to tap the constituent base, expertise or brand power of another company, and wishes to do so in a mutually beneficial way in which fortunes are tied together, then it’s time go hire a biz dev expert."

Adam Bain, General Partner @ 01 Advisors

Hiring partnership or sales leaders is a big “go-time” moment for a company. It sort of signals that it’s time to go from building a great product to building a great business and company.Usually founders think that it’s time to hit the gas on the business side the moment you’ve found product-market fit. This moment you evolve from “start-up” to “scale up.”So the most linear answer to your question is: “You hire the business team *right* after you have found P/M fit.” This is a pretty practical way to view the world: first you build up the core and then when you have a viable product, you build the organization to better communicate the value to customers. It’s feels like a big if-then statement that hinges on product/‘market fit. It feels orderly. But most businesses are not linear equations. And finding P/M fit is certainly not always linear. Often it requires cycle after cycle of cascading tests before it snaps to fit. And often getting data, perspective, stories, ideas and insight from potential and current customers helps you get to P/M fit faster and fuller.Treating the business team as the arm of the organization that merely “communicates value” is usually a signal that the org is going to be tardy to bring in biz leadership.

Why?

Because those founders are equating “communicate value” with talking. In other words, they view the partnerships and sales organizations as the “talkers” at and for the company.But the most elite partnership and sales leaders aren’t the “talkers” at all— they’re the “listeners” and “understanders.”

High performing teams use partnerships and sales leadership to help better understand the customer need both at a macro and a micro level. And these leaders provide a really valuable role when done right: they are able to effectively synthesize the needs so the company can better dial in product-market fit.

So…In non-linear situations, the time to hire partnership and sales leaders is slightly *before* P/M fit because they can help you advance along the spectrum of market fit.I have heard a number of founders talk about situations when they’ve hired a partnership pr business leader “too soon.” In those situations it has less to do with the “when” and more to do with “who.” Timing mistakes aren’t about timing at all. If you feel like you’ve hired your sales leader “too early,” you likely have hired someone who isn’t world-class at listening, understanding, and synthesizing. Often fixing the “who” fixes the “when.”