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.
Nevin Shetty, CEO of Blueprint Registry, remembers, “We had to get approval from not only the business unit sponsor but sign off from marketing and legal – it was a big game of telephone with things not getting communicated correctly. It is a long and challenging process with every retailer but once we are live and driving sales, retailers are very happy.”
The thing is, Fortune 500 companies don’t necessarily have the luxury of making quick decisions. They have millions of consumers and stakeholders around the world to protect. And as the media keeps a close eye on them, they have their brand reputation to uphold. One wrong move could cause tons of public scrutiny. Think of the United Airlines PR fiasco earlier this year, for example. While the airline was heavily criticized for infamously dragging a passenger from a plane, their tweet in response added fuel to the fire. Just take a look at this Twitter thread in reply to it.
When working with startup founders, if we need a comment or to have edits or changes approved, we quickly hop on a call to get the information we need. This gets the ball moving. However with leading executives, this isn’t always possible. You might get an email response later in the week.
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.”
Instead of adding to an executive’s workload with content or new ideas, we try to do things for our partners that we don’t need permission for. And once we do get them on a call, we ask in which ways we can make their jobs easier. If it means writing an important internal communication for them to send out – even it it’s not part of our contract – we happily do so.
Playing by their rules
Leading global enterprises have hundreds of offices, teams and partners. As such, they need to follow strict processes and regulations to keep everything ticking smoothly. This can become an administrative headache for startups – but still, it’s necessary game to play.
To work with Fortune 500 companies, startups might need to use the corporate’s invoicing system, accept payment in the form that the corporate decides, use their internal software or email server, and get used to communicating with the contacts they are given, and them only.
While it might take awhile to get used to, startups can train specific staff to comply with the rules so it’s not something the whole team needs to think about.
Startups should make sure all of the terms are clear in the service agreements they seal the partnership. While the corporate may require using pre-made agreements they have, startups have every right to add their own requests to it, and voice any concerns from the outset. After all, if a startup is bringing something great to the table, there may be room for small changes.
All in all, playing by a Fortune 500 company’s rules is absolutely worth it. Said Dea Wilson, Founder at Lifograph, “Having a Fortune 500 company as your client gives you instant credibility. If a successful VC firm invests in a startup, everyone wants to get in. But the same goes on when working with a big client. If a Fortune 500 company sees their close competitor using your products or services, they will want to take a closer look at what you have to offer.”
For startups used to doing things in the quickest, most efficient way possible, trying to work around the bureaucracy of enterprises can be frustrating. However, if you take a step back and look at the benefits in terms of expertise, visibility, resources and reach that the partnership brings, it will certainly be worth your time.
This article was Co-Written by Craig Corbett and Victoria Stunt.