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We have all heard the jokes about BD meetings being for smart people can can't close.  I actually find Business Development to be critical in creating unique value and strategic valuations on exits. 

A few things about successful BD in my view:

• Accept that you are going to spend some time just talking to lots of companies including a few that just seem to be meeting after meeting and a few that will be painful

• You need to have people who really understand your strategy and your product out there.  They need to be looking for white space not just teeing programs up or setting up meetings for the CEO

• You need to manage what resources you actually expend in doing it.  If you have more than 2 BD people in a start up, something is probably broken

• You need to manage what resources you spend on a deal in getting it done, if you are hiring lawyers too early you have an issue even if it is my favorite lawyer

• You need to manage resources on executing the deal.  It you are small and it costs you money, it is a bad deal.  Never pay for anything.  If the bigco needs you, they should pay.

• You need to find a way to manage a broad funnel cheaply.   Blogging is a good way or something I learned from what the guys did at mp3.com, a newsletter that goes out. 

BD is about finding strategic white spaces and all the complicated analysis in the world never makes up for getting out there, asking questions and telling your story.

This is a great quote from Sharon who serves on a board with me.  She is from Scale Ventures and one of the better operators who plays the role as a VC.    She was discussing the tendency of big company types to try to spend thier way through difficulty versus slow down and find what works.   I have seen this a number of times and as a former EDS executive often gut check myself on it... Find something that works and then spend money on it.  It is just "inane" to start spending money when it does not work.  I have seen a couple of deals recently where they were spending $700K a month with no clear metrics of success.  Now I am not suggesting that you never burn alot of money unless there is alot of revenue, a success story who did is youtube.  They knew how to get users to spend time on site and how to grow users...they poured it on to support those metrics.  Paypal spent alot of money, because they knew how to get users and how to service the users.  LinkedIn spent some money once it knew how to grow a massive network.   So once you find a metric you can control that matters, move that metric.  Just be sure it matters.

If you don't know how to move a metric that matters or are not sure what metrics matter, protect your cash and experiment. 

• don't try to spend your way out of experiments that are not working, if they don't work more money will not make them work.
• don't spend so much on each experiment you are having people build kingdoms and next thing you know you are burning $1M a month
• don't expect 20 person teams to find what metrics matter or how to move a metric, 7 person teams do that.
• don't spend so much money that you are forced to accept a false negative in an experiment, be prepared to tinker.
• and once you find one that works on a metric that matters, put it all on black and go fast and hard.  This is especially true if there is a network effect to your business....
• then start doing other experiments to move the other metrics that matter, including the revenue metric...that always matters in the end.

One of my companies got invited down to Disney to meet the big man.   Well, Billie Ray Cyrus never showed up, but we did get a chance to take a picture of a picture of Hannah Montana at her studio.  And we did get a chance to get this great picture of Doug and I with the real Big Man or at least his statue.  I don't think I can say alot about this bike picture without getting someone (maybe me) in alot of trouble with Disney.

The trip was alot of fun and lead to some interesting discussions about bringing our local merchants the opportunity to advertise to the local neighborhood on episodes of Lost. 

Markson who last helped found Topix has a great post about people on your team.  I think I have worked with most of these and have been self aware enough to try to take a couple of the attributes on myself..

People you don't need in Startups

We are not talking about what it is doing, but I think this may be the most interesting and fastest developing deal I have ever done with what Bart is doing at Tapulous. 

I had an opportunity to present to SVASE this afternoon about founding teams.  I did this with Jim Lussier from Norwest and it was an interesting conversation.

I did not take down alot of notes but here are some of the points I remember:

• Make sure the DNA of your team matches..Don't try to mix Oracle and Netscape views of the world on the same team.
• Don't overbuild the founding team.  Put what you need to create a company in place not what you need to run a $500M enterprise.
• Make sure your economic requirements are aligned with your team members.
• As it has often been said, don't have a founding team bigger that 2 or 3 people.
• Pick a founder who compliments your skills but matches your values.

TechCrunch has a nice piece on the investment approach at one of the top venture firms out there..   They have funded Google,Yahoo, Paypal(well indirectly), Apple, and recently YouTube.  You can not argue they have an approach that works. 

I think one of the most important they list is "think differently"

I am constantly amazed by how when the technology scene changes how it impacts normal parts of everyday life.   While I am sure there are downsides, it is interesting to watch how this transparency in some ways levels the playing field.

• The abusive ex husband who does not realize his text messages are discoverable or better yet easily posted to the web.  (nothing like seeing a judge read 50 threatening texts from a guy who thinks being nice on email is a good idea to make him look good while sending text messages that are abusive)
• The ability for stupid communication like those text's to end up on a well SEO'ed web page that might as well be the front page of the NYTimes's since it shows up on Google.
• The murderer who calls from his wife's cell phone to pretend he is her while he is burying her leading the authorities to the location.
• The CEO is who is conducting an illicit affair on his private IM account on a tracked corporate network.
• The ability to research someone on the web in seconds the way a paid PI would have done for a Hilton heiress 10 years ago.
• The person who gets busted in an interview process for skipping 3 jobs she was fired for because you can tell the job history from www.spoke.com.
• A person getting nailed by ip tracking for posting malicious threats against another person's business online.

I am not sure all this is good and it certainly puts the "privacy right" at risk, but it is going to happen.  It seems like at some point the goverment has to step in and protect people, but in the meantime, maybe someone needs to create some "how to" on how to use the web to protect yourself in everyday life.

I have seen number of different hiring models in small companies.   In one of mine we are trying a mix of the seasoned guys who really have done it ten time and work out of just the need to work and contribute.....and a mix of first time passionate smart people.  I am not sure which is the best but it is interesting to watch how someone who is a first timer can start at the bottom and rise to being a true professional in a short time....

Not everyone can seem to do this.  I think the difference is driven by one theme..do they want to really win and do they realize winning comes through thier own efforts, passion, inspiration and risk taking... (of course it helps if they know how to actively listen too)