Partnerships, and problems

As the software stack evolves and reconfigures, there's a new era of intrigue around who is complementary vs. competitive – and a bunch of folks trying to figure out how to make partnerships work.

At Hex we've had a couple of really productive partnerships with other companies, larger and smaller, so sometimes I get asked for advice on how to think about this. I usually repeat a lot of the same lines, so I figured I'd write them down here so I can lazily send a link.

Bad news up front: most partnerships don't go anywhere, and are a waste of your time. There are far, far more failed and fizzled partnerships than successful ones. I've personally spent many hours traveling and investing in really intriguing partnerships that haven't gone anywhere ("mesh" is still a trigger word for me) and only seen a couple that have really worked.

The problem with partnerships is that they sound nice. And people – especially "partnership people" – like nice-sounding things, and enjoy a spirit of collaboration, and so can get sucked into wasting a ton of time on stuff that's not going to go anywhere. The vibes are great, the results are... elusive.

If you're early and are still working on PMF or yet to figure out your first-party sales motion, I'd strongly advise you not to burn a lot of cycles on partnerships. It might be worth getting to know leaders at other companies and get on their radar – but it's unlikely that the effort it'd take to get a real partnership off the ground is going to be the best use of your energy.

All that said, if you are going down the path, there are a few things you should keep in mind.

Partnerships are about problems

Any successful partnership will start with you figuring out what problem you're going to solve for the other party. Just having a nice "better together" story won't cut it. If you're not helping them get a stone out of their shoe or unlock a new opportunity, it won't go anywhere, no matter how hard you work.

As an example, maybe your prospective partner is launching a new service offering, and is having trouble drumming up use cases with customers. If you can help unlock that you'll be solving a problem for them – and therefore catch their attention. Or maybe they're trying to break into a new market vertical where you have expertise and distribution, and you can be an accelerant. Or maybe their customers aren't burning down credits quickly enough and your solution helps speed that up.

Whatever it is, you need to identify their specific pain point and be really, really crisp on how you solve it. If it's a public company an easy cheat is to look at their investor statements and earnings calls and see what's coming up – if it's not mentioned anywhere it's unlikely to garner enough interest to get interesting.

Field > tower

A lot of founders have an image in their mind that partnerships start from the top. You will go and meet with a Senior Executive at the partner, make a pact, and see the dollars start flowing in.

In reality it's usually the exact opposite. You can waste a lot of time having really great conversations with Execs™ – but most successful partnerships start from the bottom, engaging in the field with their salespeople and shared customers.

The best partnership I've ever done started with an insurgency. We went straight to the partner's sales reps and line managers without burning a lot of time on execs. We ground out some case studies with clearly documented and quantified win-win-win situations, and then took those to more sales teams, showing them how spending time on us would help them. This was hard work, but ultimately way more effective than trying to get us pushed top-down.

A corollary: traditional "Partnership People" aren't the first or best place to start. They can be helpful with logistics items like logo rights – but they're unlikely to pay attention to you until you have clear wins, and aren't going to be your path to getting those. Think of them as a way to pour some gas where you already have fire, but they aren't going to generate you sparks.

If I were trying to launch a new partnership tomorrow, I'd start by identifying already-shared accounts (and if you don't have any that's a really bad sign and you should probably stop), talking to them and the salespeople on both sides, figuring out what problem we solve for them, how they're incentivized, and whether we have any existing wins we can document. And then I'd go talk to the folks in the tower.

Incentives matter

When you're working with a partner field sales team, you need to deeply understand and engage with their incentives.

Sales people are paid on commission, have quotas hanging over their heads, and are super busy. And they hate when you say they're "coin operated"… so let's just say they are very responsive to incentives. And if they're not incentivized to care about your thing, they will not!

One obvious incentive is if your solution helps them sell more of theirs. As an example, Hex helps data warehouses increase credit consumption. This is good, and if you can quantify it you'll often be able to get some attention from sales reps, and use them to get warm introductions to their accounts.

Even better is if your solution helps them win net-new workloads. This isn't just an increase in pace of consumption, but a binary win/loss for a bigger opportunity tranche. Imagine a rep in a competitive sales cycle to take on the inference workloads of a big company, and your monitoring software helps round out their solution and make it more attractive – they're going to care about you and bring you into that deal.

The ultimate prize – and one that does require top-down buy-in – is directly incentivizing the partner's sales reps via spiffs or quota retirement. Most sales reps walk into a quarter still trying to figure out their path to hitting their number, and if you can get their leadership to give them quota relief off of selling your thing it will be massive. This is really, really hard to do and will likely take years. ¹

One cheat code here is asking for examples of successful partnerships they've done in the past, what incentives they put in place, and why they worked. You'll find out a) if it's even a thing they know how to do and b) have a playbook to go and copy.

How do you know if a partnership is actually working? You know it when the partner's reps are retiring quota because of you. If you're not showing up on win-wire slides, if reps aren't proactively pulling you into deals – you don't have a thing yet.

The way you get there is by running an insurgency at the ground level: transiting between sales teams, arming them with collateral, and building up a body of documented wins. It's grunt work. But it's the only kind that actually sticks.

Ok... so your partnership is going well – what happens now?

The parable of the scorpion and the frog

There's a scorpion and a frog on opposite sides of a river. The scorpion beckons across: "frog, help me cross the river by riding on your back." The frog refuses: "no, you'll just sting me!" But the scorpion insists: "just help me ride across, I promise I won't hurt you."

So the frog swims across, puts the scorpion on its back, and starts swimming. Just as they reach the middle of the river, the scorpion stings the frog – who groans "you promised you wouldn't sting me! Why would you do that?"

To which the scorpion replies: "because I'm a fucking scorpion."

This is the arc of many partnerships. The frog – a promising young startup – can help the larger partner. And the scorpion promises to be nice. But the scorpion can't help itself.

I'd have to think really hard about whether there's ever been a long-running, enduring partnership that hasn't resulted in one party going after the other. Every successful partnership has a half-life, and the better it works, the more tempting it becomes for the bigger party to just… build your thing themselves.

This is the old "commoditize your complements" dynamic. Each side wants the other's thing to be a commodity. And the perverse thing is that the second it's not a commodity – the second there are juicy margins – it becomes an attractive target. Your success is, in a very real sense, your biggest risk. ²

What's this mean for companies partnering? Do your best and lean in the short term – but don't hold any illusions that the stinger will come.