Managing Startups: Best Blog Posts

Chapter 41. Who You Gonna Call? Partnering with Goliath: A Tale of Two Announcements

John O’Farrell

SUNNYVALE, Calif., June 2, 2003

HP and Opsware Inc. Join Forces to Deliver Enhanced Automation for HP’s Utility Data Center

SUNNYVALE, Calif., Feb. 13, 2006

Opsware Announces Worldwide Distribution Agreement with Cisco

These two headlines sound pretty similar—“Small company partners with giant company to reach a bigger market”—but they led to two very different outcomes. Our 2003 deal with HP didn’t generate a single dollar in revenue, whereas our 2006 agreement with Cisco drove tens of millions of dollars in sales and helped to make Opsware the uncatchable leader in data center software. Why did one succeed spectacularly while the other never took off?

As a startup with the best product, your challenge is often getting it in front of enough customers and getting them to buy. In theory, striking a deal to have an HP or an EMC or a Vodafone sell your product to their customers is the way to cover the market and exponentially increase sales velocity. In practice, however, most “David-Goliath” distribution deals turn out like our 2003 HP deal: great PR, but not much else. Here’s the way it typically plays out:

1. The deal is announced with great fanfare and high internal and external expectations.

2. Goliath needs product changes, training, and lots of help to even attempt to sell your product.

3. Goliath deluges your already overloaded people with feature and support requests.