No business delivers value to the end customer all by itself. In reality, a business does very few things within its boundaries. Everything else must come from other businesses: from renting servers on AWS to leasing offices, and from advertising on Google to buying laptops from Dell. Most of the time, such dependencies emerge naturally and evolve without any conscious effort. However, sometimes some business dependencies can (and should) be deepened explicitly through partnerships.
If nurtured well, business partnerships create positive feedback loops that help rapidly grow a business. Consider the case of Apple, a famously vertically integrated company that makes its own OS, processor, and many other phone components that other companies typically purchase from vendors. However, their iPhone App Store is proof that even Apple realizes that it can’t thrive without partners. Apple supports many thousands of 3rd party software developers who create millions of amazing app for the iPhone. These apps wouldn’t have been possible without the underlying technology supplied by the iPhone. Similarly, the iPhone wouldn’t have been as successful as it, if it didn’t provide the multitude of functionality that its users have now come to expect because of all the 3rd party apps available on the platform. So, the iPhone helped the developer community build a business on top of it, and with that, iPhone benefitted massively.
A common mistake that entrepreneurs make is to focus exclusively on end-customers while ignoring to build long-term, genuine partnerships with other businesses. While customers are obviously important, partners play a vital role in opening new markets, expanding the value delivered to customers, and preventing customers from switching to a competitor.
To make good partners who can help grow your business, start by understanding the motivations and drives of potential partners. Do they want money from you? Do they want access to your customers? Or do they want a promotion or marketing help? Maybe they want guidance and training in a newly emerging field? After understanding their motivations, support their business as if it was yours. Once partners become enabled around your business and you give them what they want (training, exposure, commissions), they will work hard to grow their business, which in turn will grow your business.
Remember: play the long game by treating your partners’ business as if it was your own business and they will do the same.
This essay is part of my book on mental models for startup founders.