

Business development: the Goldilocks principle - razin
http://cdixon.org/2011/11/28/business-development-the-goldilocks-principle/

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bravura
_1\. The potential partner turns you down because they decide to build a
similar product themselves. This happened to us a number of times. I think
part of the reason was that there was a lot of market buzz around “big data”
and machine learning which lead to the perception – rightly or wrongly – that
those capabilities needed to be owned and not rented._

This.

Doing NLP and ML consulting through MetaOptimize, this is our biggest barrier
to acquiring clients. As Chris Dixon says, ML and NLP are "hot" right now---
for good reason---but this hotness can get in the way. So a lot of people want
NLP/ML, but want it in the wrong way.

At one extreme are companies that want something difficult and highly custom
that's strategic, but then decide they'll try to figure it out in-house.
That's fine, because if they can't do it right and it's truly necessary, we
can help them in the future, or train them as they build it.

At the other extreme are people that want a baseline implementation for
something strategic. This gets strange when they want a textbook
implementation as a prototype, but then want to entangle MetaOptimize with
onerous contractual conditions (non-competes, exclusivity, etc.) while paying
the (low) price for a prototype. I can't tell you about numerous companies who
want to be the only company in their space we provide LSA for, or a baseline
recommendation algorithm for, and don't want to hear that exclusivity comes
with a price. You can't hire us for a five-hour project and then expect to own
us in some space.

And, in the middle, are companies that have a NLP/ML need and want to solve
their need in a reasonable way. Either it's strategic/core and they will pay
market value to own it, or their need is not strategic/core and they are
comfortable with licensing it.

Just my experience. Even though Chris Dixon is talking about one product
(hunch) and its backing technologies, everything about this piece rang true
for me.

------
staunch
The more important lesson of Hunch is how often bizdev deals lead to
acquisition.

Very rarely does a startup directly benefit in a major way from working with a
big company. Quite often though, if the big company is smart, they can get a
bargain on a team/tech that creates value in ways they couldn't have
themselves.

This kind of thing happens all the time. Another example is Reddit. They
created a whitelabel version of Reddit for Conde Nast (lipstick.com IIRC),
which failed, but lead to them being acquired.

