Startups Should Say No to Most Opportunities

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Image by kellik via Flickr

The great thing about startups, especially ones in small, fast growing markets, is that there’s no shortage of opportunities. One area that often comes up is larger, more established companies reaching out to talk about technical partnerships with startups in more cutting edge, complementary spaces. The bigger companies have a core competency that’s working, a limited number of engineers, and only so many resources. A tiny startup working in a related space is seen as a quick way to augment the bigger companies’ solution, often through a white label or OEM integration.

95% of the time startups should say ‘no’ to these opportunities.

When should you say ‘yes’ to an opportunity like this? Let’s look at a few potential reasons:

  • The partnership has guaranteed revenue minimums for the startup, and the money is meaningful (I did one of these is 2002 and it was worthwhile)
  • There is no custom technical work to be done (e.g. the startup has an API and the bigger company can do everything they need to without customization)
  • Partnerships like the one being proposed are part of the startup’s core strategy and it will be the first of many that look the same

It is flattering to have these kinds of discussions with more established companies, but without a plan and strategy in place they can also drain a good deal of time and energy. My recommendation is to not get too enamored unless it meets one or more of the criteria listed above.

8 thoughts on “Startups Should Say No to Most Opportunities

  1. Pingback: Ask the Right API Questions « 10,000 Startup Hours – David Cummings

  2. I agree…For so many start ups saying no is the hardest thing yet in my eyes it is the easiest thing since unless a deal makes great sense for all parties usually the deals you are offered as a start up are not that good to begin with and saying no can only get the deal to be better or in the end it was not a good deal for the person offering you the deal in the first place…

    Chris

    • Thanks Chris. Saying ‘no’ is much harder than saying ‘yes’ for most people. It usually isn’t a good deal like you mention.

  3. This probably needs to be already discussed when the startup is founded. A kind of roadmap deciding what should be done and what should not, and at which points things may change (i.e. if by that time we don’t have X, then accept Y).

    Cheers,

    Ruben

  4. Couldn’t agree more. Sometimes I see our competitors taking up opportunities that we passed on and I think “that’s why they couldn’t do the important things that we did.” But I’ll tell you, it’s no fun being the wet blanket who is always saying no. Unless the right tone is set at the top, you come off as the pompous lazy jerk who doesn’t realize that “business as usual just won’t cut it” and “we always need to be hustling” and many other useless cliches.

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