Product Partnerships (pt. 1/2)— The Making of a Partnership (2023)

Product Partnerships (pt. 1/2)— The Making of a Partnership (1)

I realized the other day that I’ve spent a lot of the last few years building products in partnership with other companies. I’ve led teams that shipped products with Stripe, Hubspot, PayPal, Amazon, BMO, WePay, and Elance; and am currently working on a few more.

Product partnerships bring unique challenges to companies and to the teams executing them. Products built internally are already tough to get right, but products built in partnership are doubly so. If your team is about to embark on one, get ready to stretch.

The reasons are simple: when you build internally, you can build what you want and when users give feedback, you can freely iterate. When you build in partnership, what you build is subject to your partner, and when users give feedback your ability to iterate is hamstrung by the partner’s technical dependencies, capabilities, and differing priorities.

As a PM executing product partnerships, your stakeholder universe will double, and the complexity of execution squares. You now have to consider two sets of users, two company visions, and two product teams in every decision you make (with obvious preference for your own).

In part 1 of this post, we’ll take a high level look at product partnerships: why companies partner, how they form, building alignment, and the politics of partnership.

In part 2, we’ll dive deeper into how a PM should execute on a product partnership.

One word: acceleration.

Good partnerships arise because they create short cuts for both companies to achieve their goals. It’s close to the classic “win-win”, except that product partnerships need a third win for the customers.

The strategic intent for most partnerships fall into two broad categories, where a company wants to either:

  1. Expand their product into areas that are outside of their core competencies (because those areas are still integral parts of their customers’ workflows)
  2. Tap into distribution from the partner’s customer base (because of its sheer size or because the partner’s customers are a great fit with the company’s product)

Most partnerships will fall into a 2x2 matrix with the above goals on the axes. Here’s a look at that matrix and a few examples.

Product Partnerships (pt. 1/2)— The Making of a Partnership (2)

Stripe and Lyft:

Stripe powers Lyft’s payments. Stripe gets distribution, Lyft gets payment utility outside of it’s core competency. In the long term, Lyft could build its own payment processing and capture more margin, but Stripe defends against that by providing even more utility.

Spotify & Uber:

Spotify users can listen to their music when they take any Uber. This is a great example of trading distribution through a great use case. Almost universally, people like to control the music when they drive, so Spotify becomes the music platform for choice for Uber’s millions of users, and Uber becomes the ride service of choice for Spotify’s millions.

FreshBooks & Hubspot:

After closing a client deal using Hubspot, users can easily invoice their client in Freshbooks. Both companies make their product more valuable for the end-to-end workflow of it’s users without having to leave their core competencies.

(Video) Partnership as a strategic function w/ Elsa Said-Armanet, frm Partnerships @ Stripe, Twitter, Google

IBM & Apple:

Apple kicked off its enterprise mobility program by partnering with IBM to build hundreds of industry specific mobile apps. This is a case of a partnership that drives both distribution and product expansion. It’s out of Apple’s core competency to make good apps for enterprise, and they don’t have the distribution into the enterprise that IBM represents. IBM has the domain expertise to make good apps, but doesn’t have the mobile platform to distribute it.

Regardless of whether the emphasis for the partnership is product expansion or distribution, partnerships that last have one thing in common: they deliver customer utility. Marketing ‘partnerships’ on the other hand, where companies essentially trade customers and cross-sell products, are short term and tactical at best (and aren’t what this post focuses on).

Now we know what types of partnerships tend to succeed, how exactly do they form?

Product Partnerships (pt. 1/2)— The Making of a Partnership (3)

Ideas are cheap, and because of that there are a lot of partnership opportunities out there. It’s quite easy to imagine a fruitful partnership between almost any two companies; with such abundant choice, which ones make it to launch?

In my experience, partnership formation is more opportunistic (right place, right time) rather than strategic. To illustrate this, in no particular order here’s a quick list of things I’ve been a part of:

  • Your exec meets their exec at some event. They hit it off, start pontificating about the future, see a shared vision or culture, and declare “we should do something together, have your team reach out to mine”
  • Their biz dev (BD) person sends an inbound request to discuss and vice-versa and it so happens the other side currently has the bandwidth to talk
  • An employees leaves from one company to the other on good terms and uses their former network to seed a partnership from the inside
  • As a precursor to an acquisition, where the incumbent ‘partner’ is actually doing a stealth interview, and it evolves into just a partnership in the end
  • VCs broker deals with each other on behalf their portfolio companies
  • Company A independently builds app on company B’s platform and there is traction, company B notices it and wants to integrate more tightly.

As you can see, partnership formation is chaotic and heavily relationship driven (as most things are).

I often wondered why has this been the case; why such an organic mechanism instead of intense planning and strategic partnership maps from MBA textbooks? After all, product partnerships can be huge commitments of resources.

I think an analogy lies in the world of dating, before dating apps existed. Back then, even if you knew the qualities of the date you were looking for, finding someone was really hard. You could go to the bar every night, but your chances of finding someone that fit those qualities, liked you back, and was ready to date, was low. It wasn’t surprising then, that most relationships came from introductions from friends and family, who would ‘back-channel’ the needs of both sides, and then match make.

Likewise, partnership formation tends to be organic because finding a partner with the right qualities, who wants to partner with you, and is ready to partner, is low probability.

Partner dating might be tough, but marriage is harder. Now that you’ve found your partner through some serendipitous experience, what’s next?

All good partnerships are built on strong, continuous alignment between companies. Alignment means knowing: what each side expects from the other, how important the partnership is to the other’s strategy, which teams will be working on it, and when they can start.

After a partner has expressed interest in working together, book that first meeting (in person if possible) with the sole focus of driving alignment. Here are some questions you can ask to drive it.

Learn about each other to get the right context

  • How did [company] get to where you are today?
  • What is your culture like?
  • What is your vision and how has it changed over time?
  • What are your top strategic goals for the next 12–36 months?

Get very clear on what success looks like

  • (literally) What does success look like to you?
  • Describe a successful phase one product.
  • What metrics would you be looking for?
  • What impact does this need to make to be interesting to you?
  • For those inside [company] that don’t believe in this partnership, what is their rationale?
  • Where could the partnership go if phase 1 is successful?

Gauge their urgency

  • When are you hoping we can launch?
  • We’d love to get started next week (optional), is there a team already ready to work with us?
  • Awesome-conference is in June, should we try to co-launch at that event?

Driving alignment will require more than a single conversation with the partner PM or biz dev person. You need to drive it at many levels: the teams, executive stakeholders, and lawyers on both sides all need to reach a consensus. And he earlier you do this the better. Aligning early ensures a healthy relationship that will prevent blockers, and even partnership deaths down the line. It can also raise the red flags early, preventing a partnership that would have otherwise wasted resources.

Power dynamics are very real in the partnership world. 9 times out of 10, there is a clear big fish and a clear small one, and it’s imperative that you recognize which one you are.

(Video) Establishing a Technology Partner Program with Atlassian Dir, Product Partnerships Rich O’Connell

Product Partnerships (pt. 1/2)— The Making of a Partnership (4)

The principle dynamic to be aware of is who has more to gain relative to the scale of their company. Find this and you find where the leverage is. Typically, the small fish has much more to gain, and therefore the big fish has most of the leverage.

How to act when you’re the big or small fish is highly situational, but in my experience from being on both sides, there are certain guidelines.

Big fish, small fish guidelines

Product Partnerships (pt. 1/2)— The Making of a Partnership (6)
Product Partnerships (pt. 1/2)— The Making of a Partnership (7)
Product Partnerships (pt. 1/2)— The Making of a Partnership (8)
Product Partnerships (pt. 1/2)— The Making of a Partnership (9)

Same sized fish guidelines

Product Partnerships (pt. 1/2)— The Making of a Partnership (10)
(Video) Schedule K-2 & K-3 with Foreign Disregarded Entity (DRE) - Part 1

These are the partnerships with the greatest risk of failure because each side believes they’re the big fish and collaboration can take a second seat to hubris. Here are some things to get ready for:

  • Get your negotiating hat on because both sides have equal leverage
  • Invest 10x more in driving alignment on what success looks like and continually remind both sides of the benefits you’re collectively working towards
  • Establish a regular cadence of exec level engagement. You will need high level buy-in to get through the tough times and be able to keep the other side honest
  • Don’t give away your leverage until you’ve received your benefit

How to quickly ruin your partnership

When you’re the big fish — Be a jerk because you have the leverage. This is the biggest mistake you can make, and I’ve seen it happen a lot. You’ve basically got the other side willing to do much more than you to make something happen, and you’re squandering that leverage by gambling that their emotions won’t get the best of them and make them walk away from the partnership out of spite

When you’re the small fish — Let the partnership linger. Go fast and push the other side to launch as soon as you’re ready. They will not have the same urgency as you so you need to drive

When you’re the same sized fish — Let hubris stand in the way of compromise.

You should probably ignore all the above, most of the time

If the above feels overly Machiavellian, your instincts are correct. Most of the time, you should ignore these and just work in full, blissful trust with your partner. This is the right mindset 95% of the time.

However, in almost every partnership I’ve worked on, that 5% always shows up - and that’s when it’s good to be prepared.

When done right, partnerships add a ton of value to both sides. Your company’s willingness to partner and ability to execute them can make a big impact on your trajectory towards achieving your vision.

Remember that at the end of the day, human relationships make partnerships work: invest in building trust, alignment, and empathy with your partner, and you’ll reap the rewards.

If you’re interested in the nuances of executing a partnership as a PM, continue reading Product Partnerships: Part 2 — How to be a Partner PM.

Oh, and Shopify is hiring.

FAQs

What is a product partnership? ›

Product partnership is the coming together of two products wholly or partially. Consumer-facing companies often engage in partnerships with other companies for promotions, integrations, and marketing, among other mutually beneficial business functions.

What are the 4 stages of partnership? ›

  • STAGES OF PARTNERSHIPS.
  • Stage I. Non-Partnering: The Singles Stage.
  • Stage II. Pre-Partnering: The Searching Stage.
  • Stage III. Active Partnering: The Courtship Stage.
  • Stage IV. Consolidated Partnering: The Bonding Stage.
  • Stage V. Going to Scale: The Commitment Stage.
1 Mar 2014

What are types of partnership? ›

The three different types of partnership are:
  • General partnership.
  • Limited partnership.
  • Limited liability partnerships.

How do you build a successful partnership? ›

4 Ways to Build a Successful Partnership
  1. Set clear expectations. ...
  2. Consider your partner a part of your team. ...
  3. Give back. ...
  4. Make honesty and transparency the basis of everything you do.
5 Feb 2020

Why are product partnerships important? ›

But brands wanting to form a joint product partnership usually do so for one of two reasons: To expand their product or offering: A brand might find it quicker or easier to work with another brand to fill a gap in their offering, as opposed to working on a new product themselves.

What are the 3 elements of partnership? ›

We return to the definition of a partnership: “the association of two or more persons to carry on as co-owners a business for profit[.]” The three elements are (1) the association of persons, (2) as co-owners, (3) for profit.

What are the 5 types of partnership? ›

Types of Partnership – 5 Types: General Partnership, Limited Partnership, Limited Liability Partnership, Partnership at Will and Particular Partnership.

What are the 7 partnership principles? ›

Seven Partnership Principles

The partnership principles of equality, choice, voice, reflection, dialogue, praxis, and reciprocity provide a conceptual language that coaches can use to describe how they strive to work with teachers.

What are the 5 principles of partnership? ›

These are:
  • Trust,
  • Shared knowledge,
  • Innovation,
  • Agreed Goals,
  • Balance of return.

How many is a partnership? ›

According to the Companies Act, 2013, the minimum number of members required to form a partnership business is 2 while the maximum number of members can be 100 and not more than that. Also read: Difference Between LLP and Partnership.

What is partnership give an example? ›

A partnership is an arrangement between two or more people to oversee business operations and share its profits and liabilities. In a general partnership company, all members share both profits and liabilities. Professionals like doctors and lawyers often form a limited liability partnership.

How do partnerships work? ›

A partnership is the relationship between two or more people to do trade or business. Each person contributes money, property, labor or skill, and shares in the profits and losses of the business.

How do you build strong partnerships at work? ›

How to Build a Strong Partnership
  1. Trust. The foundation of any good relationship is trust. ...
  2. Common values. Some people may argue with me, but I believe that having common values is the very foundation for the successful partnership. ...
  3. Chemistry. ...
  4. Defined Expectations. ...
  5. Mutual respect. ...
  6. Synergy. ...
  7. Great two-way communication.

What makes a good partnership at work? ›

Remember both parties should be communicative, accessible, flexible, provide mutual, and have measurable results. These qualities are crucial in optimizing your partnership agreements.

What is the most important in partnership? ›

When starting a business, the secret to the success of every partnership agreement is rooted in trust and respect between the two partners. You must be able to trust the decision making, temperament, vision, and competence of your partner and vice versa.

What is the importance of product making? ›

Why Product Development is Important. Product development strategies are important to ensure value for your potential customers, as well as ensuring that there is demand and that your final products are of the highest possible quality before your take the products to market.

What is the most important benefit of partnership marketing? ›

Partnership marketing delivers several key benefits, including increased revenue, brand awareness, and customer retention, among others. But perhaps more importantly, partnership marketing is a necessary new avenue of growth as older, established methods become less efficient.

Why is partnering important? ›

A partnership could mean your business will have access to new products, reach a new market, block a competitor (through an exclusive contract) or increase customer loyalty. Some prefer to use partnerships to strengthen weak aspects of their business.

What are the 2 basic types of partnership? ›

There are three relatively common partnership types: general partnership (GP), limited partnership (LP) and limited liability partnership (LLP). A fourth, the limited liability limited partnership (LLLP), is not recognized in all states.

What are the 2 features of partnership? ›

Features of a Partnership are as follows:
  • Two or more persons: To form a partnership, there must be a minimum of two persons. ...
  • Agreement between the partners: A Partnership is created by an agreement between the partners. ...
  • Sharing of Profits: The agreement should be such so as to earn and share profits of the business.

Which type of partnership is best? ›

General Partnership

General partnerships (GP) are the easiest and cheapest type of partnership to form. Two or more general partners own it, with joint and several legal liabilities for all debts and obligations. They jointly manage and control the business.

What are the 10 characteristics of a partnership? ›

10 Characteristics of Unstoppable Partnerships
  • Supportive. For a partnership to be successful each member needs to feel a sense of support and optimism about the collaboration. ...
  • Rewarding. ...
  • Cohesion. ...
  • Open. ...
  • Protective. ...
  • Challenge. ...
  • Catalyst. ...
  • Morale.
18 Jun 2015

What are the 6 characteristics in the partnership? ›

Seven Characteristics of a Great Partnership
  • Trust. Without trust there can be no productive conflict, commitment, or accountability.
  • Common values. ...
  • Chemistry. ...
  • Defined expectations. ...
  • Mutual respect. ...
  • Synergy. ...
  • Great two-way communications.

How do you create a partnership at work? ›

To ensure your business partnership stays on course, follow these tips.
  1. Share the same values. ...
  2. Choose a partner with complementary skills. ...
  3. Have a track record together. ...
  4. Clearly define each partner's role and responsibilities. ...
  5. Select the right business structure. ...
  6. Put it in writing. ...
  7. Be honest with each other.
22 Mar 2019

What is your definition of partnership? ›

What is a Partnership? A partnership is a form of business where two or more people share ownership, as well as the responsibility for managing the company and the income or losses the business generates.

What is the true meaning of partnership? ›

A partnership can be defined as a collaborative relationship between organizations. The purpose of this relationship is to work toward shared goals through a division of labor that all parties agree on. Partnerships are complex vehicles for delivering practical solutions to societal and community issues.

Can a partnership be more than 2? ›

An LLC partnership can have two or more owners, called members. Limited liability companies with multiple members are referred to as multi-member LLCs or LLC partnerships. Under an LLC partnership, members' personal assets are protected. In most cases, members can't be sued for the business's actions or debts.

What is partnership answer in one sentence? ›

A partnership is an agreement between two or more persons to share profits and losses of the firm. According to Section 4 of the Indian Partnership Act, 1932, “Partnership is the relation between persons who have agreed to share profits of a business carried on by all or any one of them acting for all.

How do partnerships make decisions? ›

There are three broad ways business decisions may be made in a partnership: by consensus, through a democratic approach, or by delegation. Most partnerships detail their structuring and business decision making in an Articles of Partnership document.

What is a strong partnership? ›

Strong partnerships are grounded in common values and goals, mutual respect and trust, and the experience, sensibilities, and knowledge that each partner brings to the table.

What is a product collaboration? ›

A product collaboration is when two brands with similar target markets co-create, co-brand and co-promote a product. You're essentially doubling your marketing power, adding value to your customers and generating buzz all at once!

What does a product partnership manager do? ›

First, what is a Partnership Manager? Partnership Managers at SaaS companies are typically responsible for recruiting and acquiring new resellers, training and supporting them, coordinating activities between the two companies and identifying and pursuing joint sales opportunities.

What does partnership mean in marketing? ›

Partnership marketing is a strategic collaboration between two or more firms that helps each firm reach its respective business goals. Goals could include: Increasing brand awareness and reach. Generating more website and social media traffic.

What are the two example of partnership? ›

A partnership business, by definition, consists of two or more people who combine their resources to form a business and agree to share risks, profits and losses. Common partnership business examples include law firms, physician groups, real estate investment firms and accounting groups.

What are the 4 types of collaboration? ›

As follows is a brief description of the four main types of collaboration known to us today (Alliances, Portfolios, Innovation Networks, and Ecosystems), and the importance of each.

What are the 3 important skills in collaboration? ›

Ok, so what are 3 important skills for teamwork and collaboration?
  • Communication. Intuitively, it makes sense that strong communication skills support a culture of collaboration at work. ...
  • Respect for diversity. ...
  • Trust.

What are the roles and responsibilities in a partnership? ›

In a partnership, each partner has a legal duty to act in the partnership's best interests, as well as the best interest of the other partners. There's also the legal duty of individual personal liability for partnership obligations. General partners are liable for all contracts entered into by other partners.

How do you manage a partnership? ›

  1. 5 Tips on Managing Partner Relationships. Manage your partners, communicate effectively, and increase your ROI together. ...
  2. Create a shared partnership vision and roadmap. ...
  3. Be transparent. ...
  4. Know your partner's strengths and weaknesses. ...
  5. Communicate effectively. ...
  6. Know when to say goodbye.

What is partnership in simple word? ›

What is a Partnership? A partnership is a form of business where two or more people share ownership, as well as the responsibility for managing the company and the income or losses the business generates.

What is another word partnership? ›

On this page you'll find 91 synonyms, antonyms, and words related to partnership, such as: assistance, association, business, company, cooperation, and cooperative.

What is a good word for partnership? ›

Synonyms of partnership
  • collaboration.
  • relationship.
  • association.
  • cooperation.
  • affiliation.
  • connection.
  • alliance.
  • merger.

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