Why Build a Rocket When NASA Has Plenty?

Building things from scratch is the essence of being an entrepreneur. It’s what we do. It’s the whole notion knowing that you have put in everything you’ve got to make your product or service come to life. We take pride in knowing that we struggle with limited resources – both capital and human to make our vision a reality. However we sometime overlook other options to us.

“We take pride in knowing that we struggle with limited resources – both capital and human to make our vision a reality. However we sometime overlook other options to us.” 

Entrepreneurs are builders. When most entrepreneurs start, their default mentality is that they will start small and become their own “craftsman.” We remain fiercely committed to building from the ground up. Imagine the day we have two employees, ten employees. One hundred employees. Even the term “startup” embodies the notion of building something from the ground up.

But should we always be building from scratch? Most entrepreneurs would instinctively reply, “Hell yes, isn’t that the point?” There is no question that the experience of building a company from the ground up is one of the most character-building experiences that you will encounter. Many entrepreneurs take great pride—and rightly so—in building their vision from scratch even though the world we live in makes it harder and harder to come up with something new that cuts through the clutter. If bootstrapping seems like the only option it can prevent entrepreneurs from seeing a second, or third, option that may be better suited for their vision, its scope, and the resources or schedule needed to ensure its success. There are some circumstances where a really good idea won’t come to life with a traditional approach.

Entrepreneurs are always up for a difficult challenge, but the smart ones are keenly aware of today’s challenges and the radically different landscape afforded by new technology and global competition. Could there be a better way than starting from scratch and building from the ground up? Isn’t it less about how you get there, than the fact that you got there? Isn’t it more important that your vision comes to life, your customers win, your investors are happy, and you achieve the personal and financial rewards of success?

A Different Approach

As entrepreneurs we often feel like we lack a lot, but we almost always lack three things:

• Capital: financial resources to support and drive a growing business.

• Distribution: an established network that helps bring a product or service to customers.

• Resources: the team members it takes to build a business.

To overcome these gaps, entrepreneurs raise money by convincing investors that their business has merit, forging partnerships to drive distribution, and incrementally bringing on resources. They embark on the traditional startup and building process.

What entrepreneurs do not lack are great ideas. Large companies, on the other hand, have no shortage of capital, resources or distribution.

It is common to open the Wall Street Journal and read about companies doing billion-dollar acquisitions, or investing heavily in innovation partnerships. Companies are putting this money to work to enhance shareholder value through research and development, acquisitions, stock buybacks or paying off debt.

Corporate America, and many international companies, have the precise resources entrepreneurs with big ideas need. Many companies not only have their core employee base and administrative staff, but also can leverage inexpensive global resources like technology development, call centers and business processes execution. Imagine the conversation shifting from what it is now—whether you can afford one new application developer— to how quickly the business could be mobilized by fifty new hires.

Companies also have distribution. Many large organizations have sales forces with thousands of team members throughout the world. A new innovation or product idea can be integrated into the “bag” of the salesperson, and suddenly, the entrepreneur’s idea can be offered at scale. Today, you are probably debating whether you can find someone who will sell on a commission-only basis because you can’t afford to hire a full-time sales- person. Imagine if you could leverage all of their salespeople?

Bottom line. The two things that entrepreneurs need the most—cash and resources—are something companies throughout the world have in spades. In fact, many of these companies are actively seeking these collaborations. While they may have resources in excess, they are always on the search for new ideas and innovation. Many companies have even set up “commercialization centers” specifically to encourage and attract entrepreneurs, and to provide the infrastructure to transition innovations into much larger commercial endeavors.

Take the Cleveland Clinic for example:

The Cleveland Clinic has an organization called Cleveland Clinic Innovations (CCI). Within the Cleveland Clinic world, there are often medical techniques that come to life through the hands on experience of doctors, nurses, support staff and other clinicians. Many of these innovations have some market viability. For example, let’s say that a doctor discovers a new technique in the midst of performing surgeries. One path might be for the doctor to take the idea, leave his job as a doctor and create an organization to bring the technique to life. Cleveland Clinic has made it much easier. If CCI sees merit in an idea, they will help provide capital, financing options, partners and other resources to get the technique or product off the ground. This often results in a joint venture with a pharmaceutical company or medical device partner, CCI and the physician or staff member.

Do we always have to build something from scratch and struggle through the blood, sweat and tears of building a company? Could we have a different perspective? Could we consider the alternative and see if building could be replaced with partnerships with those who have the capital and resources we lack? The opportunity is there. When successful, this type of relationship combines the cash and resources of corporations with the innovation and ideas of entrepreneurs for a mutually beneficial endeavor.

If you decide to take this approach, the focus of your effort changes from company building to positioning your company for this type of partnership. These efforts then focus on the following:

• Building A Business Plan Geared Toward a Strategic Partnership. Develop a business plan that outlines the fundamentals of the business, but also clearly defines a “strategic partnership” approach to going to market. The plan should not talk about the business getting investment capital like a traditional startup seeking funding. It should speak of the investment required by the partner to build the business as part of their organization.
• Differentiating Value. The focus of the business plan and its overall rationale should be to establish the product’s value statement specifically for implementation with a strategic partner, not as a stand-alone business. This will require a shift from pitching and validating the traditional entrepreneur’s solo business venture, to a mentality of co-creation and collaboration. For example, your communication would not focus on “the business will generate revenue of x” but rather “this solution could be integrated into our national sales force and be a strategic ‘add on’ to our existing product line.” You must be able to clearly and concisely show how your idea can bring value when the capital and human resources are applied.
• Requiring an Investment. The business plan should include details regarding the investment required by the strategic partner to bring the solution to life. Remember, this is not the investment to grow the business as a stand-alone entity, but rather the investment that must be made by the strategic partner to enable the business as part of its suite of products or services. This plan cannot be general (e.g., the business will need $2 million investment). The more detail your plan contains and the stronger its economic analysis—particularly as an asset to a strategic partner—the more likely that partner is to see its immediate value and act on it.
• Clarifying Resources Required. The plan should not only detail the financial resources required, but the human capital involved. The plan should outline the need for a management team, the desired roles of the entrepreneurs, and the other human resources required. Again, remember that you are pitching a strategic partnership with the company that has an existing team. Research their organization to see how their team and your team can form the right mix.
• Targeting Partners versus Investors. With a detailed plan in hand, entrepreneurs do not need to spend time chasing investors to build the business, but need to identify and contact their target partners. This starts with an analysis of the industries, segments, and markets that would benefit most from their idea. Once identified, they can target companies actively seeking outside innovation and development, as well as, their advisors (e.g., investment bankers, consultants) that are often charged with finding new innovations. You may also tap into the growing incubator and accelerator network that have relationships with companies actively seeking innovative ideas.

Think of this “strategic partner” approach as just another way to bring your vision to life.

Some entrepreneurs may view this as a “cop out”—that real entrepreneurism requires building from the ground up. Don’t think of it this way. This type of partnership is an entrepreneurial venture coming to life— simply through a different path. If entrepreneurs had a quicker way to gain access to capital, distribution and resources to bring their vision to life, wouldn’t it make sense to pursue that path as an option?

This approach is not a magic bullet. Companies will scrutinize your offering and its value to them, and whether a strategic partnership is the right choice for both parties. Choosing this path will require you to hone your approach, your communication, and the details you highlight in order to specifically address the benefits of your idea to a prospective partner. Your strategic partnership doesn’t have to, or simply may not involve your entire concept or every product, so be prepared to differentiate the scope of your vision and offering. There will be times when this path makes sense and times it does not. You may like the idea of a partnership, but the terms of the partnership related to ownership, control and financial reward don’t satisfy you. Not a magic bullet, but definitely one that should be in your gun.

As an entrepreneur, you will face many difficult questions about what’s best for your business. You will also have to find difficult answers for questions about your identity, about what it means to be an entrepreneur. It’s easy to lose perspective when we believe there’s only one answer or one correct approach to these questions. I can’t tell you whether you should bootstrap it or partner up, but I will suggest that your perspective include the flexibility, humility, and creativity to consider many options that will ultimately help you bring your vision to life. Either way there will be hard work involved—it is just that the work is allocated to a different perspective. You wake up every day not thinking about logos and business cards but rather how to package your offering and bring it to the right partner. It will not be for every product or service, but it is an alternative perspective that every entrepreneur should consider. Aligning your vision within a larger partner organization can be a significant identity dilemma for entrepreneurs, but don’t let your perspective limit your ultimate goal— bringing your vision to life.