Article first published as Why Selling To The Government Can Downgrade Your Startup on Technorati. First Greece, now Spain and Italy. Across Europe, historically solvent sovereign governments are suffering from an acute case of systemic deficits. Now, more than ever, government agencies in the US and abroad are lousy startup customers. I am not a government contracting expert. In fact, during my many years as an operational entrepreneur, I explicitly avoided working with governments, for the reasons described below. However, I am familiar enough with the government procurement process to know that it can result in the down grade of an unwary startup’s credit rating.
Note: This is part II of a five part series. Access the first installment HERE, part III HERE, part IV HERE, and part V HERE. In part I of this series, I discussed how you can teach your children to make something from nothing by sharing with them Marcia Brown’s Stone Soup. There are a number of other children’s books that also serve as good platforms from which you can impart entrepreneurial values and lessons. One such book comes from a surprising source, the notoriously left-leaning Theodor Geisel, better known as Dr. Seuss. He inadvertently drafted the salesman’s manifesto in the form of Green Eggs and Ham, utilizing 50-different words, 48-of which are one syllable. Not only will your children understand it, it is even accessible by the average salesperson.
Note: This is part II of a four part series. Access part I HERE, part III HERE, and part IV HERE. As noted in part I of this series, agreements with Big Dumb Companies (BDCs) can be alluring and potentially fatal. In many cases, agreements crafted by BDC lawyers resemble ConTraps rather than mutually beneficial contracts. This series describes how entrepreneurs can craft company-changing agreements with BDCs, while avoiding Kiss of Death contract provisions.
Note: This is part I of a four part series. Access part II HERE, part III HERE, and part IV HERE. Agreements with Big Dumb Companies (BDCs) are like DC Comic’s evil villainess, Poison Ivy. Both are seductive and alluring and both are potentially fatal. A startup’s most meaningful agreements are often struck with BDCs. You will no doubt craft agreements with companies of similar or even smaller size to your own. However, your greatest risks and greatest opportunities will arise from the deals you cut with larger entities. Fortunately, it is possible to craft lucrative deals with BDCs that do not limit your adVenture’s ability to charter its own destiny. Just as Batman repeatedly avoids Poison Ivy’s kiss of death, so too must entrepreneurs avoid the Kiss of Death provisions which BDCs attempt to include in their agreements.
In 1266, the Emperor of China, Kublai Khan, granted the Venetian merchant, Marco Polo, a life-saving letter of recommendation. The reference was in the form of a gold tablet that stated, “By the strength of the eternal Heaven, holy be the Khan's name. Let him that pays him not reverence be killed.” The tablet allowed Marco Polo and his fellow travelers to transverse nearly 7,500 miles unmolested during their three-year return trip to Italy. This golden reference effectively communicated the Emperor’s sentiments in absentia. Although it may be a bit much to ask your Referencers to provide you with a golden tablet, you should strive to obtain similarly impactful references.
In an episode of the popular 1990’s TV sitcom Seinfeld, Kramer, played by Michael Richards, begins “working” at the fictional Brandt - Leland Investment Firm by simply showing up, attending meetings and acting as if he is part of the team. Although the plot was obviously devised for comic effect, it serves to illustrate that non-conventional methods of infiltrating Big Dumb Companies (BDCs) are often effective. The key is to avoid the adverse fate suffered by Kramer at the conclusion of this particular episode.
“Good Lord Boyet, my beauty, though but mean, Needs not the painted flourish of your praise: Beauty is bought by judgment of the eye, Not uttered by base sale of chapmen's tongues” William Shakespeare, British Playwright, from Love's Labour’s Lost, 1598 Intellectual Property (IP) is an ugly thing at a startup. It requires you to expend your two most valuable resources, your time and your money. Yet, it does nothing to help you execute your business model. However, to a Big Dumb Company (BDC), a startup’s IP is a thing of beauty. Although BDCs often act irrationally, in this instance, their perception of beauty is highly rational.
In early December of 1818, Jose de la Guerra devised a brilliant plan to thwart the French pirate Hippolyte de Bouchard who was lurking off the coast of Santa Barbara, contemplating an attack. Even though the Santa Barbara garrison was outmanned nearly six to one, Commandant de la Guerra tricked de Bouchard into believing that his force was formidable by repeatedly marching his small cavalry over a ridge that could be readily seen from the pirate’s ship. Each time the men crossed the hill and descended out of view, they changed clothing, mounted different horses and then paraded again before the pirates. This ruse caused the pirates to assume that each corps of horsemen was a different contingent of soldiers streaming into the Presidio. Believing he was outnumbered, Hippolyte aborted his plan to sack Santa Barbara and proceeded south where he subsequently pillaged San Juan Capistrano. Entrepreneurs can emulate de la Guerra’s strategy and make their adVenture appear far larger than reality and thus increasing its influence and market reach while discouraging competitive threats by creating an industry alliance.
During the height of the dotbomb bubble, numerous companies struck Barney deals. These spurious partnerships had no substance and were initiated for the sole purpose of sending out a press release. They were dubbed Barney deals because the structure of such relationships was so lightweight that the underlying agreements merely affirmed the companies’ mutual affection, as articulated in Barney’s theme song, “I love you, you love me. We’re a great big family.” Despite the pathetic nature of Barney deals, the big purple dinosaur offered sound business advice to entrepreneurs in a TV episode entitled, “Sharing means caring.” Barney realized that caring entails a willingness to share the risks and rewards associated with a mutually advantageous relationship. Leverage the purple dinosaur’s wisdom and seek business partnerships which are based upon sharing the results, as opposed to deals in which one party trades their money for promises.
In the first Star Wars film, released in 1977, the seemingly humble Ben Kenobi is confronted by a squad of Imperial Storm Troopers. With a slight hand gesture and a confident stare, he convinces the Storm Troopers that there is no reason to search his vehicle and to leave his droids unmolested. The audience later learns that “Ben” is actually Jedi Master Obi Wan Kenobi and the persuasion technique he deployed is called the “Force.” Unfortunately, non-fictional entrepreneurs cannot draw upon the Force. However, there are Jedi mind tricks that really do work - words, techniques and patterns of behavior that cause people to act in a highly predictable manner. Just like the Storm Troopers, victims of these mind tricks are usually unaware of the degree to which they have been manipulated.