Marketing & Partnerships

The Shifting Sands of SaaS Relationships. Here’s How to Handle It.

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Jason Lemkin

I know why Steve Jobs was so very, very mad at Google and Eric Schmidt.  Why he pledged to go “thermonuclear”.  Why he vowed to spend up to $100 billion dollars (Apple’s cash) to “bury Google”.  It couldn’t have been about Android per se.  Google bought Android (the company) in 2005, a “software system for cellphones”, years before the iPhone ever came out in 2007.   Jobs knew about Android.

You know what it was?  Schmidt didn’t call.

Schmidt sat on the Apple board, watching the iPhone go from an idea to the center of Apple’s post-iPod strategy.  And during that time, Android clearly became one of the top 1-2 strategic initiatives at Google.

Friends become competitors in tech.  It’s just a fact, and one that stresses relationships and sometimes breaks ’em.  But everyone understands it happens.

And Schmidt should have called.  By that, I mean he should have told Jobs exactly what was coming 6-12 months earlier than whenever he did, and stepped off the Apple board that day.  But he didn’t step off the Apple board until 2009.  And most importantly, he simply didn’t call early enough.  I don’t know this to be a fact.  But I know it to be a universal truth.

And one thing I can guarantee you in SaaS.  This will happen to you, too.  I guarantee it.

Why?  SaaS is slow.  It builds slowly, over years, into a force.  It’s a minimum of a 72-month commitment.  And over 72 months, things will change:

  • Your larger partners will notice your success, and compete with you, directly or indirectly.
  • Your exclusive relationships will become non-exclusive.
  • Your partners will partner with your competitors as they scale as well.
  • And in one way or another, you’ll either throw someone under a bus — or they’ll do the same to you.

It’s not fun, but it’s part and parcel of the world of competitive destruction we live in.

So what do you do?  It’s simple:  Call.  Or better yet, get on a plane.  As soon as you can.

It’s a natural tendency to hide or duck when these changes happen.  Let your partner find out on their own 3-6 months down the road.  Why call, if it’s just bad news?  Let’s wait.  Kick the can.

Well, that’s wrong.

I noticed the NYT’s coverage of Windows 8 talked about the first call Ballmer made once they’d made the go decision on Surface.  It was to Michael Dell.  Ballmer then got on a plane, and intercepted Michael Dell in Chicago, on Dell’s way to Africa, to talk to him in person.

Was Dell the man and Dell the company mad?  I have no doubt.  Their most important business partner is now competing with them, at least in part.  Not that cool.

But Ballmer handled it (near as I can tell) the exact right way, once the decision was made to compete in part.  And the net result, is Michael Dell is giving tons of press to MSFT and professing full support of Surface.  Certainly, he isn’t going thermonuclear.

Maybe it’s not apples-to-apples.  But it’s close enough.

The thing is, in SaaS, things will probably change again over that 72-144 month journey.  The guys that threw you under the bus, in another 24 months, may again become your most important partner or customer.  Your partner’s attempt to compete with you?  It probably will fail.  They don’t know the space as well as you.  It’s all a journey.

Treat people the way you’d like to be treated, as best you can given the circumstances, and it will reward you.  Though that reward may take years.

Gizmodo pic from Wired here.

Published on October 29, 2012
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