Dealflow Triage
by Joey
Tamer
www.joeytamer.com
Silicon Alley Reporter #24 Digital Coast Reporter #6
Boom times are beginning again. A critical mass of consumers now use the Internet.
Thousands of grassroots start-ups are in development, writing business plans,
and seeking funding. Established Internet companies are in the midst of high-powered
strategic alliances and exit strategies through acquisitions or IPOs. Investors
from seed capitalists to investment bankers are in play. Vice-presidents of
business development are contacting one another daily. Content and community
developers, portal sites, infrastructure companies and their attendant attorneys
are busy.
We are starting up the ramp on the emerging technology cycle again (see Digital
Coast Reporter, October 1998). The buzz increased its noise level in January
of this year. The next couple of years -2000 and 2001- will be even more hyperactive,
barring any widespread global financial crisis.
This is the good news. The bad news, contained in all this hyperactivity, is
that individual dealflow (yours) can be lost, slowed, or killed if you cannot
establish priority within the bandwidth and attention span of the dealmakers.
There are so many deals in development that simple deals between colleagues
who have worked together before get trapped in this bandwidth overload. Valid
deals get tabled and stalled. The CEOs and investors with whom I work ask only
one thing from me: to extend their bandwidth in strategic thinking, negotiation,
and dealmaking. Many complain that strategic alliances move smoothly for several
weeks, and then the phone calls stop. It isnÕt from lack of interest;
it's from lack of time, attention, bandwidth.
George Aposporos, Vice-President of Business Development at Amazon.com, says
"In the Internet space, events are moving so quickly that business development
executives are in a constant state of triage."
Your position within this triage can be leveraged.
- Plan carefully. Before initiating
a deal, calculate your choice among various deal options. How long is the cycle
to close this deal? Will it happen in time to be effective? Calculate a conservative
time for completion, then add an additional 20%. Is the deal still effective?
- Balance your own bandwidth. How
many deals are you handling at once? It is unwise to set your company's future
on a single deal, but it is equally distressing to pursue so many deals that
there is no time to grow your company and attend to basic management and R.O.I.
issues.
- Leave more time for high level planning.
Leave more time to think, to schedule, to require capital. As fast as this industry
is moving, those who focus on the priorities and realities of the marketplace
will ultimately succeed.
- Leverage your relationship with
the dealmaker. Allow the impact of an existing relationship to guide your choice
in the beginning. Declare the value of the relationship in a context larger
than the deal: say thank you, make the right gestures, acknowledge your history
with this person. Say it out loud.
- Follow up meticulously. Determine
the best form of communication: phone contact, email, face-to-face meetings.
Each person has a different preference; know your strategic partner's preference
and use it.
- Be convenient around scheduling.
If you are pursuing the deal and the dealmaker is in overload, go out of your
way to meet at airports, at trade shows, in their territory, and so on.
- Be flexible. Sit with yourself,
your partners and your Board long enough to understand what you will accept
and reject in a deal as it changes form. Establish these parameters clearly
before the dealmaking begins. Have everyone on call as it changes. Remember
the big picture: small losses here, compromises there, a new idea proposed,
and a deal can come to closure. Without the deal, the whole game begins again,
distracting your attention from growing the business, as you wait through the
triage procedure again.
- Be honorable. Nothing sets up the
next deal like honorable behavior in the first deal. Say what you will have,
make acceptable trades, keep your convenience and flexibility at the forefront.
If certain terms are unacceptable, explain why and let the deal go. Tell the
truth. How you represent your company and its position will be remembered. This
industry is a small town with email.
- Keep your ego out of it. Nothing
kills a deal faster than ego and drama. When time is tight, drama is expensive.
Your initial choices, the leveraging of the relationship, the pursuit and follow
up, the convenience and flexibility, all point to an honest recognition of the
pressures of our times. In many cases, your ego-ridden gesture of not calling
back, waiting, demanding the meeting on your own turf, is lost in the rush.
No one sees it. Or they see it as ego and not as power. At the end of the day,
the company that gets the deal that works for them, wins. Ego is an expensive
play in any deal.
- Be patient. What else is there?
Joey
Tamer refines the vision, strategy and success of companies --
Fortune 1000, capitalized start-ups and investment fund.
www.joeytamer.com
(310) 245 5310 joey @ joeytamer.com