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April 18, 2005

Beware the Barney press release

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Posted by Dominic Basulto

How many strategic partners can an early-stage start-up really work with? According to New York VC Ed Sim, the answer is one. That's right, one. Sim explains:

"I can't tell you how many early stage companies I talk to tout their great list of partners. I always step back in amazement at how a small company can support more than one, really large partner in the beginning."

If an early-stage company claims to have a handful of partners, take a closer look to see whether the partner is really adding anything to the bottom line. If the partner is just there for show (i.e. another pretty face on a Web site), then the partnership is really nothing more than a "Barney press release":

"In my mind, if you and your partner are not generating revenue for each other than it isn't a real partnership but rather just a Barney press release. Yeah, you know the "I love you, you love me" kind of partnership that sucks precious resources from a startup and yields no value and no customers."

With that in mind, Sim provides five rules of engagement for making any strategic partnership work. It's hard work, and the fun is just starting once the two parties sign on the dotted line.

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