Session 8: October 15, 2008

Partnerships

Quote of the Day

"I get by with a little help from my friends." ~ The Beatles

Summary

Startups need all the help they can get. Choosing your stakeholders and negotiating critical relationships with an ecosystem of partners (suppliers, distribution partners, and others) can make or break your company. More often than not startups have little leverage in their relationships, so skill and tenacity are crucial. Intellectual property may be your primary bargaining chip. In this case study we will relive Steve Perlman's harried and complicated negotiations in the creation of WebTV. WebTV was a big idea that brought together top tier venture capitalists, big name consumer electronic companies, and leading technology companies. And as this case will demonstrate, to understand the course of these relationships one must consider the past experience of the entrepreneur as well as the contemporary psychology of the marketplace. There is always more than meets the eye.

Required Readings (Policy on Required Readings.)

• Readings from the Textbooks:
• Technology Ventures (Dorf and Byers): Ch 5.3 Alliances, Ch 14 The Management of Operations; Ch 19 Presenting the Plan and Negotiating the Deal (Highlights: 5.3, 14.1, 14.3, 19.4)
• Case:
• Case: Steve Perlman and WebTV (A) (in course reader)
• Watch the following short video clips:
• Eric Schmidt (Google) - Success Factors of Potential Partners
• Eric Schmidt (Google) - Partnerships: Google and AOL
• Joe Britt (Danger) - What To Do When Partners Demand Exclusivity

Study Questions (Policy on Study Questions.)

• How did WebTV define its critical ecosystem of partners, investors, and other stakeholders? What was WebTV's business strategy that led to these conclusions?
• What were Steve's greatest strengths in negotiating with the stakeholders? What were his biggest weaknesses?
• What issues would you anticipate arising between Sony and WebTV following the signing of the deal? Which interests of the parties converge over time? Which interests diverge? What is the most likely time bomb in the deal? What are the key differences between negotiating a transaction and negotiating a relationship?

Team Online Assignment (Policy on Online Assignments.)

Construct a negotiating scenario for guiding discussions with Sony. What are the three most important terms that WebTV should request, in order of priority? What should their walk away position be? What are the three most important terms that Sony will ask for, in order of priority? Recommend and justify a course of action for WebTV if they walk away.