Swing Your Partners

Jul 10 1998

It's funny how the most basic phrases acquire different meanings over time. In the sexually charged 1960s and 1970s, "multiple partners" aroused thoughts of Bob and Carol and Ted and Alice. In the technologically charged 1990s, we're more likely to think of "Infoseek and Disney and Starwave ."

Internet executives are bedding business partners at a furious pace. The relationships they are forging range from innocent cross-promotions to flirtatious revenue-sharing scenarios to the full-blown commitments known as "exclusives," whereby the partners nervously pledge to remain categorically true to one another.

Many of the deals make perfectly good sense. The right partner can broaden your core business and market share, provide a quick cash infusion, jump start your stock, propel your IPO, offer an important hedge against competition and, perhaps most importantly, create the appearance of strategic thinking. The downside is an Ozarks-like environment where everyone is essentially related to everyone else, whether they know it or not.

In either case, aggressiveness is the prevailing trend. Take Excite , for example. In one breathtaking 60-day stretch, the portal site announced alliances with Total Entertainment Network, AOL , Sinanet , MasterCard , Office Depot and Office Max, ATT , Netscape, Cybershop, Lilith Fair Music Festival and Software.net, for an average of one deal every five-and-a-half days. Meanwhile, all of those companies were undoubtedly entering into other, unrelated partnerships.

Can any one company successfully juggle so many relationships? Does a meaningful percentage of them bear fruit? Let's face it: No one really knows, because there is virtually no follow-up analysis of these deals within our industry. Instead, there is a bottleneck of new partnership announcements waiting to be unleashed by corporate PR firms.

Often, the entire point of the deal is the announcement itself. To the critically important communities of venture capitalists, the news media and other opinion makers, a company without partners runs the risk of looking like some loser standing alone at a singles bar. In the heat of the moment, any prospective partner can look attractive. One can only hope that none of this fast action will come back to haunt you in the morning.

My company has more than a dozen partnerships. Some are working very well and others were dead on arrival. For obvious reasons, I won't elaborate. But one of the lessons I've learned is that the relationship has to have a strong foundation.

It can be as simple as finding a partner who brings real value to the table or shares your vision of the future. In all cases, personalities matter. Nobody wants to deal with someone they fundamentally dislike.

Those open lines of communication come in handy when you bump up against the conflicts that inevitably occur as a result of so many people being in business with so many other people.

Here's an example: Suppose you sell widgets online, and you enter into a cross-promotional deal with a Web retailer that reaches your target demographic. Now, suppose that retailer is tied in with a portal site. And suppose the portal has a deal with a competing widget seller. Thanks to the Web's open architecture, you are now cross-linked to your competition, and you've got no real hope of doing anything about it.

If you're still primed for partnerships, here's some hard-earned advice on what to avoid:

People Who Are Overly Familiar: Do you really want to be in business with someone who reminds you of a used-car salesman? Watch out for anyone who calls you "Buddy," "Guy" or "Pal" - or who makes suspect references to golfing with Bill Gates.

Companies With No Discernible Income: OK, we can't all be profitable this early in the game. But a company's business plan should not gloss over a lack of revenue by using the word "cool."

Partners With No Sense of Timing: Beware of companies that seem to be cursed by fate. Their bad luck will rub off on you. That big announcement you've been planning will appear on the day the stock market crashes.

Partners Who Betray You: You'll know you're in trouble if any of the following questions arise.

"Who authorized you to incorporate a picture of a naked corpse with my logo?"

"Your accountant fled to Bimini?"

"Your real name is what?"

Alan Citron is president and COO of Ticketmaster Multimedia. Reach him at citron@ticketmaster.com.