The Value of Partnerships
If we are true to our goal of maximizing our impact, there is nothing wrong with asking for help.
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Stripe is a payments company valued around $100B. Twilio is a messaging company with a market cap over $60B. And most people who use their services have no idea who either of these companies are.
Gone are the days where owning the end consumer is necessary. Software markets are huge. Specialization is valued. B2B businesses scale- and do so with great economics.
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At Reboot, we believe in specialization, and therefore believe in the value of partnerships.
Our mission is “to help others help athletes move better.” In most cases, others = coaches. But “others” can also mean academy owners, B2C software companies, and more. In any case, others = partners.
Where we started
When we launched Reboot, we thought we would “own the customer”.
Out of the gate, my mind went to the largest market where the every day consumer would pay to improve performance: golf. I had visions of a Reboot Motion golf app used by 25-40 year-olds to improve their game at the driving range…and even at home. I thought about “becoming golf’s Peleton”, displacing private coaching and group classes with a cheaper, more convenient, and less time consuming model.
There is a lot to be said for attacking a large market and owning the entire customer chain. This is exactly what Peloton did- and did with great success. Customers get Peloton hardware delivered by Peloton people, powered by Peloton software. You can even ride with your Peloton apparel.
This does a lot of great things for the nine year old startup:
They control the customer experience- since people will judge them for any touch point with the product, regardless of whose fault it is, full control is a plus.
They maximize revenue streams- they capture 100% of purchases made within their ecosystem.
They constantly innovate- they have the freedom to quickly make any change they deem advantageous.
It is hard to find a problem with Peloton’s model. But that is in hindsight. What Peloton did was extremely hard- and is a credit just as much to their execution as it is to their vision. And while it may look like a no brainer now, the odds of success a few years back was likely quite low.
Why we shifted
One of the ways I like to think about value for early stage companies is:
Value today = Value if successful X Likelihood of success
Most VC backed companies create value by having massive “value if successful” numbers.
People investing in Peloton in 2014 likely did not see success as a guarantee, but they believed in the colossal opportunity if successful.
While there is nothing wrong with that strategy, it is not one we wanted to take. We had a core competency customers valued at launch, which meant we had a business with a high likelihood of success, enabling us to pursue strategies of high value and high likelihood of success…even if they are not of the highest value.
In other words, rather than maximizing for chances of building a unicorn, we were maximizing for 1) likelihood of success and 2) impact.
By optimizing for those two things, we believe most markets will be big enough to create a company we deem “successful”. Remember, software markets- even niches- are massive). And just as importantly, we will create a company that meaningfully impacts coaches’ and athletes’ lives.
Where we are today
Building a company from the ground up is hard. More so, doing all the things necessary to build a company are each individually hard.
That does not mean we should back down from challenges, but it does mean we are best served to understand where our core competencies are…and where they are not.
Optimizing human movement is definitely hard- but we are uniquely positioned to succeed here.
Best in class design, distribution, and development is also hard. And in these areas, we are not experts. Other people are, and we believe we can drive change and tackle problems by leveraging complementary skillsets.
This is exactly what we are doing today, with our three business lines:
MLB teams
Elite baseball academies
Our soon to be released Diamond Kinetics app
In all three cases, we do not talk with athletes. And in all three cases, that is OK. We trust our partners- who are experts- to execute that part of the vision.
We trust MLB teams and academies to leverage our platform to tweak deliveries and swings, optimize training, and create change with their athletes. And we similarly trust Diamond Kinetics to build a great software product that will be a hit with youth and amateur athletes everywhere.
In all cases, these partnerships boost our effectiveness in helping people solve their pain points. They also maximize our likelihood of success.
The Tradeoffs
With that said, partnerships do not come without tradeoffs.
We understand by allowing others to control the customer experience we may be “limiting our pie” or “slicing our pie” or some other analogy with me getting to have less pie.
We also understand when we do not talk directly to the athlete, we give up full control over the user experience, as companies like Peloton enjoy.
These are real costs and they should not be minimized. But for us, they are worth it, as great partnerships help with:
Speed- we get products out to customers quicker.
Product Development- if two companies have different skill-sets, the end result is something neither company could offer to the customer alone.
Education- We learn from our partners, both from the skill-sets we know they possess, as well as general business practices.
Network and Distribution- we know people. Our partners know people. Together, we know more people.
Partnerships allow us to solve more pain points for more customers…and do it in less time.
Who to Partner With
If the costs of partnership are 1) slicing up the pie and 2) reducing control, picking the right partner can be a company defining decision.
Just like companies move slow in recruitment to find the 10x engineer or the 10x designer, we need to search for the 10x partner: someone who can 1) represent our company well to end users and 2) grow the pie, so slicing it up is more than OK.
This is a question I addressed in a previous post:
While this question is important, it is equally important to ask: “what makes us a good partner for someone else?”. In other words, how do we get 1) professional sports teams 2) top sports tech companies and 3) leaders in data, motion capture, and more to want to work with us.
We believe we need to offer the following:
Mastery. We are a biomechanics company. When our resources are limited, we will look to double down on this skill.
Commitment to our DNA: We look for partners that have great worth ethic, are curious, and have an endless desire to serve customers. We need to be committed to these ideals as well.
Excitement. We need to say no unless we can give a project or partnership the resources needed to make it great….and we need to be excited to do so.
Understanding our value and our partner’s value. We want to be compensated and valued for what we bring to the table. But we do not want to be greedy. We want our partners to always feel like working with us is a win.
Conclusion
On a recent Invest Like the Best Podcast, Kat Cole summed up 1) why partnerships are great and 2) what helps form a good partnership better than I ever could:
Kat breaks down exactly what we’re looking to do. We are not only building Reboot Motion, but building the belief that a physics based approach to biomechanics is the best way to improve movement.
This will take time. It will take education, it will take distribution, and it will take money. While we could do this alone, we can do it better and faster with the help of others.
If we are true to our goal of maximizing our impact, there is nothing wrong with asking for help.
And for our partners who can help, we are happy to give them a slice of the pie.