How Do Product Partnerships Work?

In my current role as a venture investor, I help advise portfolio companies on partnership strategies to help them drive growth.

How do product partnerships work? originally appeared on Quora, the place to gain and share knowledge, empowering people to learn from others and better understand the world.

Product Partnerships are partnerships between companies that involve technical integration in order to embed or enable product functionality. Product partnerships may often drive distribution, however they are not simple distribution partnerships in that there is typically engineering work involved in exchanging data or embedding functionality in the partner’s products.

Typically a product partnership is considered when the product functionality envisioned by a company requires some data or functionality that another company owns or controls, or where the optimal user experience requires systems of different companies to “speak” to each other using API’s. For example, millions of websites include share buttons that allow you to share content to social networks such as LinkedIn, Facebook, or Twitter. These share buttons operate by the social network (e.g. LinkedIn) exposing a Share API that websites can embed into the code on their web pages. Instead of requiring the user to copy and paste the URL of a website into the social network, the API allows the information about the webpage and the user to directly be sent to the social network to create a much simpler and better user experience.

Note that some product partnerships involve open programs to access code or functionality, such as the Share API that I just mentioned. However many product partnerships involve creating new functionality or exposing capabilities through API’s externally to partners, with a user experience that may be heavily negotiated by both parties.

In addition to defining the user experience and the technical integration, there is typically a business negotiation associated with product partnerships. This may result in financial compensation from one party to the other, or often there will be a notion of “value exchange”, where both parties receive benefit from the integration in different ways. Often there are attempts to ensure that the exchange of value between the companies is fair, and in some cases additional partnership elements may be introduced in order to ensure that both parties feel that the value exchange is balanced. Using the example of the Share API, the social network in this case benefits from having their logo displayed on partner websites, and also benefits from the additional content that will be flowing through their network. In return, the website owners or content publishers benefit by having increased distribution of their content, leading to incremental views of content on their site.

Note that the partnership teams in large companies will usually be focusing their attention on partnering with other large companies, or they may be acting upon request from a product team that has an objective they are working to achieve. Identifying and building relationships with the product managers in these companies that are working on product areas where you can help them to achieve their objectives is a great way to build a partnership. While the partnership team may be a roadblock, the product manager can be your friend and often will be the decision maker or will have strong influence over which partners are selected.

Often in my current role as a venture investor at Defy Partners, my partners and I help advise portfolio companies on partnership strategies to help them drive growth.

This question originally appeared on Quora. You can see more sessions on Quora here.

Photo Credit: Getty Images