I Found Out the Sketchy Truth Behind Startup Endorsement Deals

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I Found Out the Sketchy Truth Behind Startup Endorsement Deals

My company was approached by a global leader of industry, and they proved just how rigged the entire system is.

I Found Out the Sketchy Truth Behind Startup Endorsement Deals
Photo by Azamat E on Unsplash

There are a few pivotal moments in your entrepreneurial journey that can imbue a founder with the feeling “I’ve made it!”. For some it’s the sale of a company, for others a successful product launch, a front-page write-up, or even just reaching profitability. However, there’s one exalted “milestone” that may flatter founders, dazzle customers, and potentially transform entire businesses — despite the shady truth behind it.

As someone who’s been on both ends of the spectrum — as the flattered founder and the dazzled customer — and who’s since peeked behind the curtain to find out exactly how the sausage is made, I’m here to dispel the allure behind big-name endorsement deals and industry-leading partnerships. It’s not quite as sketchy as Elizabeth Holmes slapping some big pharma logos on Theranos’ website and pitch deck, but it isn’t too far off, either…

When the email first popped up, I did what most skeptical founders would: I checked the address, investigated the sender, and descended down a digital rabbit hole to confirm its validity. Why? Because when you’re approached with a proposition that seems too good to be true from a globally-recognized leader of industry, instinct — coupled with imposter syndrome — dictates an immediate response: to call B.S.

This wasn’t B.S., however; it was a very legitimate partnership proposal from a household name entity with arguably the highest degree of trust globally. In other words, one partnership with this entity, and my venture would — or should — be set.

Here’s what that partnership would allegedly do:

  • Position my company as the top contender, a notch above our non-endorsed competitors
  • Offer perpetual bragging rights to dispel objections about our credibility, professionalism, or quality
  • Justify premium prices, without changing our offerings

In other words, this entity’s proposed partnership was the trump card to catapult my company onto a global pedestal and cement our place in the market. Any rational entrepreneur would jump on such an opportunity, right?

If this were my first rodeo, I might have let their flattery and my star-struck disposition color my decision-making. Luckily, I have years of entrepreneurial experience weathering the disappointing disparity between expectations and reality, so I contained my excitement as the negotiations began. Once I started to ask the hard questions, the chinks in their armor appeared, and I realized exactly what this was: startup extortion by a big fish profiting off their brand’s powerful cachet.

The first myth I’ll debunk is the idea that big name partnerships generate leads. Perhaps occasionally very synergistic partners with a large influx of fresh leads will send a flood of ongoing referral sales your way. In my experience (and in most cases I’ve seen with former clients’ and friends’ businesses), this is rarely the case.

While partnerships may generate intermittent gushes of referral revenue, it certainly isn’t like turning on a faucet full of free leads. When it comes to big-name brands that are offering you a revered endorsement and their logo to slap on your website, it may be just that: a vanity asset.

What those big, flattering partnership and endorsement propositions didn’t tell you or your customers is that their logo means one thing only: You had the money and paid for the privilege of their association. It’s kind of like buying corporate clout, though it’s perceived as an earned stamp of approval and seal of quality control, bestowed by an unshakably trustworthy source.

Here’s the behind-the-curtains truth, from my experience dealing with a handful of the world’s most respected brands’ partnership offers:

  • They don’t vet the products or companies they proposition; so long as you can pay, you can play
  • They target startups that appear successful and gauge their cash position to determine just how high they can price-gouge
  • They rest on the laurels of their centuries’ old brands, wielding that power to the highest degree and creating a very unbalanced partnership dynamic. Plainly put, their value add may stop and start with their logo.

A Fortune 500 partnership or mega endorsement deal sounds great in theory, until you realize your company will be doing all the work and paying the price for the privilege of the predator’s proximity. Unfortunately, they still have one upper hand tactic to intimidate you into a yes: If you don’t accept the partnership, you run the risk that your competitors will — and you’ll regret it.

I’ll be honest: I almost gave in, bit the bullet, and paid the price so our competitors couldn’t. Except I didn’t because there was one negotiation point upon which neither of us were willing to budge: the term.

I was willing to cough up the cash for the perpetual partnership endorsement, but the word “perpetual” was their dealbreaker. They countered with an annual and royalty-based system, in which they could change and increase the price of our partnership — and that shiny little logo on our marketing — whenever, wherever, forever. And I walked away.

If you run a startup, it’s easy to be razzle dazzled when a seemingly more reputable, prestigious, or globally-revered company or figure takes an interest in your brand. Initially, you’re blinded by the waterfall of future sales the union implies, and you start to throw caution — and dollars — to the wind. However, as entrepreneurs, we’re tasked with being the shrewd decision-making stewards of our company’s funds, and sometimes that means looking a gift horse directly in the mouth and waving it goodbye.

If a customer asks why a competitor boasts a logo or a partnership we don’t, I’ll be happy to welcome them into the fold. Customers who base their purchasing decisions solely on a logo or an endorsement rather than product quality or proven outcomes should know the truth about those razzle dazzle partnerships: A lot of marketing is a pay to play game, and the customers are getting played just the same.

Since rejecting high-profile partnership and endorsement offers that reeked of predatory, disingenuous motives, I’ve used a different sales tactic that’s fared shockingly more effective: I’ve told customers exactly which high-profile partnership deals we’ve been offered, turned down, and why.

Wowing customers with flashy logos might work sometimes, but I’ve found that refreshing full-disclosure and a redirection of attention to the proven outcomes your company has created to be even more effective. Entrepreneurs aren’t victims, and you don’t have to give in to bigger bullies to remain afloat, relevant, and thriving.

Go to Publisher:

Entrepreneur's Handbook – Medium


Author: Rachel Greenberg