Continuing with the Asymmetric Deal Making theme...  How do you get noticed?  How do you establish that first contact?  Obviously, you need to find the right person inside the target company (BTW, reaching out to multiple people is often a better strategy).  Conferences, trade shows, linkedin, JigSaw are all great tools for that 
But even if someone on Linkedin agrees to introduce you, chances are you are going to need to write an intro letter.   
Every day I get emails from someone trying to partner with RingCentral or to sell something to us.  And in spite of everything that has been written on the subject, they are uniformly awful.  They are however absolutely necessary and very important.

So what does a good opening salvo look like?  First and foremost it needs to be concise and very clear. 
Nobody got time to read pages of text or to ponder about what is it that you really want.  I would say no more than 200 words.

I like letters that make a good use of the Aristotelian methods of Pathos (Emotion), Ethos (Credibility – literal from Greek: familiar place or frame of reference) and Logos (Logic)

Here’s an effective blueprint:

·         Intro:  Let the person know where how you found them (e.g. I saw you at a conference and I liked your comments on methods of viral distribution or We share John Doe as a connection on Linkedin).  Use every opportunity to make the letter feel personal (Pathos).

The following 2 sections can be flipped depending on context:

·         Who are we:  This will largely depend on how familiar your addressee is with your company.  Two approaches that work well here are identity - based (RingCentral is the dominant cloud phone system for SMBs) or need – based (RC allows companies with mobile employees to save money and project a professional image).  If you use words like dominant, rapidly growing, leading etc, use another sentence or two to back it up with.  You have to be credible (Ethos).

·         Opportunity:  This is an answer to the question “So what’s in it for me?”  I think some of the worst offenses are made in this section.  Many writers simply omit it (e.g. We just told you how great we are, so you should be able to figure out why you should partner with us).  Others make it way too generic and do not put themselves in the other person’s shoes (e.g. We can save you up to 75% or we can help you penetrate a $10B market.  Any claims you make should be specific, personalized to your addressee and backed up by facts.  Justified claims will give it logic (Logos), while personalization gives emotion (Pathos).

Finally (and very importantly)….

·         What do we want:  This is the call to action. This is an answer to the question “So what do you want me to do about it?”  Many letters omit it, as if it were implied (e.g. By partnering with us, your company will save 20% on XYZ.  Best regards.) .  Others ask for unrealistic actions (e.g.  Invest in us today).  Keep in mind what the actual desired outcome is.  It is rarely something big.  It’s usually a meeting or a phone call or something along those lines.  So ask for it and give your respondent a couple of options to choose from.

Here’s an example of one of the letters I use.

Hi Joe

I found you on Linkedin.  We are connected through Johe Doe.  I'm reaching out because RingCentral is very interested in a partnership with ABC.

RingCentral is a Cloud PBX / Business Phone System focused on mobile users.  We are the dominant player in North America (with over 250,000 businesses) and have also expanded into UK.

SMEs with 1-50 employees is the least served market segment.  Because of that, it offers some of the best potential for growth.  What makes RC unique is that we cracked the code on what to sell into that space and how to make it profitable.  In the UK, 13.8M (59% of total employment) is in this segment.   So with X% marketshare, UK alone is a roughly £YB opportunity for ABC (at £Z per user per month – which is our average).  In the last year, we have proven this model with ATT in the US and Rogers in Canada (we also dramatically reduce their churn).  

We would love to explore a partnership opportunity with ABC.  And even if there’s no immediate opportunity to partner, it’s still worthwhile to see our solution and to talk.  Please let me know whether we could set up a brief phone call.  Wednesday morning and Thursday afternoon both look good

Best

(This is actually 214 words – but consistency is overratedJ). 

 This letter can be further improved by making it even more personal (for example, ABC is the ideal partner for RC in the UK because you are the most powerful SMB brand).

Just a few more quick tips: 

·         Short, clear sentences

·         No link (you do not want to have your addressee navigate away from your letter).  If you need to send links, just ask in your intro letter “would you like me to send you a link to our…”

·         No canned language.  Make it conversational.  No one like a form letter.

In an article published last month by PEHub and co-authored with Ben Smith, we argued that startups have an advantage in qualitative leaps, while BigCo's are better at incremental / proceduralized innovation. 
Soon after the article came out, a reader sent me this article from the Economist.  In spite of it's provocative subtitle 
(Why large firms are often more inventive than small ones), the author actually echoes our conclusion.    

Here's a passage for the Economist:However, there are two objections to Mr Mandel’s argument. The first is that, although big companies often excel at incremental innovation (ie, adding more bells and whistles to existing products), they are less comfortable with disruptive innovation—the kind that changes the rules of the game. The big companies that the original Schumpeter celebrated often buried new ideas that threatened established business lines, as AT&T did with automatic dialling. Mr Mandel says it will take big companies to solve America’s most pressing problems in health care and education. But sometimes the best ideas start small, spread widely and then transform entire systems. Facebook began as a way for students at a single university to keep in touch. Now it has 800m users. 

Our article is below:

With all their resources and talent, why do big companies have trouble innovating? How can a Blekko exist when there is a Google? Or a Tapulous when there is an Electronic Arts?

Even more puzzling, why couldn’t Yahoo create Facebook with Yahoo 360 instead of losing out to a 20-year-old kid from Harvard? A lot of innovation comes from tiny teams with only $100,000 in the bank, or often a lot less. The reason is they don’t fear breaking the rules.

In reality, there’s a lot of innovation happening at big companies. But most of it is incremental. The focus is usually on process optimization and efficiency improvement. In order to support the rigid, crystalline structure of a large enterprise, lots of rules and procedures are implemented and enforced. These rules are “The Box.” The goal of most enterprise innovation is to get close to the edge of “The Box” without touching the lines – like a child drawing in a coloring book.

A startup innovator doesn’t care about rules. He doesn’t care about “The Box.”  His motivation is to achieve something that has never been done. Most innovators we meet have an explicit goal of changing the world.

Another key reason why big companies aren’t good at qualitative innovation is a combination of legacy and Wall Street pressure. Most large companies do not grow very fast. Their current customer base is large, and, by comparison, the inflow of new customers is small. This imbalance creates a disincentive to introduce change and innovate. Customers often react negatively to change over the short term, and Wall Street punishes companies for taking risks.

Startups, on the other hand, are unencumbered. There’s no aversion to risk.  There’s nothing to protect.

Victor (pictured above) has seen this at RingCentral. For years, the RingCentral team has pushed the envelope with cloud telephony in an old-fashioned, highly competitive telecom industry dominated by huge incumbents. It would have been easy for RingCentral to start looking over its shoulder, and then stumble and fall. But the company kept swimming upstream, winning one innovation award after another (including the prestigious World Economic Forum’s Technology Pioneer Award) and adding more loyal customers. Now, the company is enjoying industry-wide acceptance and many of the industry’s largest names have become valued partners and strategic investors.

Ben (pictured left) saw this same dynamic as he offered advice to the Tapulous and Mesmo teams competing against the major game studios. Tapulous, for example, built out a massive network of freemium users in the same gaming market that created billion dollar businesses with Harmonix Music Systems’ Rock Band and Activision’s Guitar Hero. Neither franchise was able to embrace the iPhone as the new gaming platform, or freemium as the new business model, the way Tapulous did.

Only a few big company executives and boards have the guts to resist the pressures from shareholders and Wall Street. One example of a company that did is Charles Schwab under then CEO David Pottruck. Pottruck’s big bet was to see the Internet as the future. In the late ‘90s, Schwab offered a discount brokerage service at $80 per trade and an e.Schwab platform with reduced service levels at $64 per trade. E*Trade wasn’t yet a strong competitor. That changed.

Pottruck’s bold decision was to face rising Internet competition head-on and offer all customers, online and off line, the same service levels and the same reduced price - $29.95 per trade. This bold innovation cost the company about $100 million in profit the first year, and Wall Street punished the decision. Shares dropped by about 40%. But Pottruck and Schwab were right and within nine months the stock recovered and reached new highs on massive customer growth. Some of its competitors’ product strategies were a year behind. Stories like this are few and far between.

The startup environment is different on a fundamental economic level, not just because founders are more motivated and focused, but because anytime a startup does something big, the upside is uncapped and the downside is pretty small. If a company fails, an investor loses a few million dollars. The team goes on to get new jobs.

Big companies can look at the same project with the same economics and lose a billion dollars in market cap. Netflix is an example. The risk paradigm is reversed. For any qualitative innovation, a big company has an uncapped downside and a finite upside.

That’s why startups do what they do. They have nothing to lose, only upside. It is why they are willing to change the world.

(Victor Belfor is an entrepreneur and investor and currently runs strategic alliances at RingCentral. He can be found on Twitter @vbelfor. Ben T. Smith IV is a serial entrepreneur and investor and the co-founder of MerchantCircle and Spoke. He is available on Twitter @bentsmithfour)