It’s Not All About The Money: How Kenny Herman Listens His Way to a Deal

This is a guest post from Kenny Herman, EVP of Strategy & Business Development, Slice.

Come hear Kenny share more war stories from the front-lines of a career in Business Development at Firneo Forum on March 29th in NYC.

It’s easy to get focused on the wrong things when you’re trying to create a partnership. It’s even easier to talk yourself right out of a great deal, simply because you won’t let yourself hear what the other side is trying to tell you. Learning to see things from the perspective of your potential partners is one of the most important lessons in business development. It’s also a lesson I had to learn the hard way.

The Birth and Near Death of SinglePlatform

When I was 24 years old, I helped start a company with another New York startup guy named Wiley Cerilli. It was called SinglePlatform. This mission driven startup was focused on helping local businesses — specifically restaurants — become more visible throughout the web. These businesses would give us basic information, like their menus, hours, and photos, and we would syndicate that information everywhere that people might go to look for it in the hopes that we’d drive them more customers.

It’s easy to forget just how different the internet was in the late 2000s. Most restaurants had virtually no online presence back then, and even if they did, that information was often out of date. It was a real headache for people who just wanted to figure out where to go for a meal.  When do they open? Is it too expensive? Do they have a vegetarian dish for my difficult cousin who’s visiting from out of town?

There was a huge demand for this kind of data, but there wasn’t yet a business model for monetizing it. Our original approach was essentially a referral model. The local businesses would pay us a small fee for each customer we sent their way, which we tracked by providing a unique phone number that would redirect to their main line. We would then pay a portion of that fee to the publisher of the website associated with that unique phone number.

My core focus at SinglePlatform was to convince these huge online publishers that there was serious money to be made in these referrals. The referral fees were small — maybe 50 cents per call — but that would add up over of thousands of calls. A popular website could make a few thousand dollars a month by partnering with us. But, as the smaller publishers simply didn’t drive meaningful volume, we needed to aim our sights at the big guys.

Thanks to some of my previous startup success, the success of Wiley’s previous startup, SeamlessWeb, and countless hours trolling LinkedIn pursuing conversations with decision makers, we were able to land meetings with significant publishers like Google, Foursquare, TripAdvisor, AOL, and The New York Times. We set up meeting after meeting, but things never seemed to click. They would hear my pitch, I’d try to partner with them on this referral fee idea, and then, ultimately, they would turn us down – or worse, go radio silent.

It’s not that these publishers weren’t excited about the idea or the technology. Almost all of them would say something like “This content is interesting. If you had a critical mass of restaurant information and menus, we’d be interested in working with you.” They were taking our calls, but they weren’t taking us seriously.

At that point, I was getting really frustrated. When you’re an early-stage startup, you raise a round of funding to last you a year, give or take. We were six months into the business, and all we had to show for it were partnerships with a handful of lesser-known publishers. And while I’m more than thankful for those partnerships, if things didn’t change, and soon, SinglePlatform was going to fail.

The Lightbulb Moment 

I had one last idea. I reached out to a friend-of-a-friend, Mike Brown, at AOL Ventures, and asked him to help me understand what we were doing wrong. He listened to by pitch, and — as patiently as he could — explained why these deals weren’t happening. Our product wasn’t the issue, he said. The problem was that I clearly didn’t understand the needs of these huge publishers.

A company like Yelp or MapQuest isn’t going to stop whatever they are doing to integrate a new technology that might only bring them another $75k a year. Even if we were bringing single-digit millions of dollars to them every year, rather than single-digit thousands, they still might not find it very compelling.

These publishers cared about content. They cared about providing the content that their customers wanted. We had that content, and that made us worth talking to. In my pitches to these publishers, I kept focusing on this revenue stream that clearly wasn’t meaningful. The more I talked about the money, the more I was actually hurting my chances of making a deal. I was trying to force a square peg through a round hole.

A few days later, I went to the BIA/Kelsey conference in Boston, an important summit for people working in and around local businesses. I was still wrapping my head around the idea of completely reworking our pitch, and I found myself listening to a presentation by a speaker named Chuck Lee, who was one of the big idea guys at the Yellow Pages. I generally don’t have a great attention span, and it can be hard for me to sit through dronning presentations, but I was absolutely riveted by what Lee had to say.

Here’s a guy who helps solve problems for a multi-billion dollar business with over 5,000 sales people, and runs a site that has millions of visitors every month, and he’s talking about one of the biggest problems they face: Providing up-to-date restaurant information. I started to see the problem from Lee’s point of view. Restaurants are notorious for not answering their phones. They don’t spend a lot of money on things like advertising, because they are a low-margin business. When a restaurant fails, they don’t call up the Yellow Pages to let them know to stop listing them.

And yet, when most people visit the Yellow Pages, restaurant information is usually what they’re looking for. Something like 63% of the people who were searching restaurants on the Yellow Pages were just looking for a menu. But the Yellow Pages didn’t have those menus, because they hadn’t figured out how to work with these restaurants, namely restaurant data, in a scalable way.

That’s when the light bulb came on. We had thousands of menus from restaurants from all over the country. For the first time, I understood how we could bring value to these huge publishers, and create partnerships that worked.

Listening Saves the Day

Later that day, I had a meeting with Maria Kermath, the Director of Business Development at the Yellow Pages. Instead of talking about money, we talked about the unique, high quality content that we had – menus – and she got it immediately. The end result was a simple agreement. If we could provide them with 100,000 restaurant menus within 90 days, we’d have a partnership. 90 days later, we delivered 180,000 menus to them.

Things changed quickly for us at SinglePlatform. I started reaching out to those publishers that had, only months earlier, turned us down. This time, the pitch worked. Within 100 days of that BIA/Kelsey conference, we had partnerships with Yellow Pages, FourSquare, TripAdvisor, New York Times, and the Tribune Company. Soon after, we had partnerships with Google, Yelp, Yahoo, and Microsoft. Within a year, we sold the business for $100 million.

The problem had never been our product, or even our business model. It was the tone-deaf pitch. These publishers cared about making their user experience better. In almost every meeting, they said it. But I wasn’t about to hear it. Instead, I incorrectly inferred that the only kind of value big publishers cared about was monetary value. That’s a rookie move, and it happens often in business development.

These days, I’ll go into a meeting and ask all of the other people to speak first. I’ll ask them about what is most important to them. What matters to them? What makes them look good? Once I understand their needs and priorities, creating a partnership becomes much easier.

Come hear Kenny share more war stories from the front-lines of a career in Business Development at Firneo Forum on March 29th in NYC.

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