Monday, April 24, 2006

Making a Good Business Development Deal

Let's start with what is not...
  1. Where one party assumes all the risk. Examples include having a partner guarantee revenues that will materially hurt their business if your site doesn't deliver what they expect.
  2. Contracts with grey areas, especially around performance.
  3. Contracts where both sides don't have an out.

What are signs that a Business Development deal is good.

  1. It lasts. Not for a quarter, but for years. It grows, changes and endures.
  2. Its a win/win situation with risk, time and reward.

Hubpages is about a million business development relationships between authors and affiliates designed to last and be a win/win deal for everyone. We provide our partners a platform for free to create Hubs on anything. We make it simple for them to create a Hub. And provide tools so they can easily monetize their content by integrating the affiliate partners goods into the platform. Our risk is the time and money that goes into the building and support of the Hubpages platform. In exchange we get authors to provide content on a breadth of subjects that we could never cover.

Our Authors provide information that they incorporate in the Hubs they create. They offer subject matter expertise, and time. In return they get a free platform where they don't have to worry about the technical operations or pay to use the service, but they can actually earn money by programming links to affiliates so they can earn money.

The third piece to this interesting triangle are the affiliate relationships with partners like Google, eBay, and Amazon. All of these partners make their inventory of products and ads available to anyone. They offer commissions to people that refer them business. Their risk is similar to ours in that they invest time and money creating and supporting these systems. They win when authors program links to their products, auctions or ads.

Hubpages is one of the first companies to orchestrate this simple business development opportunity for three major stakeholders, and set it up so that everyone can win and hopefully create long term relationships between everyone.

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