In this episode of the Brutally Honest Mentor series, host Ozan Sonmez, drawing on his experience working with Siemens and other large firms, offers practical guidance for startup founders seeking partnerships with big corporations. He and a co‑speaker discuss how corporate bureaucracy both enables scale and can hinder innovation, emphasizing the need for startups to understand long, multi‑department sales cycles. Sonmez outlines three critical considerations: (1) grasping the bureaucratic process and managing expectations around lengthy negotiations; (2) probing corporate negotiation mindsets, aligning KPIs, and avoiding restrictive terms such as exclusivity; and (3) recognizing the power and legal imbalance that favors large firms. The conversation also highlights the upside of corporate collaborations—access to extensive revenue streams, product pipelines, and broader market reach—while advising founders to engage only after achieving sufficient revenue and cash flow, and to approach negotiations with humility, openness, and transparent communication. The video concludes with an invitation for viewers to share their experiences and seek further mentorship.
Chapters
So, welcome back to the Brutally Honest Mentor. My name is Ozan, and I've been talking about a lot of things in this series of videos. Now it's, I think, time to talk about, I think, the elephant in the room, which is how startups will cooperate with large corporations, or what's the role of large corporations in the startup scene. It's a topic near and dear to my heart because we work with large corporations. We work with one of the largest industrial corporations in the world, Siemens, and we're helping Siemens build internal capacities to become more relevant in the future. So in another video, we'll talk a little bit more about that. But taking a lot of experience not only from our work with Siemens but from other corporations, we have a lot of things to share to the founders who are looking into exploring partnership opportunities with institutions, with companies.
One of the most critical factors when a startup wants to expand and build a partnership with a large entity is to be able to understand processes that the corporation has. Bureaucracy is a living element of a large entity, of a large corporation. Companies who are 30, 40, 50, 100 years old have been growing steadily, have been alive, have been innovating, and been very able to stay relevant in today's economies through new things, new research and development, as well as through their bureaucracy. Bureaucracy is not necessarily a bad thing because it allows for corporations to scale. And to keep control of their growth, to keep control of their finances. However, most corporations fail to recognize that bureaucracy can also harm their integration into the more innovative part of the world, which is the startup world. So companies who are trying to work with corporates with their external entrepreneurship programs or their sponsored programs usually apply the same bureaucratic structures into these programs.
And sometimes it's more harmful than useful for startups, especially if the startup is not used to understanding this bureaucracy. So yes, corporations have a huge role to play in the startup ecosystem. They're usually strategic partners. They sometimes have their own corporate venture arms to invest in strategic initiatives. But for— first and foremost, there are large resources of revenue because they have so much problems that a startup can attack and help them solve. So maybe 3 things to consider before starting to work for a startup, work for a large company as a partnership if you're a startup founder. One, understand the cycle of bureaucracy. Talk to your contacts, whether it's in the engineering side or whether it's in the business side. How much time do they think the relationship will come to fruition? You start negotiating, you start talking to one group of people, then you need to talk to another group of people. It just bounces back and forth and back and forth until you may be finding the right person who has the right budget, right authority, and right problem that you can solve. So The sales cycles could be very long. If you know this, then you can manage your expectation. The second part, some corporations unfortunately do not have the best negotiation mentality with startups. Most divisions of corporations are super selfish, and that happens to many companies as well. It applies to many companies. They prioritize their own growth, their own KPIs. And it may not align with the startup's KPIs. Before getting too much deep into those negotiations, I think it's fair for a startup to ask, have you worked with startups before and what are the general terms and conditions you required them to apply? Because there might be some things that come very late at the stage, almost at the agreement stage, where you took 3 to 4 months to foster a negotiation, foster a relationship, And then all of a sudden you realize they will not work with companies unless they have exclusive rights, which is not the best condition to give as a startup. So learn about them. It's nothing to blame. They have their own purposes. You have your own purposes. So knowing them and being very open in communicating them is a critical factor.
And maybe the last thing you should be aware of is working with large corporations You don't have too much muscle power against them. So even if you have a lot of contracts, even there's like legal terms and structures, knowing that the large corporation will be able to use force on the startup if there's something that's going on wrong. They have their own lawyers. You may not have enough resources to do that negotiation piece. So be very mindful and think twice before engaging in a long-term conversation with a large corporation. They may have the best intention at heart, so I'm not in any way suggesting that corporates take advantage of startups, definitely not. But their structures and their bureaucracy might have a different gearing, different structural shapes that it may not fit you exactly. In some cases, building partnerships with large corporations, absolutely rewarding. You can develop products together. You can get into their cycles much faster, and you can build very successful relationships. But knowing the risks as well as the upsides is, I think, a critical component.
Some programs prioritize getting the startups into the corporation's pipeline of products, which is always a great case. You may use the corporate's access tools or outreach opportunities to go into a different market. To reach to more audiences, to get in front of more customers, and it could be a really important win-win-win condition. But be mindful about the conditions, be mindful about your own purpose and the reason you're engaging with large corporations. So long story short, strategic partnerships with corporations is critical. You are going to be at a better position if you do that at later stages of your development when you have enough revenue, when you have enough cash, when you don't rely on one corporation to survive. But be mindful, be careful, and explore with humility, with openness, and transparent communication. Hope you find the best partners. And as always, as a Brutally Honest Mentor Group, we will be very happy to talk to you about your struggles, You can comment on the sections, reach to us on any of the social media tools that we use, and let us know if there's anything you'd like to share and your experience, good and bad experiences in working with corporations. So good luck.
