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February 22, 2023

Walt Duflock: Agtech Startups — The Work with Channel Partners is Never Done

I wanted to pass along a recent story on agtech automation partnerships. It is a reminder that agtech channel partners are a great opportunity to help you sell your product, particularly in a new market. But they are also partners that need to be actively managed. Once the deal is signed, it just means the negotiation is done. It does not mean the partnership is destined for success. This particular story involves GUSS, which manufactures 3 types of sprayers — GUSS, Mini GUSS, and Herbicide GUSS. The picture below is the original GUSS — the other two products were launched later. GUSS is an autonomous spraying unit and it saves growers money by reducing inputs (through more efficient spraying) and doing the spraying autonomously.

GUSS developed a quality product that ran successful tests and was growing sales. In April 2022, they announced a joint venture with John Deere. The press release talked about the objective of the joint venture:

“Deere and GUSS are both committed to investing in innovation and technology to help farmers be more productive and profitable while growing more food using fewer resources,” Davison said.

Through a joint venture, Deere will help GUSS further collaborate with the Deere sales channel and GUSS will continue its innovation and product development to best serve customers, Davison said.”

So how does this collaboration implement itself after the joint venture is complete and the press release goes out? For starters, it makes it clear that GUSS has one main job — keep building great sprayer products. John Deere also has one main job — to help GUSS further collaborate with John Deere sales channel. So Deere was now helping GUSS approach many of John Deere’s channel partners. See below for a current list of California dealers for GUSS (from the GUSS website.)

And there is more to the deal than a press release and a website update. RDO has a podcast that’s pretty solid and in December 2021, guess who made an appearance? Yep, that would be Gary Thompson, COO of GUSS in Episode 157 of the RDO podcast. Remember, this is 4 months before the joint venture is announced, so you can see there was already a lot going on between the two companies. Side note — those of you running startups thinking about how to get conversations moving, don’t underestimate the impact of a well done podcast (I’m not saying that’s the path to joint ventures and riches, but I’m not saying it’s not … and it certainly can’t hurt.)

But, wait, as the Ginsu knives infomercials say … there’s more! The Facebook page for RDO puts up a nice post (or at least the Moses Lake, WA page does — I’m sure there are others, this was just a quick Google search to see where it got mentioned) announcing the joint venture with a link to the podcast and a nice photo of the GUSS sprayer in action in a field (see below). So at this point the GUSS team has done a great job and should raise a glass of whatever beverage they prefer. The RDO joint venture has had a press release, social media, and website marketing behind it. Life is good.

This is exactly what you would hope for as a startup: (1) CEO and/or bus dev/corp dev executive successfully negotiates a joint venture (takes a while); (2) PR team announces the deal (takes a while because while the startup review means it at least gets read by the CEO and takes 5 minutes, it is a joint release and has to go through John Deere’s PR team for approval — takes a while); (3) website is updated on both sides — and again (you can guess what’s coming) while the GUSS website takes a couple of hours to put an update together (need to track down the exact dealer names and links and get the changes made and actually pushed to the website), getting large partner sites like John Deere and RDO updated … takes a while.)

Both (all 3 actually since John Deere and RDO have done work) sides have invested significant resources into the partnership at this point, although on a % basis the effort from GUSS was undoubtedly a lot more resources than either John Deere or RDO. The win for GUSS is clear — having a reputable channel partner that can sell your product into their existing customer base is a huge opportunity. The win for RDO is also clear — having a new product to talk to customers about that can generate incremental revenue and enhance your sales team’s reputation by being the team that brought the new product to their attention (or at least did so at the right time to generate the sale). The win for John Deere is just as clear — having a nationwide RDO network that the joint venture feeds with new products can help strengthen the John Deere — RDO partnership.

So now the real work begins as the sales and channels team tries to turn the marketing and PR efforts into actual customers and sales. RDO is one of the largest John Deere dealers, and the Salinas region is a good region for John Deere sales. So RDO is now on board as a GUSS channel partner and is one of five California dealers. Among the many things GUSS has to do now is get the sales force for John Deere and RDO educated on what the joint venture means for them, what the GUSS product is, how to begin and execute the sales process, and (last but definitely not least) how much can a sales rep make for selling a GUSS machine to a customer.

Classic sales stuff, but it takes time to execute. Are you going to do this via in-person meetings (highly recommended), Zoom meetings, or some form of webinar? How do you handle time zone differences if you’re doing it online? Are you going to start (or at least ask to start) at national or regional sales meetings? To kick things off, this is highly recommended and you try and go top down — national first, get the buy-in from the key sales executives and have them push the training requirement down to the regional offices and then GUSS just has to take the time to get to as many individual RDO offices as they can for individual team meetings face-to-face. It’s the most time intensive but absolutely the best way to roll a product like GUSS out to an RDO sales force. So in a perfect world, the joint venture is announced, GUSS is at the national RDO sales kickoff meeting, then cascades down to appearances at regional and then targeted individual office meetings.

The old adage is as true of sales reps as it is for customers — tell them what they need to know, tell them again, and then … tell them again. If they hear it at national, then regional, then their office — well, they should hear it by the third time, especially in a small setting with just the team they interact with regularly.

I have some experience in channel sales from both sides. At Lexis-Nexis, I worked for a software company (Jurisoft) that was wholly owned (had been acquired) but had to be good because we were selling software regularly into multi-million dollar accounts and if you did anything that had a potential negative impact on the mother ship (particularly a Global Account Manager’s client), well let’s just say you got phone calls from some people who weren’t always on your Top 5 list (and this was in the ’90s before we had fancy smart phones). So you did whatever you could do to get the reps excited about the solution and made it as easy as possible for them to sell and then let the Jurisoft team handle all support (while still keeping the Lexis-Nexis team in the loop). The learning there was the small company with one revenue stream off a one-time software sale with a small amount of support & maintenance annually (we had a long way to go to do that part better back in the 90s) had to do everything it could to make the big company (in this case the one with multiple millions of dollars coming in annually) comfortable with introducing you and moving the sales process through.

At eBay, the situation was reversed. I ran seller programs for seven years, five of them with the Trading Assistant (consignment selling — drop it off, they sell it for you) program. Here I sat in the big dog chair — and had a never-ending stream of seller tools that wanted to work with the PowerSellers and then Trading Assistants. So the trick here was to make sure they had an offering that worked for every seller, was not a one off, and would not jeopardize any of eBay’s golden goose, transactional revenue off listing fees and successful auction/transaction fees. The learning from the big company side was that you had to fit the third party offering into one very tightly defined value proposition and market the heck out of it. No deviation, no customization — just make it one SKU available to all if you wanted to make things work well with third parties across a massive seller user base.

Finally, at APTARE, I was on the marketing side as we had a classic channel challenge. We had a direct sales team that sold to enterprise clients (primarily Fortune 500) and a channel sales team that sold through partners, and our biggest channel partner (by far) was Hitachi Data Systems (HDS). We made software that managed storage and backup software for enterprise data centers. It competed with the storage and backup vendor’s own on-device tools, while offering a more comprehensive view of the storage and backup environments (the elusive “single pane of glass”).

In this position, APTARE was very similar to GUSS working with John Deere and RDO. We had to deliver very simple value proposition messaging to the HDS team so they knew exactly when to plug us into a sales situation, and exactly when not to plug us in. We had to train the HDS reps at their global sales kickoff (annual trip to Vegas for kickoff — try and get them on Day 1 or 2, after that things get a little more challenging from a training and retention perspective … it’s Vegas …) then at regional meetings and when we could get it at individual office locations when teams were gathered. The learning here was that you had to be drop-dead simple with messaging for the reps, have a support plan, and have a revenue model that made it interesting for HDS reps to sell APTARE products. When we did it right, the HDS reps could walk through much of the sales process with minimal support and when we did it wrong it caused a lot of challenges on both sides as people wondered what happened and why things didn’t get through to a closed-won position in Salesforce for both sides.

So those are my three direct channel experiences — keep it simple, make the math work for the reps, have a clear support plan from the startup side (GUSS). Ironically, those were the same three rules from the big company side. And yet, at APTARE we could not get HDS reps to initiate or drive a sales process in many instances. Meanwhile, the one situation I know of locally in the Salinas Valley indicates that as well as GUSS, John Deere, and RDO have worked together to this point, there’s still work to do. Let me explain.

You’ve seen the dates above on the partnership, the podcast, the press release, the follow-on with RDO, the website updates, and you know there was training after all of that to get to the sales force (where the rubber meets the road as many of us like to say — because for sales teams nothing happens until somebody sells something is not just a saying, it’s 100 percent true). So the joint venture was announced in April, and I talked to an innovation leader at a top 10 salad maker in the Salinas Valley who regularly works with RDO and John Deere equipment. You would think this situation is right in RDO’s wheel house — huge salad maker, one of your largest clients, and you have the chance to get in front of them with information on a new product offering that can save them a lot of money and/or decrease their input usage for spraying or both with GUSS. Top reps for companies like that should be all over these opportunities — this is something new to talk about that you now carry in your portfolio that can extend the relationship with your customers by one more conversation. For the salad maker, he’s always looking for something to improve efficiencies and/or optimize the labor-automation portfolio. And, as he told me later, he was somewhat actively researching spraying options (but as one of many to do items on a plate that’s always a bit too full to overflowing, so it wasn’t the fastest and best research, but there was research occurring). So how did that conversation go?

Well, it turns out it never happened. The salad maker innovation leader found out about GUSS from … me … at FIRA USA in Fresno … in October (6 months after the announcement of the joint venture, and likely after multiple training situations, likely some of them in person). Now before I dive into the main point for detailing this situation, let me be very clear about one thing. I am not calling out GUSS, RDO, or John Deere for this situation. Six months is a long time, but it’s not forever and in all likelihood it would have come up from the RDO side soon enough. At the same time, the fact that it would have been 6+ months before it came up has to get the GUSS team’s attention. I know a couple of guys on each side of this one — this is not a blaming exercise, life is short and who’s got time? Let’s just get better.

(Editor’s note — the GUSS team was nice enough to point out that they do not currently sell their sprayers to salad makers, and that is an excellent point. It makes some of my content above a bit of a straw man, and that’s very fair comment because if you are not in the GUSS target market, you are probably a lot less likely to get a reach out, which explains why my friend was unaware of the GUSS-RDO joint venture or the GUSS offering. With that disclaimer, I’ll close with my main point, which was not to indict anyone on the GUSS, RDO, or John Deere side of things …)

So with that, I close with the one most important thing every AgTech startup should take away from this post. Both (all 3) teams did a very good job on the negotiation, announcement, and likely roll out of the joint venture and the selling motion. At that point, the onus is 100 percent on the startup to keep things rolling. Again, this was my learning from Lexis-Nexis and APTARE (and eBay from the other side). Nobody cares about the startup’s revenue and sales pipeline more than … the startup sales (and hopefully marketing) teams. So if and when GUSS sees this, they own the responsibility for raising the issue and getting it fixed. John Deere and RDO have far bigger stuff going on (they’re like HDS or eBay in my examples), and the startup can never leave solving these types of problems to the big company.

So let me say it loud and clear to every agtech startup — when this happens, you need to own it and fix it. I had some really tough calls at all 3 of my example scenarios when stuff went sideways. That didn’t change the fact that in every case the small company had to make the changes and get things fixed. Big companies have too many things going on and will not focus on this — you’re one of many things they have to manage and you are rarely (if ever) a big rock to them when they look at their key objectives (i.e. what they get paid on, or even better, paid bonus money on). So learn as much as you can from the sales teams of partners, and figure out what’s working and what’s not, then do everything you can to fix what’s not working and crank up the noise on the stuff that is working.

Momentum is a funny thing with sales teams — seize it and you can ride it for multiple deals, lose it and it’s really hard to get back. I’m quite sure the GUSS team will get with RDO and get things tightened up. This article is not really about GUSS — they’re doing fine with a really nice set of products and some market traction. This article is so everyone else can understand how much of the weight of the sales activity is on your side of the ledger — and it’s virtually all of it. As the title of this post says — channel partner work is never done — never, ever, ever. So remember that and help make sure your channel partners can and are working with you, or figure out why they’re not (and sooner is always better than later.)

This post is reprinted from the Medium blog of Western Growers VP of Innovation Walt Duflock; click here to read in its original format.