1Mby1M Virtual Accelerator Investor Forum: With Steven Mitzenmacher, Rackspace Technology (Part 2)

Steven Mitzenmacher: The next function is a capability deal. That’s not just about your existing core and enhancing it; it’s about adding a new Lego brick to your core. That might be your bolt-on acquisition. In that case, it’s augmenting a new product or service offering that can add technology or features to your existing stack as an adjacency. It’s highly complementary to your existing portfolio. It’s an extension, but it’s not a radical departure from what you do. It’s a similar selling motion but with a new value proposition or new use cases.

The final deal is very rare. It’s the catalyst deal. Those are the transformational opportunities. That’s where you’re going outside your core. Those are going to be your largest mergers. It’s a business expansion. These are few and far between. These are deals that get a lot of press.

Those are the ways you approach a deal. What’s important about that is that ends up defining who will be the internal lead or sponsor. Corp dev was never meant to be the lead. We are an internal service provider. The capacity deals are typically going to be owned by an R&D or go-to-market line of business. A capability deal will be led by an executive sponsor at the R&D or market level. A capability deal would be targeting a General Manager or the Head of Global Products.

Finally, a catalyst deal would be led by the CEO and the Board. That helps you think about who your internal advocates are going to be depending on the type of deal. For the buyer, it’s important to understand your drivers. I’ve found that a common factor in deal failure is you’ll misclassify a deal to get it done. You’ll over or undersell a target because you’re trying to fit that model to hit the approval thresholds you’re looking to get. 

Sramana Mitra: Excellent framework for the discussion today. This market map that you’re talking about, does corp dev and product view of the map match up? Are you sharing the same map?

Steven Mitzenmacher: The goal is that they should match up. A deal model should never be corp dev’s view versus corp finance’s view. The same is true of the market map. It should never be a different model than the product’s view. The same would be true when you think about how you evaluate your customer map and your customer pyramid. Those are going to be shared. That’s a shared deliverable depending on how the product group and product management is structured in an organization. 

Sramana Mitra: When you engage with the ecosystem around that, who is going and talking to the startups out there?

Steven Mitzenmacher: When I’m building my corp dev team, I want to be the tip of the spear to drive that dialogue. Sometimes, the matchmaking of how they find us or we find them can come in a lot of forms. We might not always be their first point of contact. We certainly want to be in the dialogue. We are very focused on trying to be the center of knowledge management on all those interactions.

We maintain our internal database of contact management with that ecosystem. In a place like NetApp, it meant building our own proprietary Salesforce instance that was just the corp dev scouting database. We want to be the central point of navigation.

This segment is part 2 in the series : 1Mby1M Virtual Accelerator Investor Forum: With Steven Mitzenmacher, Rackspace Technology
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