It’s always very important to look at both the big picture and the details of any business deal. While the big picture can give you a rough idea of how things look, it’s the details that can add up, either in your favour, or against you.
To give you an idea of how important the details in a deal are, I’ve got two stories:
1. The Power Of Co-Branding
If you’ve checked out my About page, you know that I used to be in the bottled water industry.
Well, back then we had a good customer who wanted to put together a co-branding deal with us. Basically, that means our brand and theirs on the label. They had several brands, which complicated things. And after crunching all the numbers I found that the proposed deal couldn’t make money.
But we did it anyway. Luckily.
Within a month the volume of product they were taking literally doubled. And not only did the deal become profitable because of this, but it became one of our best accounts.
The detail we didn’t see was that our customer started pushing the product. And hard. All because they now had their branding on the label too. Co-branding deals can be very good strategic alliances.
2. The Emperor, The Mathematician, And A Chessboard Full Of Rice
This is an old fable. It’s one of those ones that you never forget.
A long, long time ago, the Emperor of India was introduced to the game of Chess by one of his wisemen who was also a brilliant mathematician. The Emperor loved the game so much that he wanted to reward the man and asked him to choose a reward.
The wise man chose rice. Yep, rice. He asked that one single grain of rice be put on the first square of the chessboard, 2 grains on the second, 4 on the third, etc. Each square would receive double the amount of rice as the last square until all 64 squares were accounted for.
The Emperor thought this was a modest request and promptly called for his servants to bring the rice.
They very quickly ran out of rice. Thanks to one little detail the Emperor overlooked; the power of exponential growth. By the time you get halfway through the Chessboard, the amount of rice adds up to about 100 tons of rice. By the time you get to the 64th square, it adds up to about 450 billion tons of rice.
Or better said, about 740 times the total World rice production in 2004.
The devil’s in the details.
I love the fable! I had never heard of it before, but you are dead right that the key is always in the detail. We don’t always see the full benefits of a deal or agreement until it actually happens.
On a much smaller scale to the example you mention, I consider many potential link exchanges online to be flawed. Many people will reject a link exchange with a site that is less popular because they think they will not benefit from the exchange.
Very few sites in this position actually consider the potential future growth of the site they have just turned down a link exchange with – a detail that is almost always overlooked (in my opinion).
Imagine turning down a link with Google when they first launched because your site was pulling in 50,000 visitors per day. Boy, you would have ended up regretting that decision eh?!?
– Martin Reed
That is a great fable that I’d never heard before, Shane. Exponential growth is a very powerful thing.
I have to agree with Martin. Potential is more important than state, in my opinion. You can always do some research and see growth– but things like your water story are hard to estimate. A lot of that business deal must’ve relied solely on trust. Trust their representative instilled in you that they would come through. And you saw some sort of potential or you wouldn’t have made the deal.
— Scot
I hadn’t heard of that fable before…Great one indeed.
I can see why the co branding worked, the company had a brand to protect, and wanted to promote it just like any of their products!
It’s a great fable. I heard it a long time ago and it’s one that’s always stuck with me because of how powerfully the numbers add up so quickly.
Martin,
I don’t know too much about link exchanges. I tend to stay away from them for the simple reason that I think it’s too easy to get wrapped in that stuff and forget about building good content and getting out and networking.
Scot,
Potential is really. It’s the future. And you change the future outcome as long as you know what you need to do.
We did the deal, not because we thought it would be profitable, but because of the branding exposure. In a sense, we saw it as a marketing cost, which is always controversial. We thought there’d be a small jump in volume, but never figured it’d be enough to turn it into such a great deal.
Hey Gregg,
Co-branding can be a great thing. In one sense, that deal watered down (no pun intended) our brand because we shared the stage with another one. But their ability to get it out there is what helped us both in the end.