Jan 2, 2019 · 22m · a16z
a16z Podcast | Dealing with Corporate Dealmakers -- When to Talk to Corp Dev
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gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
In this episode of the a16z Podcast, Andreessen Horowitz corporate development partners Jamie McGurk, James Loftus, and Tyson Clark share actionable advice on how startup founders should navigate corporate development relationships. They demystify M&A dynamics, offer strategies for protecting intellectual property and talent, and explain how proactive dealmaker engagement creates long-term strategic optionality.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. The host holds 13.4% of the talking time here. How this is scored →
The host as informed peer 3.0 Guest teaching 4.4 Guest disagreement 1.4 The host pushing back 2.5
speaking balance: gold is the host, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 16:24 Jamie Rejects Strategic Investor Control Terms
Jamie directly refutes Tyson's list of standard corp dev investor controls, explicitly noting that these requests are dealbreakers for startup founders.
Hardest push from the host ▶ 9:26 Sonal Challenges Corp Dev Value PropSonal explicitly presses the guests, questioning why a founder would bother engaging corporate development instead of running standard sales processes.
Biggest teaching moment ▶ 2:48 Professional Negotiator Experience GapJamie explains the structural negotiation advantage corp dev teams hold over startup founders who rarely experience M&A processes.
The host holds their own ▶ 21:09 Sonal Confronts Stigma of Seeking Corp DevSonal demonstrates strong industry knowledge by confronting the panel with the widely held belief that only failing startups seek out corporate development.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | The host as informed peer | Guest teaching | Guest disagreement | The host pushing back | Why |
|---|---|---|---|---|---|---|
| Defining Corporate Development Role | 2 | 4 | 1 | 1 | Sonal introduces the episode topic and asks setup questions about defining corporate development and why it has a bad reputation. The guests explain that corp dev handles inorganic growth and highlight the experience gap between professional dealmakers and founders. | |
| Enterprise vs. Consumer Corporate Development | 2 | 4 | 1 | 1 | Sonal asks about the differences between enterprise and consumer corporate development dynamics. Tyson and James explain how enterprise focuses on M&A execution for GMs while consumer focuses on tracking overall strategic landscapes. | |
| Non-Disclosure Agreements and Employee Protection | 3 | 4 | 1 | 1 | Sonal asks about NDA usage during the guests' past tenures at Google and Oracle. Jamie adds crucial advice regarding employee non-solicitation clauses to protect startup talent. | |
| Managing the Engagement Process and Strategic Value | 5 | 4 | 2 | 6 | Sonal directly challenges the guests by asking why founders shouldn't just gather competitive intelligence through standard sales processes instead of corp dev. Jamie clarifies that strategic corp dev relationships serve long-term options that sales motions cannot address. | |
| Single Point of Access and Optimal Target Selection | 3 | 5 | 1 | 3 | Sonal probes into why founders should target a specific number of strategics concurrently rather than just one. Jamie explains the Coke vs. Pepsi dynamic where early alignment with one corporate can destroy relationships with competitors. | |
| Negotiating Lockout Terms and Strategic Investor Requests | 3 | 5 | 2 | 2 | Tyson lists mechanisms big tech companies use to keep competitors away, like board seats and financial reporting. Jamie immediately counters that these are dealbreakers that VC advisors strongly instruct portfolio companies against granting. | |
| Maximizing Meeting Efficiency and Evaluating Term Sheets | 2 | 4 | 1 | 1 | James shares tactics for forcing corp dev to conduct efficient meetings. Jamie warns founders against signing broad indemnification clauses and losing operational control in post-acquisition term sheets. | |
| Understanding M&A Process and Creating Optionality | 4 | 5 | 2 | 5 | Sonal brings up the industry narrative that only struggling companies seek corp dev. Jamie counters by explaining that creating optionality early allows strong companies to receive preemptive acquisition offers. |
Statements from this episode (15)
McGurk: Pre-product startups under a year old should avoid corporate development
“And, you know, the meme was out there that, as Sonal mentioned, that you know, don't engage with the corp dev. And we agree with that at certain points in a company's life. If you're less than a year old if you're really kind of pre-product that we generally a…”
Loftus: Extreme M&A anecdotes distort public perception of corporate development
“I mean, honestly, I think that one of the challenges is, is that the situations that corporate development teams are involved in tend to be sort of very high stress, very, very high emotion. And so sort of people have a lot of stories that bounce around the ma…”
McGurk: Corporate development teams hold a significant negotiation advantage over founders
“Keep in mind also that these are professional negotiators. So, you know, the a startup and they go through their life, they may raise money, you know, a handful of times if they're doing very well, maybe, maybe several times they will probably, and hopefully o…”
Clark: Enterprise corporate development focuses on transaction execution led by GMs
“If you look at, ah, the corporate development teams on the enterprise side, and so I'm talking about Oracle, and Cisco, and VMware, and those kind of companies, they tend to be more M&A execution focused, ah, and so you hear a lot of times, you know, CorpDev p…”
Loftus: Consumer corporate development focuses on broader market strategy beyond execution
“Yeah, I think, I mean, on the consumer side, there are plenty of opportunities to be M&A execution focused, but I think within consumer companies, You also see the general corporation looking to the corporate development team to understand the overall strategi…”
McGurk: Founders should only share competitor-safe information with corporate development teams
“You know, you should treat that as the type of information that you would tell anyone that you would tell an investor that you would, you know, use on a sales call that, you know, frankly, that you would tell a competitor. So you don't want to give out the ver…”
Loftus: Corporate development provides unique access to multi-department executives
“If you think about a corporate development team, they're doing transactions across the whole company. And so there are very few places within a large organization where you can go to a single point of contact that has access to multiple executives doing differ…”
McGurk: Founders should build corporate relationships concurrently with 3 to 4 targets
“If you're talking to one, I mean, you should have a plan in place and not to put a time sink into it, but you should be thorough about it. No, not, it's not 10, but it's not one. So it's picking that, You know, to the top of the top, top group that you're most…”
McGurk: Premature exclusive deals with telecom giants like Verizon have killed startups
“I've seen companies die over it, literally. Yep. So doing a deal with Verizon and you can never do another, at a, too early of a stage. You know, not being able to then do a deal with, You know, AT&T or Sprint or anyone else.”
McGurk: Startups should generally avoid strategic corporate investors in Series A and B
“Should we include a strategic in our A round? Should we include our strategic in a B round? Generally the answer is no. There has to be a very good reason. And it depends on what industry they're in and who that strategic is. Because It's just the fear of conf…”
Clark: Oracle used board seats and notification rights to block tech competitors
“We did a number of strategic investments at Oracle, and, you know, I think the way the mechanisms that we use to keep our competitors at bay with our, with the companies that we're investing in are mechanisms like, you know, board seats, or we'll ask them to p…”
McGurk: a16z advises startups against granting board seats to strategic investors
“All things that we advise our portfolio companies generally speaking against. Absolutely. And so there's a balance there. So it's not, those are not things that are automatically granted because they're asked for. And sometimes the right answer is, you know, y…”
Loftus: Founders should force corporate development to bring product leaders to early meetings
“And I think one thing that you can do as a founder is you can force the corporate development team to be more efficient. If they think that they're going to need to bring in a product person later, Or if they're gonna, if there's other people at the company th…”
McGurk: Acquirers routinely seek unlimited indemnification caps in acquisition term sheets
“So companies will always want you to indemnify them against all things, you know, everything that the, that they can think of and with unlimited caps on it.”
McGurk: Strategic corporate buyers do not acquire startups they have never met
“Strategics don't buy companies they've never met. So, you know, it's all about creating options for the company. So whether that's staying independent, that's one option. But you also have to, you know, as John O'Farrell said, you know, you have to know where …”