Three ways to ensure that MVNOs and MVNEs live happily ever after

Choosing your business partners wisely is critical in any business venture. Perhaps even more so in the MVNO space. More often than not, greenfield MVNOs are bootstrapped and running a lean operation. Every dollar matters and MVNOs need to ensure that the majority of the money is spent on commercial success. MVNO founders are typically strong in fundraising and sales and marketing. But sometimes lack experience in software or product development, and operations. In many ways these founders are stuck between a rock and a hard place trying to please investors, learn a new industry and commercialise a product from scratch with a limited budget. In my previous blog post, I elaborated on the need to choose your partners wisely and the dos and don’ts.

Technical, commercial and interpersonal feasibility are the cornerstones of a successful partnership. But how do you shape such a partnership to ensure maximum success and a solid foundation for growth, or even a rainy day? 

Below are three things to consider when entering into a contract with a software vendor.

1. Defined, clear and outspoken responsibilities

This might sound basic but you would be surprised how often division of responsibilities can cause confusion. Here the software vendor, or MVNE, has a responsibility of defining and communicating what is done by the MVNE, third parties as well as the MVNO itself.

When launching an MVNO, especially in the US, you might need to partner with up to 5-10 third parties for various parts of your operations. You will need partners for everything from international calling, connectivity, devices, payments, first-line support, tax etc. It all depends on how your value proposition looks, how you have decided to set up operations and which MVNE you choose.

You must define a clear value proposition and operational model in order to choose the right third parties to ultimately divide responsibilities. It is not unusual for the MVNO to choose partners before having these aspects defined which can cause a lot of a headaches.

I believe that the MVNE has a significant responsibility in terms of clarifying the various responsibilities. While you as an MVNO must understand your business and operations to the point that you can define what it takes to run it. At the end of the day, it it is up to the MVNO to understand their own business and the various components, and up to the MVNE to guide the MVNO through the requirements needed to make it happen.

In a good partnership this is all defined during the sales process and clearly outlined as part of the paper process. Don’t hesitate to spend some time here, it will save you time in the long run. Remember, in lean production, it is much more costly to build in errors early in the process.

2. Transparent pricing and joint goals

You want to enter into a contract that is a win-win for both parties. Transparent and flexible pricing that benefits both parties if you achieve your goals is critical for joint success. Most modern MVNEs offer tier-based SaaS pricing today which allows the MVNO to pay as they grow.

When you discuss pricing, everyone must acknowledge that a true win-win is only achieved when both parties make money. If it is skewed either way it does not create a strong foundation for a long and fruitful partnership. The MVNO needs to acknowledge that the MVNE has some costs for setting up and running the MVNO. While MVNEs must find creative ways to support an often bootstrapped MVNO.

If there is a joint understanding and a will to set up a model that works for both parties you have a good chance to succeed. That said, it is critical to make sure that it is clear what is included in the pricing in terms of hosting, features, SLAs, new development etc. These days “SaaS pricing” can be quite loosely referred to.

This brings me to the last point which is to define the actual delivery and what it is that you are buying as an MVNO. After all, you are buying software which is impossible to grasp fully no matter how good a demo is..

3. Scoping

Last but not least, as an MVNO you need to dig into the capabilities, both products and services, that the MVNE offers. Take your time to fully scope out the value proposition and capabilities that you need to launch your MVNO. In this case both the MVNE and MVNO have a responsibility to communicate their needs and capabilities and map that into a viable scope.

Both parties need to see the bigger picture and decide what is needed at launch and what can perhaps be pushed to a second phase. I’ve witnessed many restless founders who just want to get their MVNO out the door without clearly defining the value proposition, operating model and ultimately scope. This restlessness might feel like it will save time, but as always you lose time in the long run.

Don’t get me wrong, scoping should not drag out in time unnecessarily. But please take your time to discuss the most important topics before it becomes too time-consuming and ultimately costly. Make sure that you understand what is included in the scope, SLA and future developments clearly before moving to the next stage. For MVNEs, it is critical to clearly define their technical capabilities in a way that is easily understandable for the MVNO.

I hope the above can help both MVNOs and MVNEs enter into happy and long relationships built on mutual respect and understanding.

Do not hesitate to reach out if you have any questions or input.