One of the most important strategic imperatives for any start-up is securing partnerships with high profile brands – ideally global. With these partnerships, your young brand gets to leverage their successful and established distribution channel and existing customer relationships to promote your new products and services. Also, associating your lesser-known brand with a “bigger” brand conveys legitimacy and trust to your most important audiences: prospective clients, industry analysts and investors.
With a new $3.5 billion valuation based on Starbuck’s $25 million investment (in addition to the partnership), start-up Square (founded by Twitter co-founder Jack Dorsey) aims to move beyond its mostly smaller mom-pop customers and hit global retail outlets.
Though Starbucks has its own pre-pay rewards card program where customers can add to their card balance via the Starbucks Web site, Square is another alternative that offers a variety of advanced features, such as customer-recognition when they walk into a store. It appears that the relationship is for US-based Starbucks stores only at this time and will roll out by the end of this year.
The upside for Square? A lot. A global retail partner as proof of concept, an additional investor, and more consumers downloading the Square mobile app, which expands their base and makes it easier to sell the service to other large retail chains. Upside for Starbucks? A seat on the company’s Board, an investment that will payback after an expected IPO, and fulfilling its mission to be one of the best customer-centric brands in the world.
Here’s an interview about the partnership with the respective CEOs via Bloomberg TV:
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