There are countless platforms that corporates can leverage to connect with startups such as Crunchbase, Angelist, Startup List and Gust. Add to this meet-ups, pitch nights, conferences, blogs and social media all making it easier than ever to identify and connect with startups doing compelling things in your industry or adjacent industries.
What’s really lacking is a roadmap on how to work with startups.
As the often-heralded Godfather of Silicon Valley, Steve Blank likes to say, a startup is not a smaller version of a large company.
A startup is a temporary institution looking to find product market fit, whereas a large company has already found product market fit and a compelling, repeatable business model. It’s merely looking to execute, maintain and incrementally improve upon this money-maker.
A typical startup founder might label a large corporate as a slow, time-wasting, monolithic organisation whose employees are laggards and care too much about mitigating risk, watching the clock and therefore spending all of their time in pointless meetings.
A corporate executive might label a startup as a band of cowboys (and cowgirls) moving quickly, breaking things and throwing caution to the wind insofar as risk management and due diligence is concerned. They might think that a startup is in the habit of releasing half baked products to market, with no methodical process being followed and figuring stuff out as they go.
There might be some semblance of truth in both of these assumptions, but therein lies the mutual benefit and if a large incumbent is serious about deriving value from startup partnerships, it needs to learn how to speak the language and align its processes.
Startups that learn the fastest win
Eric Ries’ statement is truer today than it was when The Lean Startup was released in 2011.
Startups rely on speed so much so that entire industries have popped up, seemingly overnight, to support the optimisation of almost everything.
From food consumed, calories burnt, ketone and blood oxygen levels, sleep patterns, moods, brainwaves, fitness levels, productivity, distance jogged and more, the desire to measure and manage is perhaps highest amongst startup founders and employees.
This extends to the use of automation and outsourcing tools which help startups play on 11, to quote the delightful Nigel Tufnel from mock rockers Spinal Tap.
If you’ve gone to college, scored a gig for a large investment bank and then quit to follow your dreams and work for a fraction of what you were making at a large firm and your business only got 6 months of lifeblood left before it begins its quick fade into oblivion then you’ll do whatever it takes to make things work. If you’ve only got five employees, you’ll monitor and optimise so that five operate as if they were 10, 15 or even 20 equivalent full-time employees at a large organisation.
This is what the entire growth hacking movement which is gaining serious traction in Silicon Valley and beyond was born out of. Necessity.
If you don’t have bags of cash to throw on expensive above the line, (and often underperforming) advertising and public relations campaigns, you’ll find other ways of getting the word out such as leveraging the audiences of influencers for free by providing some form of value.
To reiterate this point, Google Ventures’ Jake Knapp and John Zeratsky who co-authored the best-selling book Sprint, run a Medium blog called Time Dorks, all about making good use of time.
You’ll be far more diligent with every dollar and every minute spent.
With this in mind, anything that slows down a startup radically compromises its chances of success.
If you’re a corporate executive who likes to take meetings with startup founders because you feel you’re doing them a favour or simply want some light entertainment to get a break from your day job, stop. You just might be getting in the way of the next Elon Musk, Jeff Bezos or Mark Zuckerberg changing the world, or failing that, you just might be getting in the way of a budding young entrepreneur realising their own dreams and making life better for a niche set of consumers.
If you’re the type to lead a startup on insofar as investment, partnering or purchasing goes, and chew up their resources by asking them to “submit a proposal” that you have no serious interest in or budget for - please, just stop. Startups can’t wait for important decisions to go before steering committee meetings that might take months to coordinate.
Ensure you align on communication and expectations. Setting up a process or unit internally to move in lock step with a startup is key if you seriously plan to work with them.
Having said that, startup founders who have never spent any time in the corporate world would be well advised to educate themselves on how corporates work as well.
With that in mind, here’s a simple do and don’t chart for both corporates and startups working together.
The world is moving faster than ever towards uncharted territories and large incumbents can learn and benefit a lot from startups that thrive on being adaptable and navigating uncertainty is par for the course.
Partnering, investing and acquiring startups all makes a world of sense in what is often a nonsensical world but only by taking the time to diligently navigate the when, who and how of corporate startup partnerships are large incumbents likely to derive any value above and beyond press clippings that the startup ecosystem is so damn good at generating.
This was an extract from Corporate Startup Partnerships 101
In this ebook, we provide an overview of how customer expectations are changing, what technology and business models are disrupting insurance, and how incumbents can drive internal and external innovation to best prepare for the disruption.