What was once a relationship fraught with unfamiliarity between global businesses and startups is increasingly collaborative, with both parties far more self-aware of what they need to do to make it work.
Proof of this shift was evident at CES, where executives from Amazon, Ford, Motorola and Universal Music were among a flurry at the conference who were just as interested in meeting entrepreneurs as they were their peers at the big agencies and technology firms. But rather than just wax lyrical about why they should work together (as is usually the case), each group was far more willing to drill deeper to discuss how they might have stifled one another in the past but are now using those experiences to foster mutual benefits.
This shift was magnified at Eureka Park, CES’ melting pot of marketers and entrepreneurs, where those who were on panels debated the large gap between fact and fiction for fostering innovation. In many cases this won’t (and can’t) be about partnerships with incubators and funding startups, they concluded. Rather it’s about setting a very clear vision on the brand side, starting with a small cross disciplinary team made up of people with real experience and a clear mandate from the board to work in an autonomous way and generally avoid anyone within an organisation with the word ‘Innovation’ in their job title.
It’s no coincidence that the more pragmatic views on leveraging big brands came from those marketers at organisations that employed experts who know what it takes to scale innovation. Jessica Robinson, director of Ford’s Smart Mobility effort, who joined the car marque last year from accelerator Techstars, said as much, claiming that those who understand both big businesses and startups are much likelier to “have the patience to work internally” and the “urgency to work with [entrepreneurs” to get something done”.
And even this isn’t always enough. Not for Coca-Cola anyway, which shuttered its own startup incubator last month despite it being run by David Butler, who has years of experience with startups as Coke’s vice president of design and a stint at SapientNitro. Time will tell whether Ford will reach the same conclusion but Robinson assured that it is at least trying to change, mindful of the fact that it must take the time to nurture the entrepreneurs it one day hopes to be profitable with.
“We’ve been reframing how we think about engaging with startups and that attitude is no longer just to see them as an investment but to really think of ourselves as an early customer in some ways,” said Robinson. “That’s not how we initially approached the program but we’ve seen great success there recently and that’s come with some pain too because we didn’t necessarily have the purchasing protocols to be able to acquire some of the services that we wanted. We had to build them on the way. Finding someone who perhaps has sat on both worlds and has the patience to work internally but the urgency to work with [entrepreneurs] to get something done is actually I think is really important.”
Someone like this could be the difference between a startup’s first cheque and them being led up the garden path. At least it was to Rodney Williams, chief executive, of audio technology company LISNR, who says his team will now often try to follow those clients from company to company as way to avoid the complexities of trying to start a new relationship. His rationale being that from that one person starts the other connections to all the other people needed in an organisation to craft a long-term partnership. Indeed, one LISNR deal saw Williams and his team meet with 10 people to close.
It chimes with the view of Alex Crosby, the chief executive and founder of Hero, a mobile app designed to help curb drink driving. “The risk of just having one point of contact is that there’s your choke point; if you try to ladder off of that one relationship but that one person is busy with something else then who do you go to?,” he mused.
“Instead of going straight into a sell or talking about the business side, hitting the buyer hard, ask for feedback. They’ll realise that you’re a person and if they like you then that’s going to be going to the differentiating factor.”
Beyond that, entrepreneurs need to “know what you’re asking for before you go to companies,” advised Stephen McDonnell, senior manager for the MotoMods Ecosystem at Motorola. As obvious as it sounds, McDonnell noted that there are many instances where startup founders haven’t researched their pitches enough – “have a specific question to match your passion and your plan,” he argued.
Currently, Motorola’s work with startups is small in comparison to the likes of Ford, meaning McDonnell and his team can invest more time in projects if they are properly articulated. Those projects that are commissioned will work toward creating hardware for mobile devices, realising the manufacturer’s belief that “innovation will come from hardware, whereas up until now it’s been software-led”.
“I think it’s really important, especially for startups to be flexible in the way they approach big companies,” said McDonnell of the traits a startup needs to be successful in his organisation. “You have to be able to deviate from the plan because we’re talking about a moment toward your success.”
And if that doesn’t work then “mention who else you’re working with argued,” explained Crosby. What he means is that his peers need to be able craft urgency around initial conversations with prospective clients and there is no better way to do this than revealing a rival business is also waiting in the wings.
Payment is still a big issue for startups, with many having to wait for an agency to pay them or worse still receive payment months after they have delivered. Aside from the constant pressure from founders to pay up, companies need to review and in the case of Ford change the way they procure innovation on this scale or risk consigning whatever they’ve worked on to a one-off PR stunt or trade demo.
When Ford had the same issue with a startup las year it changed the T&Cs in its contracts. Robinson shed light on exactly how this happened: “We were working on a project with a startup when we realised that the T&Cs are broadly setup for a vendor relationship rooted in product development, with very specific terms whereby we effectively were saying ‘anything you buld for me [Ford] I own'. We had to figure out how to update those with new language to say the work we’re doing for these projects superseded the global T&Cs of agreements. That’s the type of framework that enables to grow the startups we’re working with.”
From the polarisation of societies to rising income inequality, the global economy is at risk from all sides in 2017, pushing businesses to seek out a way cut through the uncertainty. Start-ups can provide that alternative, and the signs are there that brands are starting to realise it. Between 2010 and 2015, the number of corporations pursuing venture investments rose to more than 800, according to Global Corporate Vending. On top of that, venture capitalist CVC spread nearly $30bn in funding across more than 1,300 deals, surpassing 2014’s previous record of $16.7bn across 1,245 deals.
“Sometimes you have to be self-aware about your own product and service and where it fits within that company,” said Ford’s Robinson. “If it’s not within an established platform then its probably more for someone versus the roadmap that they already have and if you have an internal champion then they will run the gamut for you to make that work. That’s where being self-aware helps because you’re able to say there’s no clear pathway so let’s build that relationship together and recognise that it’s going to take more work.”