Partnering with startups is a great way to accelerate the entire corporate innovation journey. In fact, Techstars and Innovation Leader recently partnered to reveal best practices for leveraging startups to drive corporate innovation.
A well-run corporate accelerator can be directed to align with your specific needs and goals to:
- Help startups and their technology evolve in ways that meet your corporate needs, so the company builds the perfect product for you;
- See the future of your industry through the lens of entrepreneurs who are trying to disrupt it;
- Shift company culture to move faster and reduce inefficiencies and costs.
In order to meet these goals you will want to check that what you’re looking at is truly an accelerator. The Techstars mentorship-driven accelerator is not a field trip, hackathon, or “innovation theater.” It is a comprehensive solution to accelerate innovation. The best corporate accelerators include:
- Program leadership with a demonstrated history of growing their own companies and helping other startups succeed;
- Early-stage startups that can partner to meet your corporate needs or accelerate industry disruption.
- Curriculum for founders that both helps their startups succeed and de-risks investments for the corporations.
- Strong mentorship, providing founders and executives with the opportunity to learn from each other and build strong networks;
- Commitment, and the understanding that your accelerator will grow in value and returns over time, through a stronger investment strategy and internal corporate capability.
Five Ways To Get The Most Out of Your Corporate Accelerator
At Techstars, we have seven years of experience running corporate accelerators. To date, we have run 83 corporate accelerators in 12 different countries. Through our experience we’ve distilled five key principles that we share with our corporate partners—before the accelerator begins.
You’ll get as much out of the accelerator as you put into it.
This is truly the number one piece of advice for corporations going into their first year of an accelerator program. In fact, it’s the number one piece of advice for the founders as well.
The inaugural Comcast NBCUniversal LIFT Labs Accelerator, Powered by Techstars, successfully launched in 2018, and is welcoming a second class in Philadelphia in July 2019. With a corporate accelerator, “You’ll get as much out of it as you put into it,” said Danielle Cohn, Executive Director of Entrepreneurial Engagement and the Head of LIFT Labs for Comcast NBCUniversal. “You need to have a dedicated team to work with your partner. It takes a lot of time, energy, and effort to educate your internal stakeholders, but without this, you won’t have buy-in from the company. You won’t meet your goals.”
Matt Kozlov, Managing Director at Techstars, who has managed three classes of the Cedars-Sinai Accelerator, Powered by Techstars and is now preparing for the first year of the Techstars Starburst Space Accelerator, agreed: “The program is only as valuable as the amount of time and attention the executives and the organization pay to it.”
Cohn explained, “We hired Techstars to run our program, but you can’t just do that and walk away. The benefit of having an outside partner is that you’re learning from them and they’re learning from you, and you’re each accessing the other’s subject matter expertise.” Involvement and outright enthusiasm from your corporate leadership will ensure that everyone knows that the accelerator is a priority. Get executives involved as mentors, and they will both help the startups in the program succeed and bring back profound lessons on startup speed and flexibility to their regular jobs.
One great way to ensure that the accelerator gets the support it needs from the corporation is to build engagement with the accelerator into goals or KPIs for everyone involved. Offer incentives—bonuses or other rewards—for outstanding work on the accelerator. Most of all, make it clear to the entire corporation that work on the accelerator is now part of the job, not something tacked on. If you don’t do this, the accelerator can too easily become an afterthought, rather than a launchpad for successful corporate innovation.
2) With startups, the team is exponentially more important than the product. Choose founders who are flexible and take feedback well.
One error that corporations consistently make when choosing startups for their corporate accelerator is getting excited about a company’s product or tech, and ignoring the team.
The startups that benefit most from an accelerator are early stage. Their product is likely still evolving—in fact, this can be a benefit to your corporation, because you can work directly with the startup to develop a product that meets your needs.
“A great founding team can take feedback from every level of the corporation, and then incorporate that feedback into a product. They can adapt to what the corporation is looking for,” Kozlov said. “When you create the right environment, where startups can interface across the entire corporation, then the corporation and the startup can collaborate over three months, and the result is incredible companies and partnerships.”
Kozlov recalled one startup that pivoted early on, and ended up going through at least fifty different product ideas with a corporation before they found one “big enough and important enough to execute on.” A couple of years later, this company is the most valuable one to come through that program.
When selecting companies for the program, over-emphasize finding the best teams, and the products will develop organically.
3) Startups move very, very fast. Be prepared to work with this—and learn from it.
“Founders move very, very fast. They have a different cadence from a large organization,” said Yossi Hasson, currently Managing Director of the Alchemist Blockchain Techstars Accelerator and formerly MD of the Barclays Accelerator, Powered by Techstars in Cape Town.
This difference in pace poses both challenges and opportunities. Jens Festervoll, corporate liaison for the Techstars Energy Accelerator in Partnership with Equinor, experienced this firsthand during Equinor’s first accelerator. He reported that nearly 80% of the mentors who worked regularly with startups in the program said that they would work differently in the future, with more agility. This taste of startup speed became the seeds of cultural change, as executives started to see ways to be faster and more flexible in their working lives, making them more efficient and more engaged.
Techstars Network Engagement partner QBE strives to be a “Partner of Choice” for startups, and finding ways to work at startup speed is one part of their plan. Ted Stuckey, Managing Director of QBE Ventures, explained: “Our belief isn’t that startups should be held to a lower standard of security/risk, but rather that we have to be able to address those risk and security concerns faster than we do with companies that have the capacity and teams dedicated to dealing with a large corporations’ processes.”
Learning how to work at a different pace, and the impact that has on process and procedure, can be challenging. In the end, the biggest opportunity is learning how to add sprints into your marathon training.
4) Streamline your procurement process before the program begins.
“A startup in a 13 week accelerator expects things to happen really quickly,” Hasson said. “Do everything you can—before the program starts—to shorten the amount of time it takes for your corporation to work with these startups.”
Both Hasson and Kozlov agree that doing as much as you can in advance to help startups navigate your procurement processes is best. The standard legal review process, for example, can be a huge hurdle for startups. “Legal fees can kill a startup,” said Kozlov.
“Take some time to really understand what the procurement process is before the program starts,” Kozlov said. “Turn as many pieces as possible into short, simple templates that startups can easily use.” Kozlov also suggests setting aside some R&D budget in advance, so there’s money available to support companies in their commercial pursuits with the corporation.
Meeting startups halfway—by streamlining forms and processes or taking meetings quickly—is essential to making the progress you’re hoping for from the program. An accelerator program goes by very quickly, and you won’t want to waste any time.
5) The program isn’t over when it’s over.
Founders often tell us that they accomplish more in the three months of a Techstars mentorship-driven accelerator than they would in a year and a half without it. But even at this highly accelerated pace, there’s plenty to do afterward.
Your involvement with the startups in the program doesn’t end with Demo Day. If all has gone well, during the program these startups have learned a great deal about your needs, and together you’re starting to run pilots or develop products.
Cohn is proud to report that eight of the 10 startups from the 2018 Comcast NBCUniversal LIFT Labs Accelerator, Powered by Techstars are now working with Comcast NBCUniversal brands including Comcast Cable, NBCUniversal, and Universal Brand Studios.
“It took a lot of hard work from the companies themselves, from our team, our business leaders and mentors, and from the procurement team,” Cohn said. “We all wanted to help these companies grow and try new things, and that effort from across the corporation led to this exceptional success rate.”
Looking Toward Year Two…
All of these learnings hold true for subsequent years of your accelerator as well. The big opportunity after year one is to do all of them even better and to streamline the processes even further.
Follow this advice, and your corporation will almost certainly meet its innovation goals. That’s a predictable result. The surprise you may find as you start to engage with the accelerator is how much the mentors from your corporation will learn from the process—and enjoy it.
“Our mentors learned as much from the companies as they gave,” said Cohn. “They’re all eagerly awaiting the next class. They can’t wait to mentor again!”
Not Ready for a Corporate Accelerator? That’s OK.
A corporate accelerator is one of the best ways to stimulate true innovation, but if your corporation isn’t ready for the commitment of a corporate accelerator, there are other great, quick ways to engage in valuable and meaningful ways with startups. You can boost intrapreneurship within your corporation by running an Innovation Bootcamp—a three-day event that empowers your internal innovators to solve real problems. You can build lasting relationships with entrepreneurs through sponsorships. You can engage directly with targeted startups in your industry that are solving your problems right now.
When you’re ready to accelerate innovation in your corporation, Techstars is ready to help.
Learn more about Techstars Mentorship-Driven Corporate Accelerators.
Learn more about all of Techstars Corporate Partnership Opportunities.
If you spot a blur speeding through the bright, airy space occupied by Comcast NBCUniversal LIFT Labs Accelerator, powered by Techstars, it’s probably Danielle Cohn.
She’s the Executive Director of Entrepreneurial Engagement and the Head of LIFT Labs for Comcast NBCUniversal, and she moves fast. Officially, she’s the corporate liaison, but her true role is so much more. As she explained, “Really, our team was side by side with the startups the whole time they were in the program.” She and her team met with the 10 startups in the program every week, helping them refine what they were looking for from their other mentors. “We helped them hone in on the outcomes they were interested in. We’re about getting results.” She also helped them connect with business units within Comcast NBCUniversal that might be interested in giving them feedback.
Danielle is an entrepreneur, as well. “I’ve had a couple of startups myself,” she said. “I’ve always had a side passion project because I’ve found it keeps me fresh.” She’s the first to say how much she learns from other startups. “I work with startups every day, and it gives me a reality check when I have my own. You have to be extremely nimble; you’re doing it all for yourself!”
Her experience on both sides of the startup-corporate divide makes her the perfect bridge between these two such very different entities. She is determined that both the startups and her corporation get the most out of the accelerator—and during the 13 weeks of the program, eight startups got a pilot off the ground, an exceptional success rate. By the end of the calendar year, three companies had additional contracts with Comcast Cable, NBCUniversal, or DreamWorks, and all the rest were still working with some part of the corporation. Three of the companies now have a presence in Philadelphia.
How does she do it? She has four rules for herself—and other mentors. Here’s how to mentor—and Give First—like Danielle does:
1) Have fun doing this.
“Mentoring shouldn’t feel like a burden. It should feel like something you want to do,” Danielle says. If you don’t have the time, be honest—with yourself and with the founder—and bow out. Otherwise, let yourself enjoy the craziness of watching—and helping—a startup grow, change, and find itself over the course of 13 weeks. Or even beyond… Some mentors stay involved with the companies well after the accelerator program ends.
2) Be responsive.
“They only have 13 weeks. You’ve got to be responsive,” Danielle says, and you know she means it. Fortunately, she has some additional advice on how to do this well. “If you need to, bring someone to do your follow up. You’re going to walk out of the meeting with a to-do list of asks.” Someone has to do them—if not you, then your designated representative can look up names, make introductions, find that elusive bit of data that wasn’t at your fingertips when you wanted it. The important thing is that if you say you’ll do something, it gets done—fast.
3) Set expectations.
“Part of your responsibility as a mentor is helping the founder realize that 10 asks just isn’t realistic. They have to pick one to move forward with.” At least one at a time. Yes, you’re a mentor, but that doesn’t mean you have endless bandwidth. You can also help them understand which of their asks is going to do the most to get them where they want to go.
4) Be ready to learn.
“Mentoring is a very rewarding experience, and I highly recommend it.” Along with the pleasure of sharing knowledge comes the very real experience of learning from the entrepreneur you’re supposed to be mentoring. “I learn from startups all the time,” Danielle says.
Techstars connects the world’s largest corporations with the most promising technology startups. Learn more about becoming a Techstars partner!
By Ted Stuckey, Managing Director of QBE Ventures
For the past year, we’ve been promoting—both internally and externally—the concept of QBE becoming the “partner of choice” for startups. We’ve been inspired by the work that companies like Barclays and Stanley Black & Decker have put into their partnerships with Techstars. One of many great examples is the collaboration between Crowdz and Barclays to move B2B payments online. Stanley has not only reaped multiple benefits through pilots and collaborations, but they’ve also shown a clear commitment to helping their partners grow through funding and other follow-on support. Many of the decisions and initiatives we, as QBE and as QBE Ventures, have made and undertaken are a direct derivation of this idea.
But what does being the partner of choice mean?
As one of the largest international commercial and specialty insurance carriers, pivoting and adapting takes time. We’ve recognized that we cannot adapt to the changing times by ourselves and that we need to find partners who will help us and challenge us to be better. In an industry ripe for disruption, we need partners who will dispute the status quo and push us to reexamine our assumptions.
The need to collaborate with startups—and the benefits of collaborating—are unquestionable; however, too often we’ve seen partnerships fail and result in disillusionment on both sides.
Here are a few of our key learnings for successful collaborations between corporations and startups.
Speed it Up
Corporations need to be much more forthcoming and transparent about what their requirements and processes are. One of the healthy debates we’ve been having as a company is whether or not startups should be given special treatment. Over the last few months, our stance as the Ventures team is yes—but not necessarily in the way that you might imagine.
Our belief isn’t that startups should be held to a lower standard of security/risk, but rather that we have to be able to address those risk and security concerns faster than we do with companies that have the capacity and teams dedicated to dealing with a large corporations’ processes.
Startups often don’t have the resources in place to engage in a multi-month process of negotiations and paperwork. On the flip side, as a corporate partner, and hopefully one of the first large enterprises many of our future startup partners will work with, it’s our responsibility to help the startup understand what is essential when working with a large enterprise and to help prepare them for future interactions with less startup-friendly enterprises.
Innovation at the Desk Level
Corporations must strive to engage with startups and be innovative at the desk level, not just at the highest echelons. Breaking down silos and educating stakeholders internally about how to engage and work with startups has to be a focus.
It’s important that all stakeholders involved understand that engaging with a startup offers the company a chance to work with new and exciting technology, but that the engagement also brings its own suite of challenges. Corporations need to understand and prepare for what will be required to scale and need to be able to keep the project within scope.
Be Honest, Be Brutal
The most important element for a strong partnership is communicating often and clearly with the startup. Be honest, be brutal: it’s better than a no after a slew of calls and meetings filled with nodding faces.
As with all partnerships, success depends on both parties and, just as corporations must be transparent about their needs, startups need to be upfront about their needs as well. It’s essential that startups offer corporations a well articulated, relevant, and easily understood value propositions.
Push Us To Be Better
It’s key that startups take the time to understand the corporation they’re partnering with, from the corporate hierarchy to the infrastructure. Startups should have a plan for what a full implementation should look like and the resources required. But most importantly, push the corporations. Push us to be better, to approach problems creatively and challenge our preconceived notions.
As a Techstars Network Engagement Partner, we’ve not only engaged with Techstars accelerators around the world that align with our innovation and strategic priorities as a way to deal source, we’ve also helped startups in adjacent verticals figure out how to better approach the insurance space and better navigate a massive multinational enterprise. Being a part of the Techstars network has also given us access to the Techstars Partner community, where we have built peer relationships and shared best practices.
Our job at QBE Ventures is as much to prepare the business to be the partner of choice as it is to help our startup partners prepare to be the partner of choice for other corporations. Our partnership with Techstars as a Network Engagement Partner is one of the many steps we’ve taken to achieve that goal.
Research shows corporations create coherent partnering and investing strategies with startups
BOSTON & BOULDER, CO – Innovation Leader today released a new survey sponsored by Techstars, the worldwide network that helps entrepreneurs succeed, which shares how executives at large corporations are approaching engagements with startups and other disruptors to fuel corporate growth.
The survey, Startup Engagement: Best Practices for Large Organizations combined quantitative data from 115 large organizations with 15 qualitative interviews to reveal ways that corporations currently engage with startups, and sheds light on best practices for companies looking to leverage startups to drive internal innovation.
While some startups are determined to go it alone, motivated by the disruption of established industries, others are eager to partner with large organizations for mentorship and advice, joint product development, access to markets, funding, and the potential of a large equity event in the form of an acquisition.
Survey research found that large corporations range in their experience and willingness to work with startup entities. Of the five percent of corporations with the highest level of experience with startup engagement, research found that providing mentorship, sponsorship and participation was at a much higher rate (88 percent) than corporations with less experience (57 percent). More experienced corporations are also more likely to partner with startups to co-develop new products (79 percent) than corporations with fewer startup touch-points (51 percent). More experienced companies are also more likely to participate in university startup programs (85 percent) when compared to less experienced corporations (45 percent).
But many companies have not put a game plan in place to connect to their startup ecosystems. In fact, the survey found that 19 percent of corporates said they haven’t yet established goals for startup engagement; 47 percent haven’t defined a clear “point of contact” internally who will be responsible for startup interactions; and 38 percent of corporates don’t yet have metrics in place to track the impact of their startup engagement activities.
“Our experience tells us that it’s not a question of if this disruption will occur, but when,” says David Brown, founder and co-CEO of Techstars. “We saw a way to turn this situation into a win-win. For a large corporation, the best path to true innovation—cultural change as well as problem-solving and avoiding disruption—is to partner with startups. We realized that if we could bring together the corporations that were the most willing to innovate with the top technology startups that have the deepest domain expertise, both would benefit.”
The research suggests that large corporations with the most startup interaction are more willing to work with startups across every category of engagement, including corporate VC investment, running a startup-focused technology accelerator, acquiring startup technology, becoming an early customer of startup products and services or reselling their technology to their customers. Willingness to work alongside startups creates mutually beneficial circumstances for both the startup and the corporation.
The research also shows that more experienced companies were similar in their approach to their goals for working alongside startups. All companies said the top goal was running pilot tests or proof-of-concept tests for new ideas, followed by “driving internal transformation” by using startup tools and methodologies, and to better understanding customer or tech trends. Just 29 percent said they were hunting for potential acquisitions.
“We met over the last four years with 1,500-plus startup founders around the world and asked them what would make a great corporate startup partnership. Everything we designed kept their input in mind,” says Danielle Cohn, Executive Director for Entrepreneurial Engagement, Comcast NBCUniversal and one of the interviewees featured in the Innovation Leader report. “At the conclusion of our first accelerator class, seven of the 10 companies were doing some form of a partnership with Comcast NBCUniversal businesses, including two that have entered into master services agreements with our company.”
In addition to the research results and interviews with corporate leaders, the Innovation Leader report includes a roadmap for corporations looking to work with startups — from establishing a strategy to identifying the people who will be involved to assessing progress. For more information, download the full report.
Techstars is the worldwide network that helps entrepreneurs succeed. Techstars founders connect with other entrepreneurs, experts, mentors, alumni, investors, community leaders, and corporations to grow their companies. Techstars operates three divisions: Techstars Startup Programs, Techstars Mentorship-Driven Accelerator Programs, and Techstars Corporate Innovation Partnerships. Techstars accelerator portfolio includes more than 1,700 companies with a market cap of $18 Billion. www.techstars.com
About Innovation Leader
Innovation Leader is a fast-growing media and events company with a laser focus on helping the world’s largest companies build their competitive advantage. Since 2013, Innovation Leader has built the largest network of corporate innovation, strategy, and R&D executives in both public and private companies, helping these executives to strengthen their innovation programs; connect with useful resources, solutions, and vendors; and engage with peers inside innovative labs and workplaces around the globe. For more information about Innovation Leader membership and events, visit www.innovationleader.com or follow us on Twitter, LinkedIn and Facebook.
Today, global energy corporation Equinor and startup Crux OCM are working together to test Crux OCM’s software, which functions as an “autopilot” for oil and gas control room operators. It’s early days yet, but if the Crux OCM solution works and scales, it will lead to efficiencies, cost savings, and new revenue opportunities for Equinor.
This sounds like a pipe dream: a startup and a large corporation partnering to give the startup a first user to test their idea and the corporation the kind of solution that would have taken years to develop internally.
In reality, this kind of partnership can be a rapid win-win, but only if approached the right way. Startups and large corporations think and work incredibly differently—and too often, great ideas get lost in translation. The first hurdle is identifying startup founders with deep domain knowledge who are at the top of their game.
Identifying the Stellar Startups
“We did not really know what we were getting into,” said Jens Festervoll, corporate liaison for the Techstars Energy Accelerator in Partnership with Equinor. “Equinor is a global energy company and wanted to partner with an accelerator company that had a reach into global startup ecosystems and a reputation for attracting top talent.” They were hoping to identify and work with truly stellar startups with products or solutions that could make a real difference to Equinor, and to inject a dose of startup culture into the company—but they also knew that working with startups would bring special challenges for a large corporation like Equinor. And so an accelerator was born.
From the moment she heard about the Techstars Energy Accelerator in Partnership with Equinor, Crux OCM founder Vicki Knott knew she wanted in. “The same day applications opened, the founder of Crux OCM hunted me down,” said Audun Abelsnes, managing director of the program. “Vicki’s real obsession for a niche problem like increasing the volumetric throughput of pipelines appealed to me. Techstars backs exceptional founders, and I immediately felt there was something special about Vicki.” Crux OCM indeed proved to be an exceptional startup, with a great team that was ready to #domorefaster.
The Startup Culture Injection
But Vicki did have some hesitations: “We were worried that the experience would be the same as all of our interactions with large corporations up to that point—that progress would be so slow we would not be able to determine and secure a trial opportunity within the three months of the accelerator.”
It’s true that corporations and startups work at different speeds, and this can cause friction. “The speed and sense of urgency is just totally different between a energy major like Equinor and any startup,” said Audun. Fortunately, Audun is also positioned to help ease this tension. “I have unique access to senior management in Equinor that can help and push the needle forward if necessary.” He gave Equinor the tools and methodologies to build trust with the startups in the program, creating strong channels of communication and overcoming cultural barriers.
For Equinor’s part, Jens reflected that he and his colleagues “appreciated the speed at which these startups expect things to happen, and the fact that we do not work that quickly.” But the Equinor people who mentored the startups in this program—giving their time and attention on a regular basis, week after week—found that they were changed by the experience. Nearly 80% of these mentors said that they would work differently in the future, with more agility. That taste of startup culture let them see ways to bring elements of it into their working lives, making them both more efficient and more engaged.
“We need this cultural change,” said Jens.
The Measurable Power of Mentorship
Techstars not only brought startup speed to Equinor—mentors also got first hand experience with the Techstars value Give First. This means helping others whenever possible, without expectation of a transactional return. It is the essence of mentoring. “The Equinor staff was so welcoming and open to the Techstars companies,” Vicki said. “All individuals in the organization did their very best to help us and fully embraced the Techstars #GiveFirst mantra.”
Going into the program, Crux OCM saw their technology as a solution for oil pipelines. Equinor mentors like Jofrid Klokkehaug, VP of operations and maintenance, and Ulrik Olbjørn, the digital lead for Equinor onshore, helped Vicki realize that she could expand this vision. The software was just as applicable to the 5000 miles (8000 km) of integrated gas pipelines and facilities on the Norwegian continental shelf. Thanks to this insight, Crux OCM had a great new market to attack—and Equnior had a potential solution to a problem.
That’s the beauty of Give First—you always do get something back. You just don’t know what or when it will be. In this case, the benefits for Equnior came quickly: “Crux OCM will test their solution on a small Unit at our Snøhvit LNG facility as a first user,” said Jens. “If the tech works, then there is an opportunity to scale to more complex systems, adding more value.”
A Win-Win Times Six
With this accelerator, the company was looking to “improve Equinor’s ability to innovate and drive change,” said Jens. Less than a year after the first class of the program, Equinor is seeing gratifying results.
They’ve experienced the high quality of Techstars startups, overcome cultural barriers that made trust and communication difficult, and infused some of that energizing startup culture into their corporate culture—and these are just the intangible successes. Crux OCM is one of six startups from the program that are exploring potential solutions with Equinor. That’s a win-win times six—and a very measurable, and speedy, path to creating value.
By Chris Pearson, Manager, Partnerships | IBM Digital Business Group
I’ve spent my fair share of time mentoring startups, and when we meet for the first time, I always begin by asking the founders a seemingly simple question: “Why are you doing this?” Answers to this question come in different forms, typically to the tune of “We’ve noticed a gap in ‘x’ market that we can expose,” or “We have an innovative product that can revolutionize the way ‘y’ business is done,” and of course the ever so original “We’re the Uber for ‘z.’” It’s always great to get a picture of the product these founders are developing and to witness their excitement about the potential impact it can make, but none of those really answer the question I’ve asked. They’re all telling me the what and how but not necessarily the why. The reason I specifically ask “Why?” is that this question requires the founders to defines their purpose—and I believe that understanding your purpose is the foundation on which companies can truly thrive.
“He who has a why to live can bear almost any how.” These wise words, written over a century ago by Friedrich Nietzsche, are just as true today as they were then. Circumstances change, markets shift, new innovations arise, all of which are uncontrollable factors that can impact what and how, but if you have firmly established your why, there will be very little you cannot overcome.
Determine Your “Why”
Simple questions don’t always yield simple answers. The purpose behind our actions, let alone our business, isn’t necessarily easy to define and oftentimes takes a bit of digging, but once you have it, the decision making process becomes significantly easier across the board. As a founder, you have to account for hundreds of decisions on a daily basis, each of which can potentially take you any one of a hundred directions. The benefit to understanding your purpose is that it acts as a compass in your decision making. Whatever answer or course of action aligns most closely with the central purpose you’ve identified is the decision you make, period.
For me personally, I decided years ago that my purpose was to help foster growth across the startup ecosystem. I’m not a founder myself, but I have recognized a pattern across history: civilizations tend to thrive—and reach their pinnacle—when they are focused on innovation. Creating solutions that make life and business more efficient and effective is a central theme in growing societies, and I believe that is just as true today as it’s ever been.
I developed this mission shortly after joining 500 Startups in a business development role after many years in corporate finance, and it was this idea that opened my eyes to a missing component in the startup ecosystem. I realized that enterprise companies play a critical role in the development and growth of startups and that the development of startups plays into the long-term success of enterprise companies. For the sake of time, I won’t dive deeply into the subject. Here is a reason so few large corporate entities survive, or at least maintain, a high level of success beyond three generations—and it revolves around their inability to accept and buy-in to innovation.
Partners for Innovation
It was this revelation that led me to take a role at SoftLayer, which ultimately fully migrated into IBM, where I’ve worked to become a key figure in the development and execution of our startup program Startup With IBM. Our objective is to manage a program that not only provides startups access to our technology through credits and more importantly positions those companies that work with us to reach our global network of clients and partners in order to help them find customers and generate revenue. We want to leverage the strength of what IBM is today to create meaningful value for the growth and development of these startups who will ultimately determine what IBM becomes in the future. If we can serve these startups well, helping them grow and scale on our cloud, as more than just as technology providers but also as a business partner, then we have the opportunity to become a core piece in the success of the next generation of these companies. By design, our program is only successful when startups are successful first. The goal is to create a structure that serves and supports founders by leveraging IBM’s core competencies to give them the tools and resources they need to do what they do best: innovate.
It’s yet to be seen whether or not our complete vision will come to fruition in the end. What we do know is the why behind what we’re doing, and every decision we make for this program will be to serve that ultimate purpose as we go forward.
Learn more about how Techstars partners with corporations to promote innovation—within corporations and for startups.
Techstars, the worldwide network that helps entrepreneurs succeed, announced today two new ways that will help Fortune 500 companies engage faster with the Techstars Network to drive innovation and disruption in their industries: Techstars Network Engagement Program and Techstars Innovation Bootcamp.
Long known for its worldwide mentorship-driven accelerator programs, Techstars created the new programs to help large corporations confront the threat of disruption to their businesses faster. Techstars has more than 1,600 startups in its accelerator portfolio with a market cap of more than $16 billion. By connecting early-stage companies with larger corporations looking for innovative solutions, Techstars is helping startups in our network succeed, while also helping large corporations stay closer and engage earlier and more effectively with disruptive innovations.
How? Through two way mentorship. Startup founders provide insights and technology solutions that represent the disruption that large corporations are seeking. Corporations are able to offer startups business development opportunities, market insights, proof of concepts and potentially investments. It’s a win-win partnership.
Take Amazon’s acquisition of PillPack (a Techstars company). PillPack, a tiny start up, moved the entire global pharmaceutical market, putting companies like Walgreens and CVS in danger of losing enormous portions of their core business because they weren’t thinking ahead or outside of the box. Techstars’ new programs puts disruptors in direct contact with large corporates so that they can work together to solve business challenges before they’re in competition with each other.
About Techstars Network Engagement Program
Techstars Network Engagement Program provides corporate partners with unparalleled access to the Techstars worldwide network of entrepreneurs. Techstars Network Engagement Program helps partners identify internal challenges, implement proof-of-concept solutions, scale new technologies and expand their portfolios.
“By partnering with Techstars, we’re able to take advantage of their proven ability to source and support the world’s most promising startup founders and help them achieve lift-off through initial investment, business development and mentoring. Through local engagement with QBE subject-matter expertise and leaders, we hope to provide a strong network of mentors and supporters to help Techstars entrepreneurs succeed – at every stage of their journey,” Ted Stuckey, Managing Director of QBE Ventures.
About Techstars Innovation Bootcamp
Techstars Innovation Bootcamp is a 54-hour internal innovation event that empowers employees at large corporations with an intense, yet fun, process to help identify and rapidly advance new business concepts. Cross-functional teams pitch business innovations to a panel of judges at the end of the 3-days with a goal of further advancing their ideas. Techstars Innovation Bootcamp creates a culture for advancing entrepreneurial ideas, learning startup methodologies, and rapidly advancing new business concepts.
“Equinor piloted our first Techstars Innovation Bootcamp in London earlier this year and, after a successful program, we rolled out additional programs in Stavanger, Oslo, and Houston.
The Techstars Innovation Bootcamps have had three benefits: (1) Exposing Equinor employees to the startup business culture (i.e. toolkit, mentors, pace of delivery), (2) Rapidly assembling a meaningful portfolio of investible innovations and (3) Strengthening the engagement between the Corporate Innovation Function and the Business Lines.
The co-ownership with Techstars on bootcamp outcomes and the ability to create a healthy tension between startup business practices and corporate expectations have been keys to our success.” Laurent Poncet, Head of Business Model Innovation at Equinor.
A quick New Year’s shoutout to everyone with love and care for early-stage acceleration. 2018 marks year four of our METRO Accelerator powered by Techstars. Since the 2015 launch of our first Techstars program, we are (proudly) looking back across three years of building and running a bona-fide startup development system – a first for METRO, a first for our customers, and a first for the hospitality industry. Not bad!
Since program inception, our joint METRO Techstars team has attracted 40 formidable founders to trust us with their business building. On the way, METRO learned to become a dedicated early-stage investor, a passionate corporate mentor, and a powerful source for commercialization opportunity helping our startups grow.
For the 50+ year old multinational corporation that METRO is, three years of successful early-stage startup development support has been a rather transformative experience. With that – lessons learned, lessons shared – here’s what I believe is key to look out for if you are a founder looking to apply for our (or another) corporate program:
Build Relationships That are More than Transactional
Most corporate mentors you encounter during the program are likely individuals tied to a myriad of internal realities, complexities, and constant change. Tempting as it may be to assume s/he possesses a magic wand, at times it’s not as easy as it seems to unlock the large(r) organization. During the program, better you connect with your corporate mentors beyond your most ad-hoc request (say, to proof-of-concept your solution ‘today’), to create relationships made to get your emails answered, even months post Demo Day.
Learning Goes Both Ways
You may want us to – but no, we don’t always know the answer to all your questions. To best deal with that, what good corporate programs (should) do is to help create a ‘safe space’ for mutual learning. As we work jointly through your company’s opportunities and complexities one issue at the time, we found outcomes prove best if everyone comes out smarter than going in. So, do keep challenging us as we will do the same. Let’s be honest. Often, both sides are in uncharted territory. So, let’s get jiggy with it, creating spaces for plenty a-ha and eureka moments enabled equally on both sides.
Ask, Does the Corporate Provide Robust Post-Demo Day Commercialization?
I firmly believe the difference between a good program and a great program is the corporation’s ability to provide commercialization opportunities beyond core 12-week acceleration. Think program-as-a-service versus program-as-a-lab. The former seeks to afford you a more permanent path to new customer acquisitions, following to the biz dev support during the actual program. To be sure – ‘free market’ forces in full swing – no corporate program will actually guarantee you new customer opportunities all the time. Hence, back to my point above, this is why establishing long-term corporate–mentor relationships is such an important thing.
Be Sure You’re Ready to Run with It
How much ‘homework’ is enough before approaching a corporate about piloting your product or service? Hard to say or measure, but we tend to know it when we see it. Above all, be comfortable asking uncomfortable questions in sometimes tricky corporate meetings. Having sat in many pitch sessions, don’t short-sell yet don’t over-hype. No matter what you are building, it’ll likely always be added to or otherwise be ‘under construction’. That is perfectly fine as long as you are honest about your offering’s strengths and weaknesses (to the degree you know of them). In other words, corporates or otherwise, it’s your audience’s trust in your judgement that is equally as important as promoting your product’s intrinsic genius.
We just completed the second Demo Day for the Techstars IoT Program in New York. One of the corporate partners of this program was the global professional services firm, PwC. In this post, Dave Drach, VP Corporate Strategy at Techstars and Niko Pipaloff, Emerging Tech and Startup Engagement at PwC, share their experiences on the most effective ways to approach startup/corporate engagement.
How can corporations and startups best collaborate to prepare for the digital age?
Startups must be very tactical when engaging with a corporation and be willing to be open during mentor interaction, but then specific in what goals they would like to achieve. Corporations have deep domain experience from years in a particular industry, as well as an extensive network of connections. Both can help founders understand business markets and how ecosystems currently work.
Through partnerships, startups can leverage PR and marketing, as well as channel and distribution access, especially in heavily regulated industries. For example, DoPay, who completed the Barclays Accelerator, Powered by Techstars, was able to leverage a Barclays bank in Egypt to create merchant accounts for their easy payroll platform. These kind of partnerships and strategic relationships are the result of open and collaborative communications that are fostered through the mentoring process.
Corporations should consider the startup ecosystem as a critical component of their innovation/R&D function. Surprisingly, we found that just 7% of companies rank “working with the startup ecosystem” as one of their top sources for innovation in PwC’s Global Digital IQ Survey. In order to get the most from their investments, corporations should look to engage across the startup lifecycle, tailoring their strategy for each stage.
Early stage engagement (pre-revenue) can focus on establishing broad relationships and awareness building. Sponsorship of co-working spaces or incubators are a great way to get a pulse into the ecosystem. Corporations can also offer pro bono services to build a positive reputation in the community. For example, PwC has offered workshops in data analytics, corporate structuring, tax law, and sales tactics.
As startups mature and grow, more direct business relationships become more likely. Focus on providing funding, domain expertise and relationships but be careful not to overwhelm the startup with your demands. Realize that the startup will need to serve a market beyond the single corporate partner and give it the space to make the best product and market decisions.
What are the most productive outcomes of a collaboration between a corporation and startup founders?
The most productive for founders, and I would say the corporations as well, are some form of cross licensing and promotion. When both parties stand to benefit from the deal, then both parties will invest in making it successful. The collaboration usually focused on a new, innovative technology, perhaps a technology that the corporation has not been successful with or has been challenged in engaging.
A great example is the collaboration between Disney and Sphero where the two companies were deeply engaged in the Disney Accelerator, powered by Techstars and then the two partnered to create the BB-8 connected toy. The collaboration included content and media promotion, content licensing and even investment from the corporation in the startup. The results were outstanding and the two entities have since collaborated on many additional connected toys.
The most productive collaborations allow each party to focus on their strengths. For startups, I think that strength is effective “exploration”. That means testing new ideas and markets, customer discovery, finding product/market fit and setting the direction. For corporates, their strength is in effective “exploitation”. That means bringing massive resources to bear and scaling an idea through funding, domain expertise and relationships. It means taking a model that was proven out in small scale and putting behind it the power of global salesforce, manufacturing or distribution capabilities.
As one of the largest professional services firms, PwC has the capacity to provide a startup unprecedented access to customers and partners. The real challenge is to identify complimentary go to market strategies and identify startups that are at the right stage of maturity.
What are the differences in how a corporation handles disruption and how a startup handles disruption?
For a startup, there really is no such thing as disruption. A founder sees a problem, harnesses the resources to solve the problem and delivers a monetizable solution. The focus of the founder is solving the customer’s problem and likely ignoring the existing business ecosystem in the process. That is what the Techstars company Everledger has done with diamonds and blockchain.
Everledger records the provenance of diamonds from mine to ring leveraging a digital registry built on blockchain. It completely changes how you insure a diamond. And obsoletes most of the legacy criminal behavior around stealing and fencing diamonds.
Founders just do their thing and if it makes the existing infrastructure obsolete, the disruption, that is a side effect of their solution and their effective execution.
For a startup disruption in the market is almost always an opportunity. A changing landscape makes established players more vulnerable and gives nimble new entrants a fighting chance to provide something better fit to the new paradigm. An established corporation could also view disruption as an opportunity but it’s often saddled with the “Innovator’s Dilemma”…change often threatens established corporate functions who resist the loss of their eroding position. This is why large corporations are rarely the instigators of disruption but so often the victims of it.
To counter this, corporations need to develop a mindset of constant change where it is normal and expected to reinvent oneself every few years. Part of that is cultural (changing the norms and expectations so that employees feel safe and encouraged to try new things) and part of it is operational (providing the tools to facilitate a free flow of ideas and the environments to effectively prototype them). In my experience, neither of these is possible without a visionary leader in the c-suite willing to champion the cause.
What are some of the technologies that are emerging from the startup ecosystem that are having an impact on large corporations?
I work every day in helping connect our portfolio of early stage companies with corporations to help both parties. I pay attention to deals that close fast between corporations and startups because it demonstrates technology areas that are being adopted rapidly.
First would be drones and drone deployments. Skyward, a Techstars investment which was acquired by Verizon, was the right solution at the right time. Skyward focuses on systems that simplify drone operations into task oriented solutions. Hensel Phelps, a 3,000 employee construction firm, moved from experimentation with drones to offering an operating infrastructure for drones by becoming a Skyward customer.
AI is being embedded into task specific solutions, mostly with improved development platforms that are emerging, like Seldon. Adoption is not moving as fast in the area of blockchain, but the demonstrated solutions are truly breakthrough.
One example is the blockchain startup Wave, who completed the first global trade transaction leveraging blockchain between Ornua (the Irish Dairy Board) and Seychelles Trading Company. This was a global trade transaction for butter and cheese between Ireland and the East African Country of Seychelles, completed digitally, in blockchain.
Based on our research, PwC has identified 8 essential technologies that are having the greatest impact on our clients, and all of them are heavily driven by innovations coming out of the startup ecosystem.
For example, in the IoT domain, we are partnering with Sigfox to bring low cost, high bandwidth sensor solutions to many of our industrial and utilities clients. In the drone domain, we are partnering with Hangar to support hardware and flight planning for our mining and infrastructure clients. And in the Machine Learning domain we are experimenting with platforms such as Datarobot to bring advanced machine learning capabilities to the masses. PwC works with these and many other startups to provide deep technical expertise and push the limit of what is possible. Ultimately, we are stronger together.
How does the incentive structure for innovation differ between corporations and startups?
The primary incentive structure for a startup is survival. If you do not find product-market fit, then you die. If you do not find a scalable monetization model, then you die. Time is your enemy. Innovation is your friend. You have no infrastructure, few to no customers, and no legacy, so you can focus purely on the potential of the future. And if you survive, the payoff can be significant. You are able to control your own destiny within the opportunity which you are pursuing.
Every conversation, every meeting, every transaction has tremendous urgency. You must #domorefaster, to use one of the key training points we leverage here at Techstars.
A startup is a high risk, high reward venture where the incentives for the founders are directly mapped to the market success of the company. It’s a “succeed or die” environment which forces a clarity of purpose and an efficiency of action. Startup founders are constantly pushed to work on the most important aspects of the business and their decisions are pressure tested at each step.
Traditionally, corporations have been less effective in innovation because their internal structures rarely allow for such single minded clarity of purpose. Employees are ultimately incentivized with bonuses and titles, but because of the diffusion of responsibilities it can sometimes be easier to obtain these rewards by effectively managing perceptions rather than solving hard problems.
Ultimately, corporations should look to map internal incentives more directly to innovations and their success in the market. That means giving intrepreneurs the time and space for dedicated work and a bigger piece of the upside when innovation efforts are successful.
Are there structures that help corporations and startups innovate together?
The collaboration between startups and corporations has grown significantly over the last 10 years and is replacing elements of the R&D infrastructure of many corporations. The original approach was primarily focused around acquisitions. One of the most effective approaches I have seen recently is support for startup partnership integration, either through a third party, or an internal “black ops” team that is given executive support to quickly drive through integrations and partnerships.
Both the startup and the corporation benefit from rapid deployment and integration. We call this “Startup Speed” and it’s a game changer for our partners who get there.
In many ways, corporations and startups inhabit two different worlds and speak two different languages. Incubators like Techstars are vital in bringing the two parties together, but it can still be hard to bridge the gap and work together effectively. Ultimately, a corporation needs an integration point with the startup ecosystem, teams within the company that speak the same language and work in similar ways. PwC has several.
Our Emerging Tech and Analytics Labs provides a sandboxed environment for the testing and prototyping of new technologies and tools. Our New Ventures group, provides the financial backing for the development of new products and businesses. And our Digital Services team provide expertise in human centered design and customer engagement. These teams are familiar with PwC’s core businesses and operations but also bring a wealth of experience from tech, startups, venture capital and digital agencies.
Ultimately, it is through these functions, that PwC is able to effectively collaborate with the startup ecosystem.
We’d love to hear from you. As a startup, what have you found to be the keys to successful collaboration with corporate partners? As a corporate executive, how have you bridged the gap to effectively engage with the startup community?
We recently held an AMA on corporate innovation with Cory Hooyman, lead innovation manager at Target.
We talked about corporate innovation and how to bring new practices and methods into your team and company.
Is there one thing that startup founders need to know to best interact with large corporations?
Ryan: The nice thing about our program in particular – especially when we’re working with a large corporation or retailer – is that there’s a massive gap between the corporations and the startups. It’s on both sides of it.
The startups, in a lot of cases, do not interact with an enterprise level corporation because they don’t speak the language. The timelines are off. A lot of the time, the professionalism of the startup needs to improve in order for them to interact with these very large organizations.
On the flip side, the corporations – and Target has done an amazing job of this – admit where they need to improve in order to interact with the startups. Not everything is going to be at the level of a huge consulting firm or a massive software company when it’s just three or four people who are iterating an idea.
When we look through the companies during the application process, we always try to project the potential of that team in their ability to work with the enterprise level companies. Just because they don’t know how to speak that language right now doesn’t mean we can’t work with that and hopefully get them to a level where they’d be able to actually interact with a 10,000 person company or 300,000 person company. That’s a big thing for us.
When we talk about team, team, team for the participants in the program, clearly, it’s about the entrepreneurial skillsets and the stuff that we identify as Techstars as an organization. But for companies that are trying to work with massive corporations, we also have to think about the potential of that team, their ability to interact with those large corporations.
Techstars sits right in the middle, between the startups on the one side of it and the corporations on the other. We plant ourselves right down the middle and try to be the middle ground between the two of them so they can hopefully speak the same language.
Cory: There are certain things that founders should watch out for. If the time is not right, the corporate yuckery can take place. They can in some way, shape, or form drown your company by not being aware of some of the things that Ryan mentioned, like the gaps.
I’ve talked to people who have, not through this program, but I’ve talked to companies locally who are on their (and I am not exaggerating this number) 28th, 29th or 30th meeting with Target. They’re still hoping for a pilot. People get passed around to various people in the organization with the intent of maybe this person might be somebody good to talk to.
Really, the only reason they keep getting passed around is because nobody has any money to do what these people are trying to accomplish. If you knew that up front, you might be like, “I’ve had my fifth meeting. I get it. I’m out. I’m going to go focus on something else.”
But because people don’t want to tell you they don’t have access to these resources, they just pass you along with the hopes that somebody else can deal with it.
Do you have a question about interacting and working with large corporations? Let us know in the comments!