A few weeks ago at Bits&Pretzels I had the opportunity to participate in a workshop facilitated by Accenture Interactive and bringing together representatives from well-known corporations and startup founders. The objective was to discuss what it takes to build successful partnerships between corporates and startups. To make the activity more entertaining, the participants were asked to think about corporate-startup matching in the same way as they would approach building a dating profile, listing the key characteristics that identify an “ideal partner”.
I recently found myself in a couple of situations that reminded me of that discussion and of how important it is for a startup to make sure the partners we pursue are not simply takers but also givers, genuinely interested in building something great together with us.
Dressed to impress?
During the workshop, several corporate representatives stressed how, beyond an innovative idea, the ability to focus and to deliver are among the top qualities that they look for in a startup.
Unsurprisingly, many on the corporate side were not big fans of the “sell it first, build it later” approach (or worse “tell us what you want and we’ll build it for you”) that many startups have adopted. While it is understandable that particularly an early-stage startup will not have everything figured out, and that it would be equally foolish of you to spend money and time building stuff nobody wants, there is probably nothing worse than getting a prospective corporate partner excited about something you have not really figured out how to build yet and that they might end up having to wait for indefinitely. If you are looking to score, then make sure you go into that meeting with a clear idea of what you are offering them to build together and how you plan to do it. This will definitely help you gain their trust first and then make sure that deals are closed, products get built and revenue starts coming in.
But just like with dating, building a successful relationship requires both parties to make an effort to understand each other’s perspectives, objectives and constraints. Corporates themselves need to be able to show flexibility and understanding of the peculiar nature of a startup and of the fact that things at this stage have a natural tendency to evolve and sometimes even change abruptly. Reality is, however, that not all big companies are meant to be early adopters and innovation leaders, and one of the biggest mistakes that a startup can make is chasing a big brand simply because they are just that, “a big brand”.
Beware of “players”
Many corporations today are approaching the startup world by organizing or sponsoring hackathons and innovation contests.
This type of initiatives basically become a somewhat casual invitation “to play” sent out by a big company to smaller companies. In the true spirit of “open innovation”, their intended outcome is to enable large, more established companies to “trade” the large resources and the market reach they have with the “new, ground-breaking ideas” that they are unable to efficiently produce themselves and that startups have. In the best case scenarios, these can truly represent a great opportunity for a startup to get in front of the right audience and show off what it can do.
Participating in hackathons and contests, however, represents a considerable investment for a small startup. Particularly when you are still an early-stage startup looking for its first customers and with a very small team, the truly most scarce resource is not “money” but “time” and how you prioritize what you spend it on. Beyond the more tangible financial effort required to travel and attend this type of events, the truly expensive drain is all the time you have to commit to preparing, building and following up and that forces you to choose which other important tasks you need to put on hold.
In this type of situations, the worst thing that can happen to you is getting entangled with a potential corporate partner that wants to “play with startups”, but that doesn’t really understand this space and does not have a clear innovation strategy in place that would enable them to effectively turn ideas into real business ventures that would benefit both parties involved.
Two recent personal experiences made me particularly aware of the risks of getting involved in activities that simply end up draining your resources (or worse). In one case, the “great prize” for the winner of a startup contest we were considering applying to turned out to be just a vague promise for introductions to the management of the (smallish) tour operator organizing the contest to discuss a possible cooperation. In the other case, we* were at first very happy to be invited to participate in a hackathon we had really been looking forward to. Our enthusiasm, however, disappeared when we saw the agreement the organizers asked us to sign. Among other things, not only were there no indications of “next steps” for the best projects after the event, but the agreement explicitly stated that both parties were free to pursue the ideas that came out of the hackathon on their own. Interestingly enough, this turned out to be a key “showstopper” also for another startup I recently talked to and that was planning to attend the event, but decided not to go in the end.
The right one for you is out there!
The lesson I learned is that if the big brand that is asking you to make this significant investment does not have a clear innovation strategy, all that is left is just empty “play”, and that is really the last thing you need. To put it bluntly, your counterparts on the corporate side get their salary every month and can afford to “play”, you don’t.
The good news, though, is that there are also a number of very serious players that treat startups with respect and that know how to build successful partnerships. For instance, I was very impressed by the fact that the organizers of a pitch contest we were selected for offered to cover travel and accommodation costs for up to 4 team members of each participating startup.
Truth is that, just like with dating, there are plenty of great fishes in the sea. However, as the sea gets more and more crowded it is fundamental for founders to learn how to see beyond the allure of a “big name” and do their homework to find the one that is right for their startup. A very important part of this process is also being able to demonstrate that you understand your prospective partner’s business and that you have a clear idea of how you can help them create more value and drive their business forward in a direction and at a speed that might not have been possible for them on their own. As a matter of fact, the dynamic at play here is exactly the same as when you are interviewing for your dream job: the focus of the conversation should never be on why you need that job and what they can do for you and all on what you can do for them that helps them further their goals and that they would never be able to do with anyone else.
If you are lucky enough to find that “special” one, it is also incredibly helpful to understand the value of personal relations, particularly the one with the internal sponsor that is vouching for you. No matter how high up they might be in the organizational chart of the company, it is vital that you properly understand not only their official position but also their informal role in the company and what challenges and constraints they might face internally. Never forget that they are sticking their neck out for you: while they might not be investing money in your startup they are nevertheless putting something very valuable on the table. Your ability to deliver on the promises they are making about you – to put it more bluntly your ability “to make them look good” – is going to be a key factor in your struggle to go from endless conversations to a signed contract (and money in the bank).
In conclusion, every time you consider pursuing a partnership with a large corporate, you should always ask yourselves 2 important questions:
- Do they have a clear innovation strategy?
- What is their track record working with other startups?
If you have doubts about the answers, then it is probably better to cut your losses and look for the right partner elsewhere, instead of keeping wasting time and energies on an endless, expensive roller-coaster of hope and despair. But just like in real life, if you manage to find someone that truly respects you and your time and that is willing to offer something equally valuable in return, hold on to them and don’t let them go!
This is an opinion piece by Francesco Cetraro, the founder of GigsGuide, a service that helps people find concerts and other live events that match their taste when they travel. The post is also to be found on LinkedIn
