How to build win-win relationships between startups and big business, while avoiding shiny tech syndrome and other pitfalls.
Jenn Torry is a Senior Innovation Consultant at Fluxx with more than 15 years’ experience working with both large corporates and startups to generate new value streams.
Jenn spoke at the recent Pink Mingo Tech Lessons event and here in this exclusive blog, she shares her insight on how large organisations can inject a little start-up magic into the way they do business.
Matchmaking startups and big business: when it’s better to collaborate than compete
Would Goliath’s story have ended differently if he made David his partner rather than his opponent?
The real keys to battle are sometimes obscured by our misconceptions of winning!
It’s easy for large organisations to get excited about buzz-worthy disruptive technologies. The ones we see startups building entire businesses upon - from blockchain to AI. As it turns out, there’s even an official name for it - ‘shiny tech syndrome’.
The antidote is to avoid jumping to the shiny tech as the solution, before we are even clear what our question is.
So is it a race between the corporates and the startups? Or can they work together to help one another?
Let’s take a look at some examples.
In 2018, Google Ventures teamed up with Lime - an electric scooter sharing startup.
Through a partnership with Lime, Google show users the option to take the startup’s scooters, pedal bikes and e-bikes as new travel alternatives for planning their routes via Google Maps.
In addition to car, train, bus and walking options under the transit icon, they’ll now see scooter options in 40+ cities around the world.
If Lime vehicles are available in a rider’s vicinity, Google Maps will predict the amount of time it will take to reach the vehicle and also gauge how long it will take to complete the entire journey.
A cost estimate for the trip will also be displayed on screen, and users must tap into the actual Lime application to unlock and access the vehicles, similar to Google’s integration of ride-hailing services Uber and Lyft.
Why does this partnership between a behemoth like Google and a small startup like Lime work?
1. They’re solving a real customer problem. Lime’s short-term rentals are a way to solve the ‘last mile problem’.
You just got off your train and you have seven minutes to get to your first meeting on time — but it’ll take you 15 minutes to walk the rest of the way, Vishal Dutta, product manager of Google Maps, wrote in her blog post.
2. The two can create something together neither can create alone. Scooters are good. But maps + scooters = real good
3. It’s a win-win - Lime gets scale, Google gets a better offering. Both share the profits.
The second example of a big business working successfully with a startup is News UK and mTag.
mTag make photos shoppable.
You look out for the Mtag on images in social media and editorial content. Then you simply shop the photo - click on it and select the retailer you’d like to purchase it from.
Why did this partnership make sense for mTag and for News UK?
News UK could monetise editorial in news ways. Most of their revenue still comes from newspaper sales and ad revenue. This was tapping into a whole new commercial opportunity.
mTag could access New’s UK’s audience of millions and their network of brand partners.
There was a clear place to start. News UK own Fabulous. A perfect place to test the shoppable image proposition before rolling out across all publications.
The third example of a startup working successfully with a big business is Lobe and Microsoft. Microsoft purchased Lobe about nine months ago.
Lobe is a startup that lets you build machine learning models without having to code. So in real terms it means you can create models to teach your apps to learn in human ways. Teach it to see emotions, hear music, feel movement, understand nature.
Why does this partnership between a tech giant like Microsoft and an emerging tech player like Lobe work?
1. Microsoft gets hard-to-come by machine learning talent. Microsoft’s CTO Kevin Scott says himself that “AI development and building deep learning models are slow and complex processes even for experienced data scientists and developers.”
2. Lobe get access to global infrastructure. As a three-person startup, teaming up with Microsoft not only gets them access to the infrastructure, but teams of people who can accelerate the scaling of this technology.
3. It satisfies a B2B and a B2C need. It satisfies a need for developers and a need for regular people who are increasingly expecting their tech to behave like humans and understand humans like humans.
These are just some reasons why It can be a good idea for big business and startups to team up.
It all comes down to creating a WIN-WIN for both parties.
But it doesn’t always so well.
There are real risks involved for both sides.
Having worked in various startup labs and accelerators, I’ve been at the coal face. And I’ve learned a few things about how to avoid pitfalls and do it right.
1. Know your why.
If you’re a big business - why do you want to work with startups? And why would they want to work with you? Is it to generate new revenue streams? Is it to develop an entrepreneurial and innovative culture? Is it to solve a problem you can’t solve with existing capability?
2. Know your what.
What do you have that they want, and what do they have that you want? There are hundreds of corporate accelerators and incubators in London alone - why should they come to yours? What can you package up and offer as a service? Do you access to customers they’d want? Contacts in the industry? Perhaps it’s the less sexy stuff like your super smart legal team startups just can’t afford?
3. Agree expectations up front.
Explore where the opportunities lay for each. Agree what success looks like before you work together. Put it in writing. And measure it along the way. Setting expectations up front pave the way for a better relationship.
4. Be open to a pivot.
What you think is the opportunity area might just not be. But none of us can predict the future. We don’t know how customers will react, how our people will respond, what’s going to happen in the market during that time. There are many unknowns that we can’t plan for. Allow time to pivot - expect that you will change course. Be prepared to uncover new areas of value.
5. Trust the chemistry.
You can change the idea, but you can’t change the founders. You must get along. You must trust each other.