If you read my blog regularly, you know I’m a really big believer in revenue as one of the most important metrics for startups. And, that partnering with corporates is one of the best ways for startups to generate revenue.
Corporates, of course, are companies considered to be part of the “Fortune 500” or those on the S&P 2000 and they share a few things in common. First, they have capital. Many large corporations have more than $1B in cash on hand and they’re looking for ways to spend that cash to generate future returns or to find efficiencies in their businesses. Second, they’re in a wide array of markets. Think about Orange, one of the largest telecom companies in the world. If you began working with them tomorrow, you’d have an opportunity at international exposure almost immediately. And, they’re looking for ways to innovate. They have a business model that works for them now, but they know their current model likely won’t last forever. So, they’re consistently on the hunt for new ways to do business. Often, that means looking to startups to help fuel innovation.
When it comes down to it, though, a ton of corporates have pretty poor underlying motivations for working with founders.
They often do it because they just don’t want to get beat by Amazon. They’re so worried about competitors that they feel like working with a startup will help them stay relevant and offer unique products and services so that they stay ahead of the competition.
Or, they just want to grow their own revenues and/or save costs. They’re worried about their survival so they’re willing to work with anything and everything that could either generate additional revenue for the company or save it some money.
Basically, it’s like someone who just wants to get married because of all the things it’ll do for them. They’re not at all focused on what they can give or on the wellbeing of the person or people they’re in relationships with. These types of relationships are often destined for failure. They don’t ask, “Who do we want to be in the world because we’re together?” or “How can I love my partner more?” They’re just focused on what’s in it for themselves.
The outcomes for corporates engaging with startups in this way are equally as doomed. Why?
- Startups can pretty immediately sniff out that you don’t really care about them.
- Startups have no idea if what they offer is actually relevant to you. Every startup can probably help you beat Amazon, grow your revenue, and save costs. But your lack of further detail or focus on anything beyond that won’t help you or founders truly narrow down whether you’re a great partnership or not.
- That, in turn, will lead you to startups that can promise you all of these things but won’t actually offer you the innovation or growth you really need for your company.
- You’ll only have short-term fixes. If you only care about a quick fix to beating a competitor or growing your revenue or saving costs, then you’ll most likely be working with a startup that can provide a short-term fix.
- And, you’ll hurt your brand. Startups talk a lot to one another, and they’re constantly telling each other which companies are great to work with and which ones really aren’t.
A Better Way
So, if a corporate is really going to have a successful relationship with a startup from Day #1, what should they do? Here’s what I’ve seen work well —
Create a Bigger Vision
First, have a motivation that’s focused on something bigger than your company, but that’s also tied to your company goals. Startups don’t care about your internal growth projections. But if you find a common denominator, you can actually get startups excited about working with you. Think about Volvo’s goal, “No deaths in our cars by 2020.” Sure, it will likely generate more money because people will want to buy safer cars, but it’s also about something bigger than just money. It’s something that all of us (including startups!) can get excited about. And it’s so much better (and more specific) than “We want to increase our revenue in 2020” or “We want to exceed our customer’s expectations.” Who doesn’t? Plus, neither of those goals generate excitement or clarity. But, eliminating all deaths in cars is exciting.
Tie That Vision to a Larger Innovation Strategy
If Volvo truly wanted to eliminate deaths and serious injuries by this coming year, then they probably needed a lot of support to help get there. I’m guessing it required a lot of new technologies in their cars that they probably didn’t have before. But because they had an audacious and clear vision, it likely became a lot easier to find the innovations (startups!) that fit their goal. Their innovation team probably knew it would be essential to find startups that could help their cars break faster or that could help assess environmental situations that cold cause their cars to crash, for instance. So, their goal could have been to “Find one technology in 2019 that helps our cars break 20% quicker than they do now.”
Finally, corporates should share their vision everywhere — on Twitter, at tech conferences, on Linkedin, through partnerships, etc. If the company has a motivation that’s exciting for everyone (i.e. no deaths in cars) and they have a specific issue tied to that motivation (i.e. cars breaking down faster), I promise you that startups will be pounding on your door. Why? Because working together will mean that you and founders will be focused on something much bigger than both of you individually. And the startup knows exactly what you’re looking for so they can bring you a technology that fits with your stated need.
Isn’t this so different from what you typically hear (or even experience, if you’re a startup)? I see so many corporates in the world asking for startups to apply for an innovation award or to help fix some random issue at their company. But no one has been excited or will ever get excited about just helping you generate or save cash. And if we’re really honest, leaders at corporates probably don’t get excited about that motivation either. So, why don’t you find something that gets everyone excited? We’ll all be better for it.