Welcome to the imaginary Innovation High, where the best startups are seniors and corporations are impressionable foreign exchange students. It’s 2016. Microsoft, Barclays, Coca-Cola, and Disney are all just arriving. For them, the visit to Innovation High means leaving new environments, expectations, and behaviors.
The school exists to bring new products and services to market successfully. To enroll, corporations are asked to make their resources available to the startups — industry knowledge and connections, feedback, maybe some money. Corporations spend three to six months here, learning from and working with the best in class.
What does this temporary relationship look like? Which corporation learns the most? Why?
We asked tech startup founders who’ve passed through corporate accelerators what it was like to innovate with company employees. All of the teams we spoke to were tasked with developing their young products in a corporation’s three- to six-month program, alongside employees and under their roofs.
What we found were at least three types of relationships. Corporations can be:
1) a startup’s partner : companies fit into the operations side of a startup’s business model. Strategies are aligned and partnership terms are negotiated.
2) a startup’s customer : company employees work in close quarters with startup teams who enjoy tight feedback loops from their ultimate end-users.
3) a startup’s network : companies selflessly open doors for startups to decision makers, enterprises or gatekeepers of the industry.
Startups as partners
The Barclays Accelerator in New York City launched the 2015 cohort with a party. Seeds founder Rachel Cook was there with her micro-financing team. There were popcorn machines and 'maybe hot dog vendors.' 'It was like, this is a corporation’s perspective on what startups are and what they need. It was almost a caricature of what startups were.'
Seeds builds micro-lending into games, converting free users into paying customers through an ad surfacing during the game that ultimately finances the poorest women in the world. Rachel saw the program as a chance to partner with Barclays, one of the largest banks in Africa. 'I saw a potential opportunity. We could build a partnership to funnel capital to them so they could deploy it since the backend of our business is about deploying micro-loan capital.'
The Barclays innovation model welcomes startups as partners — the 'we pick companies that we’ll be able to work with' approach, as noted by Beagle founder and Microsoft Accelerator alumnus Cian O’Sullivan in contrast to the 'we pick companies that are working on cool things' approach that MS employs. Employees are in close quarters with startup teams throughout the three-month program.
Barclays was an operational partner on the backend of the Seeds business model. As such, employees wouldn’t be the people actually using the Seeds platform. Their feedback as well-resourced financial professionals was valued (though Seeds was the first micro-financing project in the bank’s history). Their feedback as app developers was not. After the partnership was formed and the strategy developed, Seeds was focused on developing the product that both parties would need. This stage didn’t require much interaction with Barclays employees:
'A lot of people are excited to talk to the startups so it’s kind of like we’re animals in the zoo. Everybody wanted to come in and serve us. Eventually I had to put boundaries up. As a startup founder your most limited resource is time and energy so we couldn’t talk to everyone who was interested in scheduling a 30-minute conversation with no clear goal, you know? Eventually I said, ‘these are our goals in the program, we can’t take the call right now.’
Heavy interaction makes sense when a corporation is a startup’s customer. Company employees work in close quarters with startup teams who enjoy tight feedback loops from their ultimate end-users. However, corporate teams will need to give other teams more space. That means being able to recognize their needs, something that is a real challenge when you’re coming from a large company.
And, as Rachel mentioned, each side 'had this weird chip on their shoulder in a funny way.' Startups know they’re delivering a lot of value, saving corporations the costs of developing new tech in-house. Corporate teams know their worth, too. Recognizing each other's needs and values is a critical step towards a productive partnership.
In a corporate accelerator, this means making employees accessible, but not invasive. It means designing a program’s curriculum to maximize startup learning, but not forcing anything on them.
Tips from the startups on how to partner
Educate your Employees! — The common thread in all of our conversations. Employees need to be able to empathize and communicate with startups. A technology company with a staff of past startup founders and early-stage employees might be off to a good start, but a pre-program course on startup needs and challenges could help facilitate more meaningful conversations between decision makers and startup teams.
More Freedom! — The best startup teams don’t want to be bogged down in your ecosystem or caught in time-consuming projects that drag on without a payout. As Rachel said, “ If corporations are too heavy handed the best entrepreneurs aren’t going to want to be in that environment because it’s not conducive to getting your job done as a founder.”