Startups And Corporates

Can startups and big mega corporations co-exist?  I used to think it was possible. I thought that linking startups and corporations was a good idea.  It sounds good on paper.  The reality is they are like oil and water.

Sometimes corporate employees can be good mentors to startups.  The marketing or engineering people are the most useful.  Marketing people can give startups some sense of the things they are seeing in the market.  They can offer up ideas for connecting with customers.  Engineering people can help startups think about how to scale their development.

But, corporations have an unlimited amount of money; so often mentors don’t look through the same lens as startup people.  Corporations aren’t used to guerrilla marketing and taking risks like startups do.

Selling or partnering with big mega corps is virtually impossible.  I have tried it.  It fails every time.  Corporations are all about endless meetings, endless sales cycles.  They don’t understand startups at all.

Think of corporations as aircraft carriers, and startups as tiny bass boats.  When the bass boat pulls up to the corporation, they don’t even see it.  They don’t understand how to deal with it.

Corporations generally don’t like to take risk and they see startups as risky.  Suppose you have a widget that you want to sell.  You meet with the engineering team at ACME Corp and they like it.  Engineers are like that, they think innovation is pretty cool.  As the widget discussion winds it’s way up the chain of command, someone says, “but can we commit our supply chain to a startup?” and it ends.

Better for startups to find their own market. It’s possible to get wins with small and medium size companies.  It’s almost impossible with the large multinationals.

Mega corporations only care about what they are going to do.  They have tunnel vision.  Bureaucracy is the norm.   Meetings and status reports are how they communicate.  Their goal is to create a vertical silo they can vigorously defend from competition.  It’s highly expensive for startups to try and get them as a customer.

Many corporations say they embrace innovation.  What CEO doesn’t want to appear innovative to their shareholders?  The reality is the corporate culture penalizes risk taking; but the outside world can’t readily see through their outward reputation.

Interestingly, I hear through the grapevine that West Coast corporations are less risk averse than Midwestern corporations.  I’d hypothesize that since the startup ecosystem is significantly larger there than anywhere else, the employees of those companies are better primed to think out of the box.  That being said, the Midwest has a deep bench of professional salespeople that are experienced at navigating corporate waters.

The whole key is where you enter.  If you are going to be successful, you need to identify the right champion inside the company that can carry the ball through the bureaucracy.   Selling into them requires a large amount of prep work to actually figure out who that is. If your startup business hinges on selling to big corporations, make sure that you have a sales team that has experience selling to your target market.   If you don’t have someone with that experience, that prep work is rarely worth the startups time.

 

 

 

  • awaldstein

    The core difference at a psychic level is that startups wake up every day and scramble to build a market, large co’s wake up every day and stress that they may be loosing theirs.

    • Or they are complacent, or trying to figure out how to keep building an impenetrable silo.

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  • Carlos Jaramillo

    I think both can coexist and work together, because at some point a
    startup will transform in a Corporation like Uber is doing, and get the best of
    both worlds. Also the same process can be achieve for a corporation with it
    relates with startups. I agree the process isn’t smooth enough but what
    relationship in this world is it?

    • Uber is no longer a startup. When you get to $1B in valuation, you might still think and react like a startup, but you don’t resemble a startup. A corporate will start to take you seriously if you can build value for them.