Welcome to the fourth instalment from my presentation on “Leveraging Startup Innovation”. Today we’re talking about:
Tips for successfully engaging with Startups
A Startup is NOT a smaller version of a large company! – Steve Blank
Engaging with a startup is different from conducting business with another corporate. These are our 5 top tips for engaging with Startups.
- Cultural Fit –
“A Startup is NOT a smaller version of a large company” – Steve Blank. They usually don’t have a HR or finance department and probably don’t have dress code policy or a 5 year trading history!
As an example: the largest telecommunications company in Australia, Telstra, has a checkered history of acquiring larger startups and slowly squeezing the life out of them by trying to apply the same culture and operating rules.The company has taken huge hits to their bottom line in writing off these acquisitions in once successful startups! They even have a name for it – they call it the “Telstra snuff”.Luckily they have since identified the problems and have implemented numerous new programs includes an accelerator and venture capital arm.
- Clear Intentions –
people are mostly nice and prefer not to say “No” to a Startup that pitches to them, even though there is no ability or view to use them in the short to medium term.To a Startup founder, the word “Maybe” usually means “Yes” and they will continue to hound you for the next 12 months. Be honest with them, and state clearly what your intentions are. It can sometimes be a little bit brutal but most will appreciate it.
- Good Partner/Customer –
Be a good customer or partner. 90 day payment terms that are paid 15 days late are not acceptable terms for a startup if you expect to continue doing business with them. Chances are they won’t be around for you to place the second or third order that your customers just started to love.
- No Free Rides –
If you do a pilot with a Startup or they do some work specifically for your organisation they cannot use elsewhere, PAY THEM.It is amazing how many large companies will try to squeeze every dollar from a Startup when 99.99% of Startups are not the well funded Venture Capital success stories you read about.
Most are usually boot strapped from their own funds and can achieve incredible things on a shoestring budget, so pay them when you direct some of their innovate goodness your way! You’d be amazed the level of loyalty that you receive in return.
- IP (Intellectual Property) –
Discuss and document at the outset how any jointly developed intellectual property developed will be split. There is no need to create a huge document, it should be a maximum of 2 pages.
As always, if you would like some assistance or additional advice in putting together your plan for engaging with Startups, please get in touch!