The allure of working with a big corporate is inevitable for a startup company. After all, a commercial deal with a large multinational can translate into immediate cash flow, valuation jump, new leads, etc. Moreover, ‘corporate development’ teams are now in place at many tech companies. They offer an irresistible deal to startups – work with us and become a candidate not only for strategic investments. Eventually, such an engagement may even lead to an acquisition!
To help early-stage startups understand the pros and cons of engaging with large companies, I gave a talk in 2015 at IIM-A CIIE. I also wanted to help corporate employees appreciate the founders’ situation.Startup-Company-Entrepreneurs-and-Corporations
There is a wide gap between those whose entire career has been with large companies versus those who run a startup company. The key is to find common ground between corporate priorities and startup aspirations.
The fundamental difference between a startup and a conglomerate is the business model. The former seeks to search for one whereas the latter focuses on executing it well. Startups operate amidst high market uncertainty whereas large companies prefer stable markets which allow long-term planning. Moreover, startups intentionally take on (calculated) risks whereas corporate managers seek to mitigate it.
Engaging with Entrepreneurs
Since my audience was full of mid-senior professionals, I took time to explain how they could engage with young startup founders. Both parties had to remain sensitive to matters of confidentiality. However, the corporate employees also had to be careful when asking questions about sales, marketing, pricing, etc. How can a new venture have clear answers in these matters when its very nature is the exploration and search for a business opportunity? To address this, we developed a long list of questions that are applicable to most startups. Each employee could then choose a subset depending on a) which particular entrepreneur they spoke to and b) the maturity of the venture.