Startups Should Be Pickier about the Corporations They Partner With

October 6, 2014

8:33 pm

The term “startup” has really become more of a nebulous term in a space that has grown rapidly in the past few years. I mean, when does an upstart company go from being a mere startup to a full-fledged company? After a certain number of years in operation? After successfully raising a Series B? The debate is never-ending, and the opinions within the community certainly encompass a broad range.

One thing that cannot be doubted, however, is that many of today’s major corporations were once nascent organizations that experienced similar trials and tribulations that many in today’s startup economy experience; these companies have been there, and they totally get it – and they shouldn’t be seen as fearful behemoths.

At an afternoon panel at this year’s Tech Cocktail Celebrate Conference, representatives from various corporations talked about the opportunities for mutual benefit between larger companies and startups, and why startups should aim to have as high an expectation for these corporate entities as corporations have for them when deciding to work together.

Titled “Corporations Embracing Startup Communities,” the panel included Brady Forrest, vice president of hardware incubator Highway1; C. Todd Lombardo, innovation architect at Constant Contact; Elliot Lewis, the chief security architect for Dell Software Group; Paul Swartz, a business development manager at American Airlines; Carrie Walsh, managing director at Silicon Valley Bank; and Sneha Menon, startup adviser at PayPal’s Startup BluePrint.

All of those on today’s panel have had extensive experience – through their various positions – in developing relationships between startups and larger institutions. The main takeaway from the participants today? Before any considerations of partnerships or investments or any other kind of relationship, corporations and startups need to step back and take a look at what they’ll need or expect from the other party. Once those expectations are set, only then can corporations go out and actively search for the best startups to choose for their programs or to partner with, or can startups find the right kinds of programs, incubators, or corporations to partner with.

“Don’t get caught up in the trap of trying to please [the corporation],” said Lewis. “Don’t get too engrossed into getting an ‘in’ with a specific bank and doing whatever they expect from you to get in that relationship.”

According to Lewis, startups should really look more into forming relationships with large institutions that respect their desire for autonomy and vision. At Dell, for instance, Lewis said that they want to really help each of the startups they work with to become as successful as they can without interrupting their vision too much; their main goal as a corporation is to enable startups to either disrupt or influence the current markets in which they compete. Basically: startups should set high expectations for what kinds of resources, connections, and advising they hope to attain from various large companies.

“Enterprises have the resources, while startups don’t…we’re really about getting ourselves back in touch with the community, and plant the flag in the sand that we stand for small business,” said Lombardo. “[Startups also need] access to industry experts that will help drive their business and connect them to the broader innovation ecosystem – which we can provide,” added Walsh.

The panelists added, however, that large organizations should expect the same high quality from startups. Mainly: they should expect that startups be able to provide future value for the company, especially in developing industries or new technologies. For Lewis, he noted that corporations simply do not have the ability to grow or develop all these new ideas organically, so they depend on the innovation from startups to push them into nascent industries, such as the Internet of Things. Walsh put it best when she said:

“Our early-stage funding was really more of an investment in our own future.”

PayPal and American Airlines are both sponsors of Celebrate – we thank them for their support! 

On October 6-7, Tech Cocktail Celebrate Conference is gathering hundreds of attendees, industry leaders, and inspiring speakers in downtown Vegas to meet the hottest startups and investors from around the country, learn and collaborate with others turning their communities into startup cities, and enjoy music, parties, and llama spotting. Check out more Tech Cocktail Celebrate Conference coverage here.

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Ronald Barba was the previous managing editor of Tech.Co. His primary story interests include industry trends, consumer-facing apps/products, the startup lifestyle, business ethics, diversity in tech, and what-is-this-bullsh*t things. Aside from writing about startups and entrepreneurship, Ronald is interested in 'Doctor Who', Murakami, 'The Mindy Project', and fried chicken. He is currently based in New York because he mistakenly studied philosophy in college and is now a "writer". Tweet @RonaldPBarba.

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