On Thursday, September 26, 2013, OLC attended Enterprise Fireside Chat Series, featuring Steve Faktor of IdeaFactory.
Moderator: Can we get a little about your background?
Steve Faktor: I was head of funding new growth opportunities before my current position at American Express. I was with CitiGroup and Mastercard creating new products and services. It’s always been a challenge. Big corporations are resistant to change. I was in consulting and there, you got to drop your decks and leave. It’s definitely that you get to see politics in big corporations and you definitely burn calories dealing with it.
The short sale I’m bringing to the table is that I’m very partial with partnerships. You can get bogged down with details. You have no idea that you’re going to get into ridiculous discussions. The faster you get into a partnership, the faster you will get to real conversations and bridge that gap quickly.
Moderator: Why do you think startups partner with enterprise companies?
SF: It’s where the money is! They have an idea of who to talk to, to get it. The trick is to identify eagerness to do so. The other part is psychological. You have to get a feel for their motivation and you have to remember that corporate is risk averse.
There are companies that I know partner to position themselves to obtain a certain customer or open up new space—but they know the partnership doesn’t move the needle. A lot of it depends on their situation.
Moderator: What kind of startups counteract that?
SF: I say even before the startups pitch to the board, one thing to consider is: Do they have a product? If you have a product or a defined differential service, you have a very good choice. You’re going to get a lot of limitations, but you need to make the decision if that’s a good investment. Having a diversity of customers are very important. You need to have something in market and traction.
Moderator: How do large companies evaluate these startups?
SF: Some of the metrics are just rueful. You’ve got some on social and the marketing side that you need to tie to ROI. The charge is that you can sell on the brand—soft sell, but on the company side, you need to come up with a plan. Know the numbers inside and out. Mastery of numbers is very important. A lot of it goes back to risk aversion. You need to make a very strong case.
Moderator: What can a startup do to prove themselves?
SF: Having the right introduction is usually how startups get their foot in the door. Cold calling works, but only sometimes. You need a level of trust to begin, and with mutual contacts, that’s the easiest way. Having the right story to tell and understanding what the corporation is trying to do is very important. Listening is more important than talking at the beginning.
Moderator: What can large companies do?
SF: I think the workforce is hungering for startup newness. I think that employees now have more access to executives more than ever before. The organization is used to speaking, let’s say, ‘Math-ese’ and you speak ‘Startup-ese,’ well, it’s taking that middle ground and translating it into something you both can understand.
Moderator: How much does it come down to corporation level or people level?
SF: It always comes down to people. Think about what jobs are now. We’re all in front of screens for the most part of our day. Entrepreneurship triggers survival instinct now in a digital way. It’s, in a way, a trick of the mind. It pushes people to try harder.