Why do corporations work with startups? And why do startups work with large corporations?
Why do corporations work with startups? And why do startups work with large corporations?
1. The power of change
a) “Fast fish swallows slow”
“In the modern world, it’s not big fish that consumes small, but fast, it absorbs slow,” says Klaus Schwab, founder and chairman of the board of directors of the World Economic Forum.
As the experience of recent years shows, to create a large company now takes much less time. Judging by the estimated market value, for five years since launch, the market value of Facebook has increased to $ 15 billion (2004-2009). Over the same period, the market value of Uber increased to $ 40 billion (2009-2014). The second indicator of growth rate is the time required to achieve an income of $ 1 billion. It took Dell 9 years (1984-1993), Office Depot 5 years (1986-1991), and Groupontook only 2 (2008-2010) to reach this indicator. In short, a small fish can quickly grow into a huge shark and devour you.
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b) "If you yourself do not come up with something that will destroy your company, someone else will do it"
When Apple began producing iPhones, it decided to drastically reduce iPod sales.
The last entry in a small red book distributed to Facebook employees in 2012 reads: “If we don’t create something that will kill Facebook, then someone else will.”
Three prominent examples of companies that do not follow this rule are Kodak, Blockbuster and Borders Group. All three companies were once the leaders in their respective industries. In 1975, Kodak invented digital photography. In order to prevent the decline in sales of main products (films), Kodak decided not to invest in digital technology. A few years later, the development of a new technology led to the bankruptcy of Kodak. In 2000, Blockbuster refused to buy Netftix for $ 50 million. In 2010, Blockbuster declared bankruptcy, and Netftix’s market capitalization in 2015 was more than $ 35 billion. In 2001, the Borders Group company delegated sales of online books to Amazon.com. In 2015, sales of e-books on Amazon.com exceeded sales of printed books. In the same year, the Borders Group filed for bankruptcy.
2. Mutually beneficial cooperation
Startups and corporations interact with each other, using a complex network of relationships, and derive mutual benefits.
2.1 What can a startup startup corporation offer?
Startups can offer corporations:
a) fast response
As a result of the fact that a startup’s access to capital is limited, the young company is forced to reach the break-even point in a shorter time than a large corporation. A quick start-up reaction is promoted by a shorter chain of decision-makers and an approach called a “frugal startup” (developed by Toyota Lean Management). The need for a quick reaction of the company was very clearly stated by Mark Parker, the executive director of Nike: “Most of all, I’m afraid that I will manage a large, slow, ossified, bureaucratic company that revels in its success." Startups can make a large company work faster.
b) Innovative image
Large corporations, especially those that appeared in the Y and Z generations, are considered less and less attractive. MBA diploma holders are increasingly willing to join start-ups, or even start their own venture business, despite all the debt obligations. Corporations will be able to improve their image in the eyes of such an audience by actively engaging various start-ups.
c) Innovations
Startups are like their own R & D departments of large corporations, derived from the staff of the company. This means that corporations must closely monitor and concentrate on relevant innovations, ahead of their competitors.
The innovations that start-ups can offer include innovative management models (examples of this are Airbnb, Uber, and even Zappos with its self-government and halocracy).
d) Culture
The culture prevalent in companies such as Facebook, as well as in many startups, perfectly reflects such statements as: “Done better than perfect” (better done than constantly striving for perfection), or “Move fast and break things” ( Act decisively and expand horizons). That is why companies such as the DBS Group collaborate with startups. Thanks to startups, they change their culture, become more risky, and are increasingly focused on key performance indicators.
2.2 What can a corporation offer to a startup?
A corporation can offer a startup:
a) Trust
Especially in the B2B sector, large corporations can act as a guarantor of the performance of a business model of a startup, its products and / or services offered to potential clients and investors.
b) Branding and public communications
Transnational corporations can use their connections with various media, in particular with advertising companies. Joint marketing is another way to effectively interact.
c) Distribution channels
Coca-Cola offers start-ups the easiest way to attract customers. She owns such a huge fleet of trucks, which owns the three largest carrier companies taken together.
d) Suppliers
At times, sometimes it can be difficult to find a good manufacturer-supplier, especially when a young company cannot afford to order a minimum batch of goods. However, by combining orders with a large company, or by enlisting its support, a startup can easily make its way to the best manufacturers.
e) Financing
More and more often, startups in search of funds turn to large corporations. Most startups (61.7%), mentioned by the Wall Street Journal, whose valuation exceeds $ 1 billion, received financial support from at least one corporation (not including investment companies such as Goldman Sachs). For example, in one of the investment rounds (in round E), DocuSign attracted funds from such corporations as SalesForce, Google, Recruit, Mitsui & Co, BBVA, NTT Dacoma, Telstra and MKI.
1. The power of change
a) “Fast fish swallows slow”
“In the modern world, it’s not big fish that consumes small, but fast, it absorbs slow,” says Klaus Schwab, founder and chairman of the board of directors of the World Economic Forum.
As the experience of recent years shows, to create a large company now takes much less time. Judging by the estimated market value, for five years since launch, the market value of Facebook has increased to $ 15 billion (2004-2009). Over the same period, the market value of Uber increased to $ 40 billion (2009-2014). The second indicator of growth rate is the time required to achieve an income of $ 1 billion. It took Dell 9 years (1984-1993), Office Depot 5 years (1986-1991), and Groupontook only 2 (2008-2010) to reach this indicator. In short, a small fish can quickly grow into a huge shark and devour you.
')
b) "If you yourself do not come up with something that will destroy your company, someone else will do it"
When Apple began producing iPhones, it decided to drastically reduce iPod sales.
The last entry in a small red book distributed to Facebook employees in 2012 reads: “If we don’t create something that will kill Facebook, then someone else will.”
Three prominent examples of companies that do not follow this rule are Kodak, Blockbuster and Borders Group. All three companies were once the leaders in their respective industries. In 1975, Kodak invented digital photography. In order to prevent the decline in sales of main products (films), Kodak decided not to invest in digital technology. A few years later, the development of a new technology led to the bankruptcy of Kodak. In 2000, Blockbuster refused to buy Netftix for $ 50 million. In 2010, Blockbuster declared bankruptcy, and Netftix’s market capitalization in 2015 was more than $ 35 billion. In 2001, the Borders Group company delegated sales of online books to Amazon.com. In 2015, sales of e-books on Amazon.com exceeded sales of printed books. In the same year, the Borders Group filed for bankruptcy.
2. Mutually beneficial cooperation
Startups and corporations interact with each other, using a complex network of relationships, and derive mutual benefits.
2.1 What can a startup startup corporation offer?
Startups can offer corporations:
a) fast response
As a result of the fact that a startup’s access to capital is limited, the young company is forced to reach the break-even point in a shorter time than a large corporation. A quick start-up reaction is promoted by a shorter chain of decision-makers and an approach called a “frugal startup” (developed by Toyota Lean Management). The need for a quick reaction of the company was very clearly stated by Mark Parker, the executive director of Nike: “Most of all, I’m afraid that I will manage a large, slow, ossified, bureaucratic company that revels in its success." Startups can make a large company work faster.
b) Innovative image
Large corporations, especially those that appeared in the Y and Z generations, are considered less and less attractive. MBA diploma holders are increasingly willing to join start-ups, or even start their own venture business, despite all the debt obligations. Corporations will be able to improve their image in the eyes of such an audience by actively engaging various start-ups.
c) Innovations
Startups are like their own R & D departments of large corporations, derived from the staff of the company. This means that corporations must closely monitor and concentrate on relevant innovations, ahead of their competitors.
The innovations that start-ups can offer include innovative management models (examples of this are Airbnb, Uber, and even Zappos with its self-government and halocracy).
d) Culture
The culture prevalent in companies such as Facebook, as well as in many startups, perfectly reflects such statements as: “Done better than perfect” (better done than constantly striving for perfection), or “Move fast and break things” ( Act decisively and expand horizons). That is why companies such as the DBS Group collaborate with startups. Thanks to startups, they change their culture, become more risky, and are increasingly focused on key performance indicators.
2.2 What can a corporation offer to a startup?
A corporation can offer a startup:
a) Trust
Especially in the B2B sector, large corporations can act as a guarantor of the performance of a business model of a startup, its products and / or services offered to potential clients and investors.
b) Branding and public communications
Transnational corporations can use their connections with various media, in particular with advertising companies. Joint marketing is another way to effectively interact.
c) Distribution channels
Coca-Cola offers start-ups the easiest way to attract customers. She owns such a huge fleet of trucks, which owns the three largest carrier companies taken together.
d) Suppliers
At times, sometimes it can be difficult to find a good manufacturer-supplier, especially when a young company cannot afford to order a minimum batch of goods. However, by combining orders with a large company, or by enlisting its support, a startup can easily make its way to the best manufacturers.
e) Financing
More and more often, startups in search of funds turn to large corporations. Most startups (61.7%), mentioned by the Wall Street Journal, whose valuation exceeds $ 1 billion, received financial support from at least one corporation (not including investment companies such as Goldman Sachs). For example, in one of the investment rounds (in round E), DocuSign attracted funds from such corporations as SalesForce, Google, Recruit, Mitsui & Co, BBVA, NTT Dacoma, Telstra and MKI.
Source: https://habr.com/ru/post/303474/
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