What Brings Corporate And Startups Together?
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Jitendra Kavathekar — Managing Director, Accenture Open Innovation spoke to Entrepreneur at Intech50 on what do giant corporates really look for in a startup before partnering with them.
When it comes to tie ups, what does corporate look for in a startup?
Accenture is a Services Company and we serve the Global 2000, government and NGOs as well. When we are looking at partnerships with startups, we are really looking at with an eye towards how we serve our clients better. So, in that regard, when we look at the transformation that our clients are going through, be it digital transformation or if they are going through incremental innovation or incremental addition to their business, or maybe even efficiencies they are trying to create in their business, we are looking for innovations that are coming from the ecosystem in the form of startup that help make those goals happen. In that regard, it is important for us to find companies that have already proven this technology.
We are also looking at companies which have a pretty good idea about their business models and pricing model, which means that they already have a track record with other corporate and clients they have sold to or licensed with, because those conversations go much faster when we bring it to our client base. We have to remember that Accenture is looking to do innovation at scale. So, we have parts of our innovation, organization that are focused on disruptive technologies that will disrupt over two or three years. Those are very interesting for us and we are really looking for breakthrough, big thinking and grand challenges type of things. But when it comes to open innovation, which is an area where we engage with the vendors, we are really looking to be able to innovate at scale. So, what I would say if the technology works, it scales and business model is proven, there is already some market attraction - those are the sweet spots of the tech companies we engage with.
You mentioned that startups should focus on one particular point and not do too many things. Please elaborate.
I learned it from one of the VCs when I was an EIR at one of the accelerators at Silicon Valley before working with Accenture that, "Most startups will die not because of starvation but will die because of indigestion." What that means is that indigestion happens when you try to take too many thing and you try to do many things at once. And, certainly there is fear for entrepreneurs that nobody will like their product or license it but really that's the real risk an entrepreneur is taking by starting their endeavour. It's not only a technology risk thinking that can we can reach this technology goal, but also a business risk that is there an actual market or it. For that you have to define who your market is, because if you go in and you don’t actually have a market, you’re not really taking a risk. You’re not even addressing anything and you’re hoping that for some reason somebody’s going to want that product.
We had said yesterday that not only understanding your market really well but defining your use case to a specificity that makes it very easy, very apparent and kind of a no brainer for somebody to understand what the value proposition is, in terms that your start up customer completely understands how it benefits them. This doesn’t mean using big words, lofty conversations or value propositions, it simply the use case – this is what you do to solve this problem. That’s what we found with a lot of startups we work with that they are pretty clear about this.
You can look at any of the successful companies today; they focus on a particular problem for a particular market. Today they might be serving many markets and may be platform across different use cases. That’s fine, but how they started was by addressing something very specific.
For us, it makes things easier because then we know how we can focus in terms of working with that startup. Even if we find a startup that maybe has an approach that is relevant for a number of different industries, we still will narrow down to one particular industry that we think is the best, strongest and foot-forward for that startup, which gives us the solid conviction that yes, we can also lean into that relationship because we know they are strong in that particular area and then we can take them to market because we ourselves have to prove to ourselves that there is a model here that works. The three way model – the startup wins, the client wins and Accenture has to win. So, we have to prove that in the best, easiest case scenario. Then we can replicate that across different industries and use cases.
What would you advise to the bootstrap startups in order to survive for a longer time? What should be their execution strategy?
I am based in Silicon Valley and there aren’t many bootstrap companies there. Most of the companies have some sort of venture funding or other kind of funding. India, on the other hand, has a lot of them. Especially when you get to series B type of funding, there aren’t that much B type of investors that can write those big checks in many parts of the world and you can see that a lot of them are constituted in the Silicon Valley today. And when you get to that series B and series C kind of funding, of course you have some in other places but the majority is centred in certain geographies and Silicon Valley is one of them. Many entrepreneurs go there and there is a culture of how to achieve growth very quickly. Typically when you get to series B, you’re raising money not for your technology anymore but for sales and marketing. So when you raise a $20 million to $50 million round and you put that much money into sales and marketing that is a ‘hit the gas pedal and go fast’ and grow very fast.
This may not be the actual mindset for a bootstrap startup or the might not be in the culture of that entrepreneur to grow that fast because they built on what they have based on a very solid footing, providing value in every step of the way and seeing the return of the investment in every step of the way. Not to say one is better than the other but there are two different kinds of mindsets.
As I mentioned before, Accenture for us, we are looking at innovation at scale. So, it’s very important for us. As large as we are, we only have a finite number of offerings that will go to all the industries that we go into. It’s difficult for us to have relationships with companies and only have a small area that that company has interest in.
I think what’s working for that bootstrap company, they should stick to that. They should keep going; there’s nothing wrong with that. The question they have to ask themselves is how much growth do they want and how fast. The question is if they want to grow that fast and if they do then what is their strategy to grow that quickly. Maybe having some sort of backing from some sort of finance here, to be able to help them bridge that gap and try to bring them up to scale. It may be interesting and good for them but it may be counter to how they want to run their business. From an Accenture perspective, we cannot comment on what’s wrong or right, but we do know that these are two different kinds of approaches.
Also, if bootstrap companies have strong founders or CEOs that has actually created it, and it’s there for longevity and providing impact to the world, whereas the venture back startups have board of directors, an eclectic group of people who are looking at the whole company. The CEO may be gone but after the initial stages or other things. So there a lot of dynamic aspect here and they are two different world.