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A startup/enterprise collaboration is a magical thing that can boost overall innovation exponentially. That said, the process is anything but simple. In fact, it is often inefficient and impractical; for a young startup, to find, connect with, and pitch their innovation to a decision maker within a global enterprise is nearly impossible, and for a large enterprise, to implement innovative technologies and solutions, well… for a bureaucratic entity, it’s no simple task.
To learn about and understand the intricacies of the corporate innovation world, we’ve initiated a series of dedicated meetups with the goal of bringing together like-minded corporate innovation enthusiasts to build a community based on conversations and idea sharing. (To join the community, check out our Corporate Innovation New York and Corporate Innovation Israel group.)
At our latest meetup, Innovation Through Startup-Corporate Collaborations, we heard from Gilad de Vries, SVP of Strategy at Outbrain and digital content and marketing guru, who enlightened the crowd with his knowledge on the corporate innovation world, while Hillel Fuld, tech blogger and startup advisor, moderated the Q&A session.
To Corporate or Not to Corporate
Outbrain, an online discovery leader, is unique in its corporate-characteristics. Gilad joined the company in 2011 when it was still an up and coming startup. Today, Outbrain has more than 600 employees spread across 18 offices around the globe and has raised in the region of $150 million. Despite this rapid growth, or maybe because of it, Outbrain stays true to its original startup-minded DNA. It is perfectly positioned to take advantage of the strengths, reach, and resources a global enterprise has while still paying much respect and attention to the process of innovation, which requires speed and agility.
Outbrain understands the advantages of collaborating with external companies to boost their offering and value, but also encourages its employees to think outside the box, share their points of views, and suggest and promote their ideas. Their innovation strategy consists of hackathons, collaborations, M&A and more.
In this Q&A-style meetup, we picked Gilad’s brain on some of these processes and the lessons learned are presented below.
Q: In your mind, what’s the difference in the way startups and enterprises operate?
A: The differences in the ways startups and enterprises think and act are many. Startups tend to be agile, while enterprises are slightly slower moving; startups are able to try new and sometimes crazy ideas, while enterprises are less able to. It all comes down to the flexibility or lack thereof, of the company.
For example, a start-up’s size makes it’s easy to shift and pivot frequently – it’s almost expected. However, for big companies operating at scale, it’s complicated. There’s much less flexibility as there’s likely to be a rigorous schedule in place that’s dictating the next two to three quarters. This rigidness gives you very little wiggle room.
Q: When experiencing growth from a startup to a large company and ultimately an enterprise, what can be done to ensure a smooth transition?
A: I would say that the most important thing is for the leaders of the company to initiate and actively oversee the shift.
Since the mindsets of the two entities are so different, all levels throughout the organization must be on board and consistent in every regard of the company goals, overall culture, and of course, it’s perspective on innovation. Not only keeping up with, but continuing to stay ahead of the market.
Time to Collaborate
Q: How big a part of your corporate innovation strategy is acquiring startups for their technologies?
A: To date, Outbrain has acquired four startups, however M&A (mergers and acquisitions) is never the sole focus – it’s the outcome. We focus on launching PoCs (proof-of-concepts) with startups, and if the PoC is successful, then sometimes an acquisition is an option, but developing a relationship is the most important parameter in our minds.
Simply put, a successful acquisition is a process that starts with a successful PoC.
Simply put, a successful #acquisition is a process that starts with a successful #PoC. @giladdevries Click To TweetQ: How does Outbrain, a major global company, go about seeking external innovations?
A: We’re constantly striving to be innovative and advance our space as much as we possibly can.
That being said, before we go out looking for external innovations, there has to be a need. This is the first step. Once we identify that we could use some sort of technology or innovation to bring our users more value, we seek out companies that we feel have something useful to us. We then invite them to run a PoC (proof-of-concept), whether it’s for 4 weeks, 4 months, or more. Running a PoC with a company gives us the ability to test the tech or solution on a small scale before fully adopting their offering or acquiring the company.
We find PoCs very valuable and are currently running a number with different startups.
A note for anyone that’s been rejected to run a PoC: We’ve had to say “no” to companies before. Don’t get discouraged though. A “no” isn’t an indefinite no. There can be strategic partnerships in place of PoC’s, which can be equally beneficial to both parties.
Q: How has a past acquisition of Outbrain’s come about?
A: A startup approached us after they tried pitching their solution to publishers – they got some interest but it wasn’t a perfect market fit. At the same time, we had clients reaching out to us telling us about their new technology they would love to see integrated into our platform.
We invited them to run a PoC with us with an offering that included both companies technologies, and the PoC turned out to be very successful. The culmination of these two events led to a successful acquisition.
For me, one of the most notable things about this acquisition was that the technology already worked with our systems because we had run a PoC with the company. I always tell startups that the best way to ensure a successful PoC is to make the technology as easy as possible for the enterprise to test, help them see your technology as an extension of their existing platform, and that is what happened here.
But, what’s important to remember and something that not many people know is that over 70% of acquisitions fail. Sometimes because the technology is marginal, but mainly because of a lack of cultural fit between the startup and larger company. In my eyes, company culture compatibility is one of the core elements to keep in mind when considering who to work with. It is definitely one of the key factors that I take into account.
With Great Innovation Comes Great Responsibility
Throughout the interview, Gilad pointed to the fact that he believes that as corporations grow and their impact on society as a whole increases, it becomes their responsibility to innovate in a way that betters society as a whole.
In 2014, Outbrain showed this by example as they unilaterally decided to eliminate 25% of their traffic which they deemed “fake news” long before the modern media started using the term and admitting to it. Part of this was due to Outbrain’s ability to recognize with better accuracy what was real news and what was fake, but another part was because they knew that as they grew, they would be paving the way, both technologically as well as ethically.
Without a doubt, Gilad’s take on corporate innovation and the responsibility it brings with it, is inspiring. We truly hope others will follow.
