08th of April, 2016

4 Keys To Launching An Innovative Startup From Within A Corporate

Michelle Bourke
By , CEO - Artlivemedia

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Our entire economy is changing.  Victorian companies less than two years old are responsible for most of the new job creation.  Ecommerce startups like Aussie commerce have gone from $0 to $210 million in turnover (or 11% the size of David Jones) in just 6 years.  Disruptive startups like Uber have gone from zero to over a million Aussie users in 3 years and Australia corporates are investing hundreds of millions in innovation funds and their own startups (or other startups) because they know they need to disrupt, or be disrupted.
Big business is ploughing big money into innovation.  In the last 1-3 years, IAG Insurance, Australia Post, Telstra, Optus, PwC and many more have announced multi million dollar funds focused on innovation.   But how do you spend the dollars and get a real return?  In this article we cover of the top 4 keys to success for corporate startups:
  1.  Involve yourself and your team in the startup community
While you may not be bootstrapping or needing investment from outside of the company to get started, the principles of starting a startup internally are the same and so help from the already very strong startup ecosystem here in Australia can be very helpful.  Here’s some things a startup entrepreneur would do before they got stuck into their startup:
  • Attend meet ups like Startup Victoria’s monthly meet up.  It’s free and up to 400 people get along to the events which are held at Inspire9 every month.  Plus if you get on the mailing list you’ll get updates to all the key events happening around the startup world.  At meet ups you’ll meet other startups either attending or on panels and learn from them directly.
  • Get onto state government news distribution lists. For instance the Victorian government has it’s monthly ICT email which goes out to interested contacts and again, they do a great job of curating the best opportunities.  Kathy Coultas and her team can get you on the list.
  • Check out TheFetch for more curated local events.
  • Do a bit of internal up-skilling and training.  There are a bunch of low cost or free training and also paid courses like those run out of General Assembly (Their Digital Marketing and UX courses are both really good ones).  This is particularly useful for team members who have perhaps been used to being a part of the corporate machine and haven’t been generalists before.  In a startup, you need to know a little bit about a lot of stuff to keep on top of it all.
  • Take your team to a hackathon.  Sure you could run one internally, but go out and actually experience one with your team first.  Again the above lists should help keep you informed about any hackathons if they’re on.
  • Stay on top of startup news.  You can do this on sites like Startup Daily or Starup Smart for local news, TechCrunch for global news.  Paul Bennet (VC at AirTree ventures) is the best source of auto-curated news out there and you can sign up here.  I read it religiously every day – saves a lot of time to have it all in one place.  It even auto curates trending tweets from startup twitter influencers.
  • On top of that we’ve curated our own list of Twitter influencers which you can find here.  Use Hoosuite to cut out the noise and engage with them.  There’s a lot going on that you find out through this source in particular.
  • You could even consider putting the team through an accelerator program – some accelerators like One10 have separate consulting services that can help corporates.  Some are specifically built for corporate startups – like Slingshot(which just recently bought Melbourne based startup accelerator Angelcube).
  1.  Chat with other corporates who have done a great job of it
On the corporate side of things, take Nifty for example.  One of my very good friends Marina Paronetto who is the Innovation Manager at PwC Digital highlighted these guys to me last year and what they have achieved is very impressive.  In some ways, getting a successful startup of the ground within a major corporate is almost more impressive that doing it from the outside! The team behind the management of Nifty run it very much like a startup and since it’s launch it has been doing extremely well.
If you’ve got Linkedin Sales Navigator as well, why not also do a quick Linkedin search for other Innovation Managers and find peers across other non-competitive organisations that may be willing to share insights with you.
  1. Prepare for it structurally
Think about how you can set the startup up for best success.  For instance, the startup shouldn’t have to be beholden the internal processes that could hold it back from making fast market decisions.  For instance, having to go through months of procurement process, to go through agency panels, or even be forced to use the agencies or professional services business you already use.  They could be cost prohibitive and your startup may be a small part of a larger pie and not get the love it deserves.  Think particularly about the marketing budget line items and how they need to be separated out.  Just because your centralised digital marketing team has an SEO budget, doesn’t mean you can just use some of that budget for your startup.  You’ll need a whole new budget for it. Use data to guide where the focus effort.  Here are a few more tips:
  • Realistically assess the level of entrepreneurial competence within the proposed team – do you have the right people in the team, or do you need to bring in outside help in the form of an individual who has successfully done it before?
  • Separate the team structurally so they report directly to a senior General Managing Director or Executive Director.
  • Build KPI’s into any teams who will be supporting the startup internally around the Startup’s success.
  • Look at whether it may be necessary to separate out from the company as a subsidiary
  • Assess whether you have an innovation ready culture.  If it’s not supported from the top downs a priority of the business, the startup will struggle to thrive.
  1. Be realistic with your numbers
We’ve seen a tendency for big business to expect the types of returns from their startup ventures that they would never expect from their core business operations nor the myriad other projects they invest in internally.  Sometimes a good yardstick is to think like a VC.  Understand the market and the value of the startup if it were to exist separate from your business.   Be rigorous and realistic with your projections.  We’ve come across too many cases where forecasts have been based on wishful thinking rather than data.  This wouldn’t be acceptable to any sophisticated investor, so why would you accept any less?
If you have an internal startup you’re looking to get off the ground, let’s have a chat!
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