Tomasz Rudolf (D-RAFT):
"Startups and corporations need each other."
Published 20th September
Tomasz Rudolf is CEO of the agency D-RAFT that helps global companies and startups to develop joint business. From his point of view, passion of startups and pragmatism of corporates are complementary and both of these two worlds need each other. Like husband and wife. A good working relationship is based on trust, shared goals and complementary skills.
In your work you try to bring together two worlds that are hard to connect: the world of corporations and the world of startups. How is it that both are traveling in so different orbits?
Business is business. Independent of the size, organizations are attracted by opportunities in front of them. Startups can recognize them earlier, move faster & experiment with new business models, products & technologies. Many fail, but nobody really cares as this is perceived to be normal. Corporate executives have much more to lose - their reputation & current revenues are at stake when they introduce a product that fails. They need to see a huge opportunity to justify taking any risks.
If you had to characterize each of the two sides with an attribute, what comes up your mind?
In my experience, startup founders are passionate - in the beginning doing what they love is all they have. They are driven by their vision, feeling of ownership & control. The joy & excitement of entrepreneurship allows them to go on even when there is no money. Corporate executives are much more pragmatic. They have their monthly salaries, company cars and benefits that they do not want to put at risk. They have to prove ROI, create plans and PowerPoints and get other departments to agree before they can start any initiatives. All that politics gives less space for intuitive decisions.
Who needs whom more?
I deeply believe both worlds need each other. Like husband and wife - so different yet so complementary. Startup founders need corporations - as clients, partners or investors. After all, many founders dream of selling their companies one day. Big organizations can be a source of revenues, reputation and unique resources. On the other hand, corporations cannot survive disruptive shifts in business models without the energy that entrepreneurs bring. You can try to hire them directly, but often the only way is to partner with their companies or buy their solutions. We see that across industries - energy companies, telecoms, publishers, retailers, car manufacturers or banks - all need to rethink their business models and incubate their businesses of tomorrow. But startups are needed not only for radical innovations. They are an infinite source or solutions that can cut costs, improve processes or differentiate customer experience.
What does a corporate need to change internally to be successful in working with startups?
First, admit that no matter how many great people you have on board, there are always more outside your company and you cannot ignore them as potential sources of innovation. P&G did that when they took the challenge to source at least 50% of their new products from external entrepreneurs & inventors. You need that humility and openness to start. Then, you need to pick a leader with enough experience to navigate the corporation and enough entrepreneurial spirit to build a common language with startups. Jeremy Basset from Unilever or Marius Swart from Coca-Cola are great role models. One of their tasks is to create the right organizational setting for sourcing innovations, partnerships or corporate venturing. You need to fight internal antibodies, secure budgets for pilots, create APIs to internal IT systems… But most importantly, stop just observing startups or dating them at startup events. Pick an important corporate challenge and select best startups that can help you tackle it. Launch & learn together. It’s hard to build open innovation muscles unless you start training.
What must Startups be prepared for when negotiating with a big company?
Obviously you need to be well prepared to get the deal in the first place. Before the first meeting do your homework, read interviews with key executives, scan corporate strategy for most important goals, analyze competitive activity. From all the years I have done enterprise sales, I learned that the most important thing corporate buyers want is to know that you understand their business, goals and context. During the first date, listen first, talk second - it will allow you to present the value of your solutions using customer’s words. Once you get the deal, negotiate the terms smartly. You need to have some experience and assertiveness not to agree to anything a renowned corporation asks you to do. After all, if you do not protect your strategic interest, no one else will. Corporations can ask you for exclusivity or in other way limit your growth opportunities and you need to know when to say no.
Which models of cooperation are possible and what was your biggest success in this task?
At D-RAFT, we support different types of deals, but our focus is on headhunting European ready-to-scale startups that help corporate business units reach their goals. There are many ways to collaborate. First and most obvious one is a client-supplier relationship, where the corporation buys a product or service or licences a technology. One recent example was ING bank working with mobile app creation startup Kinetise, cutting the cost & time from the process. Secondly, companies can partner to launch a joint offering on the market. Startups can provide their products under their own brand, just like Spotify bundling its offer with Scandinavian telecom TeliaSonera. They can also offer corporations a ready-to-launch ‘white label’ solution on a revenue-sharing basis. Finally, apart from the purely commercial collaboration, the corporation might decide to invest in or acquire the startup.
I consider our biggest success so far to be the mindset change among executives we work with. After helping more than 100 corporations engage with startups in some way, we see that they no longer ask themselves if working with startups makes sense. Best proof is that CEOs of companies like Ghelamco or MasterCard decided to join us and invest millions in creating The Heart Warsaw - European center for corporate-startup collaboration.
Have you an important tip for both sides?
Best relationships are based on trust, shared goal and complementary skills. Try finding a partner that you like working with, check references and just start working together. Look beyond current products or technologies & co-create something that you could never do alone.
The interview will be also published in czech and german in the October issue of the magazine Plus of the German-Czech Chamber of Industry and Commerce.