Since the inception of the term ‘corporate innovation’, companies have struggled with how to structure it in a way that is both separate enough from their core business to be innovative but still able to take advantage of the resources large companies provide. Other struggles like incentivizing top talent, failure stigma, and involving stakeholders like customers have been problems since the beginning. To solve these issues, companies have developed and continue to experiment with structures like accelerators, corporate venture capital, and innovation labs but the struggle continues.
The rise of web3 has presented a potential new solution to the corporate innovation problem in the form of decentralized autonomous organizations, commonly known as DAOs. To use Linda Xie’s definition, “A decentralized autonomous organization (DAO) is a group organized around a mission that coordinates through a shared set of rules enforced on a blockchain. This article by Packy McCormick gives you a good overview of DAOs and why they’re so powerful. Packy makes one addition to the definition that I think will make the concept click:
“More simply, DAOs are a new way to finance projects, govern communities, and share value. Instead of a top-down hierarchical structure, they use Web3 technology and rapidly evolving governance and incentive systems to distribute decision-making authority and financial rewards. Typically, they do that by issuing tokens based on participation, contribution, and investment. Token holders then have the ability to submit proposals, vote, and share in the upside.”
In this article, I’ll explore how a corporate innovation DAO could be structured and what it solves. To make the discussion more straightforward, let’s assume the DAO is composed of stakeholders including the parent company, the innovation team and internal employees, loyal customers, and fans of the brand. These stakeholders all hold tokens in the DAO and the value of those tokens increase if the DAO is creating value or there is some other social benefit that comes with being part of it.
2020 was a strange year for everyone. I’m not going to rehash the events for you – there are enough thinkpieces out there already. But I do want to share the best books I read over the course of the year. There’s something here for everyone: entertainment, knowledge, music, sports, wealth, self-improvement, and more. Without further ado, here are my 2020 book recommendations.
The world lost a treasure when Kobe Bryant tragically died in January. Kobe’s book The Mamba Mentality is a fascinating look at his work ethic, worldview, and clear thought process. I can’t even imagine the future writing he would have been capable of had he lived longer. Here are The Mamba Mentality Key Takeaways.
I wrote a tribute to Kobe while lying awake in bed the night of his death, which you can read here.
Imagine you’re in a hot, dry desert and desperate for water. You’ve been walking all day and the thought of drinking nice, cool water makes you ecstatic. Suddenly, you see it! A pool of water in the distance. You hurry towards it, running as fast as your legs will carry you. But when you arrive, all you find is sand. Damn sand!
You’ve just experienced a mirage. And this is exactly what it feels like when you’re looking for that first customer and close a whale. You’re desperate for validation and revenue. If only you could get that big name-brand customer, investors would be tripping over themselves to give you money! TechCrunch would write about you! The cash would be rolling in and all your worries would be over!
After weeks or more likely, months of emails, calls, negotiation, and nervous waiting, you finally land a deal with a WHALE, a well known publicly traded company. Not just any deal – this deal starts with $100k+ in revenue and has the potential to bring in much, much more. This is the inflection point right? It’s all #winning and *crushing it* from here!
Unfortunately it usually doesn’t work like that. If your first customer is a large company, the deal is more likely to be a mirage than the start of a winning streak.
Corporate innovation people get pitched by startups All. The. Time. In theory, a startup may reach out or be introduced and they’re a perfect fit at the perfect time, leading to a quick deal. I’ve personally never seen a deal happen that smoothly and certainly wouldn’t bet on it. The far more likely scenario is you’ll be rejecting startups that reach out to your corporate innovation group.
Startups are rightly rejected by large companies for a variety of reasons. The startup may have misinterpreted the corporation’s existing capabilities or the corporation is already building a similar solution, internally or with an external partner. But many times, a startup with an objectively needed capability comes around – and yet, the timing isn’t quite right so a deal doesn’t get done. Sometimes the issue is budget. Other times, it could be an attention problem – decision-makers are focused on another, more important problem.
No matter the reason, the world is always changing and corporate needs are no different. Smart corporations (similar to VCs) are great at saying no while leaving the door wide open for future collaboration when a need arises. There’s a fine line between misleading a potential partner and clearly saying no but leaving the door open for future opportunities.
Last week, I saw a tweet by Ryan Kulp highlighting predictions by Gonz Sanchez on the 2020 European startup ecosystem. The predictions, while interesting, weren’t what caught my attention. To me, the shocking thing was Gonz literally put monetary stakes on his predictions. Take a look at this screenshot from the Seedtable newsletter:
I get contacted regularly by startups looking to partner with large, global companies who can give them scale. My work over the years has shown me a number of these deals from both sides of the table. While almost all of these relationships make some logical sense on paper, in reality they are way more difficult to implement than founders initially think.
On the surface, the logic for these relationships is straightforward – one party has a unique technology or product that can improve things for end users while the other party has global distribution and scale. What’s not to love? But there are several other factors that go into the decision making process for large companies which founders often fail to consider.
I’m currently in the midst of reading the incredible Musashi by Eiji Yoshikawa, and my mind went on a tangent (which is surprising to no one). I couldn’t help but compare it to other novels I’ve read, particularly those I’d describe as epics.
I use the word epics but it’s difficult to know what exactly comprises an epic novel, as opposed to a regular one. Going further, it’s clear that there are certain stories which qualify as epics, regardless of form factor. I’m talking about books like The Count of Monte Cristo, movies like The Godfather, and TV shows like Breaking Bad. What isn’t clear, however, is what distinguishes these epics from “regular” novels, movies, and TV shows.
I traveled less in 2019 than I ever have in my adult life and since I do much of my reading on trips (flights, trains, etc), I read a little less than usual.
That said, I still read some great books this year and my reading skewed more towards fiction than in the past. There’s probably an escapism lesson there but I’ll spare you. Here are my picks for the best books I read in 2019:
Last week, I had the pleasure of attending and keynoting Carnegie Mellon University’s Corporate Startup Lab Demo Day. My friend and mentor Sean Ammirati first shared the Corporate Startup Lab model with me in 2017 and I’ve been a fan since Day One. The idea is to bring together Fortune 500 companies with interdisciplinary teams of students to build internal startups solving problems and developing new business models.