Customer Mirage: Risks of Signing A Large Company As Your First Customer

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.

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The Art of Rejecting Startups

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.

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The Five Questions Large Companies Ask When Evaluating Startups

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.

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Epics

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. 

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The Best Books I Read in 2019

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:

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Corporate Startup Lab Demo Day 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.

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Inside Outside Podcast Interview

I recently had the opportunity go on my friend Brian Ardinger’s podcast, where we spoke about The Startup Gold Mine. We were able to get into a few different things, including:

Startups and corporates speak a different language

  • Different timeframes
  • Size of deals
  • Response times
  • Number of stakeholders

Corporate incentive structures for successful partnerships

  • How comfortable is the corporate team in innovating? If comfortable, they’ll have a higher tolerance for misses. Look at the entire portfolio.
  • Companies that allow intrapreneurship give employees new outlets to thrive.
  • Allow more employees to scout for deals – innovation can come from all parts of the organization.

What are the benefits of startups-corporation collaboration?

  • Inside large organizations (10,000+ employees) it’s an echo chamber. They only see direct competitors.
  • Need someone looking outside of direct competition. Expose the corporate team to new ways of thinking.
  • Startups also get exposure to see how their tech can apply to different domains.

You can listen to the podcast on iTunes, Spotify, or your favorite podcast player. Learn more about this and other great innovation episodes on the Inside Outside Innovation website.

Make sure to grab a copy of The Startup Gold Mine at your favorite bookstore!

The Laws of Human Nature Key Takeaways

The  Laws of Human Nature Key Takeaways

I’ve been a huge fan of Robert Greene’s work ever since his 48 Laws of Power was recommended by my boss back when I was a 19 year old intern at Booz Allen Hamilton. Greene’s books combine two of my favorite subjects – history and psychology – to give actionable takeaways that you can apply in your daily life.

The Laws of Human Nature is Greene’s long awaited book, his first since publishing Mastery in 2013. The book absolutely accomplishes what it set out to do, namely:

The truth is that we humans live on the surface, reacting emotionally to what people say and do. We form opinions of others and ourselves that are rather simplified. We settle for the easiest and most convenient story to tell ourselves.

[…]

Consider The Laws of Human Nature a kind of codebook for deciphering people’s behavior—ordinary, strange, destructive, the full gamut. Each chapter deals with a particular aspect or law of human nature. We can call them laws in that under the influence of these elemental forces, we humans tend to react in relatively predictable ways. Each chapter has the story of some iconic individual or individuals who illustrate the law (negatively or positively), along with ideas and strategies on how to deal with yourself and others under the influence of this law. Each chapter ends with a section on how to transform this basic human force into something more positive and productive, so that we are no longer passive slaves to human nature but actively transforming it.

The Laws of Human Nature key takeaways listed below are my personal favorites but this book has a ton in it and I suspect different things stand out to different readers.

You can also listen to our Made You Think podcast episode on The Laws of Human Nature below:

Here are The Laws of Human Nature key takeaways:

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Entertainment Isn’t Dumb

If you watched the Super Bowl this year, you probably saw Microsoft’s heartwarming commercial about children with disabilities using an adaptive Xbox controller to play games with their friends. In case you missed it, here it is:

First of all, these kids are absolute heroes for what they are living with and somehow doing with a smile. Nothing makes you more aware of your own fragility, mortality, and good fortune than observing someone, especially a child, with a major health issue. Owen (in the commercial), for example, is only nine years old and has already had to endure 33 surgeries.

There are many forms of entertainment: movies, music, TV shows, sports, video games, board games, books, and more. It is very, very easy to dismiss all of these things as a luxury or even a waste of time. You’ve heard the argument before: “Imagine if all the money and energy that goes into the entertainment industry were put into something productive, like curing cancer”. This is a seductive, but wrong, argument.

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