It all sounds great on paper and in press releases. Corporates have established user bases and customers that trust the brand. Startups have innovative technologies and energy to disrupt the status quo. Joining forces they add value to the customer while generating more business for both companies. So far, so good. Yet, in reality, outside the PR it’s rarely all roses.
We launched this series, in which we ask startups about their experience with corporate incumbents. About their real experience – rejections to pay for the Proof of Concept after promising, no governance and painful processes. No names of corporations will be mentioned as the goal is not to expose anyone, but to gather learnings and contribute to the improvement of the processes and communication.
This week we asked Ivan Stefanov, co-founder of fintech startup Notolytix. The founded in 2015 Notolytix has developed a solution in the risk management and data processing area, that aims at changing the way companies conduct fraud and risk management. According to them, seemingly different use cases such as fraud prevention, AML, account compromise, and credit risk, all have common roots – the underlying transactional data. Notolytix enables organizations to process their data in many different ways and deliver multiple real-time decisions, all via a single integration. Since then the company has been in talks with several corporate partners, did Proof of Concepts with some of them, and saw the innovation-related problems of corporate structures from the inside.
Is there a case that didn’t work out well while trying to work with a corporate client or partner?
Ivan Stefanov: To be honest, I don’t think we have a case that has gone so bad. But I can think of a couple of cases where we had to admit to ourselves that there was an opportunity which we couldn’t land at that very moment.
What was the problem from your point of view? What could have happened better?
There is no silver bullet and there are no two sales opportunities that are alike. That being said, it is really important to evaluate the opportunity asap and be real about the current state of your solution and team.
What’s the lesson you learned from this situation?
Remain optimistic, while keeping your feet firmly on the ground.
Based on this experience, what have you changed in the way you approach corporates?
Do your homework first.
What’s your one piece of advice for someone who’s just approaching corporates?
Make sure you are talking to the right person, the decision-maker, someone who has a mandate and a budget. Large corporations have many VPs and SVPs that are just title holders.
Who were the decision-makers in your case? What were the challenges?
In our case, those were usually CROs, CCOs and sometimes CFOs. However in may corporations these roles are duplicated on a global or business line level and this makes it very difficult to gather the right group of people to begin with.
What would be the right structure and governance that would allow a corporate to really work with a startup?
I don’t think there is a silver bullet of a solution here. What might work for corporations is to adopt periodical evaluation process of their tools and processes. This is however highly unlikely to happen.
When does corporate innovation make sense and when doesn’t? For you as a startup? Can you think of a good and of bad example from your experience?
Unfortunately, corporate innovation frequently is an oxymoron.
Why an oxymoron?
Well, the main reasons behind that are – Size, Regulation and Corporate mindset. The size makes things slower by default. Regulators, with almost no exceptions, are always behind industry trends, lack practical experience and knowledge. So on top of the size, they further suffocate any innovation among corporations, by not reviewing in timely manner guidelines or not even doing the slightest effort to proactively educate themselves. Corporate mindset – 90% of the senior management in a large corporation are preoccupied with internal politics. Their main focus is to keep their highly paid jobs and produce pretty reports. So, no time to worry about improvement and innovation.
Do you see any patterns or issues that need to be addressed in the communication between startups and corporates?
It is not so much the communication but rather the decision-making process and the speed of execution.
Why do you think the speed of execution is so slow?
The reasons vary quite a lot – from lack of resources, to shift in prioritization or purely contractual negotiations issues.