2020 STEX25 Accelerator Startups Day 2 - Startup Corporate Collaboration Panel Discussion, Session 1

MARCUS DAHLLOF: And again, the topic is startup and corporate collaboration. Really the purpose here is to share some best practices and lessons learned. So I'm going to start with a poll question that we asked the audience. And that was, what's the key value proposition that your corporate provides to startups? The options were industry expertise, scale, funding, customer reference. And the clear winner was industry expertise.

So I want to ask the startups-- and anyone can take a stab at this-- how does this resonate with you? What are your thoughts on that? How important is industry expertise in sharing the knowledge that a big corporate has regarding a particular industry? How important is that for startup?

ELI PASTER: I can kick it off, Marcus. I think for us, the key here is that individual companies know their bottom line more than anyone else. And so there's a back and forth where we say, go back and look at your energy consumption and your carbon footprint, and let's see if we can find a solution to improve everything. And so that expertise, their energy needs and their bottom line sort of financial sector, that's extremely valuable to us in providing better service.

MARCUS DAHLLOF: Anyone else that can perhaps share an example where through sort of transparency and good dialogue with a corporate, you were able to hone in on a lucrative market or learn some invaluable lessons for your product?

ROHAN PURI: I think part of the learning is a lot of the team that we've built at Stable are experts in the industry and have that industry expertise. They've already worked in a lot of these companies. I think I'll echo what Eli said here is it really is about navigating the specifics of your company, the key decision-makers, the key drivers, the OKRs that you're pushing for this quarter or this year. That's the real industry insight that we know, OK, this is a focus for them, and this is no longer a focus for them that we need specific to the company, more valuable than general industry expertise, which we get across the board with talking to many, many customers.

MARCUS DAHLLOF: Right, right, right. OK. Different question here-- a lot of the technologies that you guys are developing-- and I think this is particular to MIT-- is transformational. It's also long term. And so you're going to start engaging with corporates at an early stage where your product is immature, and it's certainly not at scale. Can you talk about your interactions with customers in the early days-- what went well and what didn't?

TREVOR BEST: Yeah. And I can jump in here. I think it's all about honestly communicating your stage. And there is an urge with a startup to sell and try and get people interested. But many, many corporates want you to hit a certain stage before they get interested. And if you're very open and honest up front-- we found many who will say, OK, hey, hit the next stage, come back, talk to us in a year. And whenever we hit that stage, we come back, and they're actually grateful we didn't waste their time a year before.

We've also found some that are interested in early stage technologies, because they want to see what's coming. They want to work it into their plans. And so those are very special ones. When you find them, you got to hold on to them. And so we've been very lucky in finding companies that are interested in engaging with early stage companies like ours.

WILL TASHMAN: I'd say we also engaged a lot of early stage sort of the pilots and early stage types of deployments. And the key here is that we're obviously not a 25-year or 30-year stable program like an SAP, but the idea is that we can use that actual agility and flexibility and speed to our benefit. And so a change that might take a normal bigger software company or an internal team two months or two years to make, we can do in two days. And so where we admit our mistakes and we try and be super responsive when errors happen or bugs pop up, but if we can also deliver on new features and new asks in a tenth or a hundredth of the normal time that an other software vendor would be, then you start to see the benefit of collaborating with a startup as different sizes.

MARCUS DAHLLOF: Got. Got it. Next question here-- discuss your typical engagement model with corporates and perhaps clarifying your stage at the same time. What is your thought process when selecting corporate partners to work with?

ROHAN PURI: I can jump in here. Typically corporate partners in our space have been related to one another. So they often know the same folks within the other companies, because, again, they've all come from the same original companies. And so you actually get context about other corporates through parallel corporates. The way we think about it is we need one key owner of the information in the relationship. You need a champion at every one of the companies that we work with. And that champion should be somebody who can either drive a decision on their own or make a decision on their own to drive a commercial contract.

And then we need somebody who is actually helping actually nurture that relationship and take it forward within the company. So that's what we do with every corporate relationship to drive it through. Of course, you need multiple stakes of buy-in. You need some accountability in terms of, hey, it's going to take 3, 6, whatever, 12 months, whatever your sales cycle is. And having a central one person for that startup to go to that has decision-making power on their own or is the direct point of contact with decision-making power makes it much, much easier to move things forward and to get to a clear decision of yes, we want to engage, or no, we don't want to engage.

Another big rule for us is in our early days-- we're a little bit later stage now. But in our early days, we were willing to take pilots and do some of those initial contracts. And we still are willing to do that. But I think it's really important for us to distinguish that this is a pilot or an innovation and R&D budget sort of thing with a B2B customer versus this is a commercial interest that we have longer term. And that helps us segment out how we go about that process with a company.

TREVOR BEST: And I've got something I'd like to add. When we're looking for corporate partners, this is about mindset. I am always very interested in finding somebody who has a vision. Marcus, you mentioned that a lot of us are working with transformational technologies. And what we found is that many corporate partners will lay out like a five-year roadmap. And if they weren't aware of your technology and it didn't make it into the roadmap, they won't really consider it. They have already pigeonholed down to we're looking for this thing. What fits that? And so we are always very interested in finding someone who has vision, who is willing to consider new things and take a different approach to the same old problem. And we found a number of partners willing to do that.

ELI PASTER: Yeah, and, Marcus, I'll say one thing, and it really comes down to simple math. So when working with corporates, we tell them to evaluate the ratio of risk to reward. You want to try something cutting-edge, it's a possibility that it won't work. But if it does work, you might have just saved your bottom line 30% or 40%, and you're ahead of all your competitors. So that's the type of mindset that we try to get people into. And if they say, no, it's too early, we're not willing to take that ratio, then so be it. We say reengage later.

WILL TASHMAN: We also try and implement, like I mentioned earlier, sort of a crawl, walk, run type of mentality. Big corporates never want to do everything all at once. You've got to start in a little pilot, then move to a slightly bigger pilot, then a bigger pilot. And so as long as we have a champion like Rohan mentioned who at least sees that vision and sees that future, we can go and execute down that path and work to expand within our different customers.

MARCUS DAHLLOF: Is it more important to get to an answer, let's say a yes or a no quickly, or are you trying to preserve that conversation and, like you said, the crawl, walk, run approach sort of with the mindset that the customer never really says no, they just are taking a long time to answer.

WILL TASHMAN: So that depends on your resources. And if you can't keep everyone sort of in this maybe stage and focus on them, then certainly you want to drive through yes/no faster. But if you have the resources to maintain those relationships for the longer term so that in 6 months or 12 months or after coronavirus stops or whenever that may be, they know that they have a reliable partner that they can go to at least these kick off that first step, you can go and execute like that.

MARCUS DAHLLOF: OK. Let's switch gears here. And if the audience has any questions, feel free to put them into the Q&A here, and we'll try to address them. Let's talk a little bit about strategic versus financial investments. I don't, off the top of my head, know exactly your situation. But what are your thought process in terms of strategic versus financials? And we do see a lot of strategic investments obviously given the corporate membership that we have.

TREVOR BEST: I think there's one main consideration when you're looking at strategics versus financials. Whenever a financial VC invests in you, then you pretty much still have an open board, and you can go get other investors very easy. As soon as a big strategic takes a noticeable portion of your company, then their competitors are not likely to ever touch you or work with you. So for me, whenever I am looking at strategic investment, one of the big things is, OK, if we do let this company invest in us, then who will never work with us again after this? And I think that's probably the number one consideration when we're looking at a strategic.

ELI PASTER: Yeah, I think for us, it's-- in strategic versus purely financial, there's really two things we look at, which is one, how long have they been looking at us? Is it a snapshot in time, or is it three years? Because we love to deliver on what we promised. And then for looking forward on the strategics, what are they actually trying to do? Do they align with the sort of core motto of PolyJoule, which is it's not just about making money. It's about changing the world from a green perspective. And if it's purely a strategic investing for financial reasons, it's not the right fit for us.

MARCUS DAHLLOF: All right. So the common vision is an important component you're saying.

ELI PASTER: Yeah.

MARCUS DAHLLOF: So maybe finally here-- and we don't have a lot of time. But finally, maybe you can share a little bit about your best experience working with a corporate and what made it the best experience.

ROHAN PURI: I have a little anecdote here that might make it really strong. So I won't name names or anything, but one of the corporates that we were talking to-- many of the corporates that we work with are very large entities with startup-oriented programs. They have innovation programs, startup scouts, people who deliberately go out and reach out and connect with startups. And while that sounds great on paper, what ends up happening is you get a large group of people whose job or the way that they're being rated in their job at the corporate is funnel-- getting startups into the door and making introductions. But that's not what a startup really needs. Introductions are part of it, but it's really about getting to sales, right? Like, getting a partnership in place and doing that. And that's often not a main goal of those folks.

So one of the corporates that we ended up working with had this one person, this singular person, not a startup program, a singular person who worked with startups. And their only role was to take any filter away from what we might have heard from the rest of the corporate team. They would back-channel-- they were senior enough where they could back-channel in the back end and say, hey, just so you know that these people are considering you, but they likely won't be able to make a decision for a year. So even if they're talking to you about it being in six months. And it really truly felt that we had somebody on our side that was championing us and heralding us.

And we can even do gut checks. It got to the point where we felt so confident, we said, hey, this person said this. What do you think about their budgetary requirement? Is this a hard requirement? Is this a soft requirement? Do you think this is coming out of an innovation budget or out of a commercial budget? Which is a very important consideration for us.

And they were very clear. They're like, let me get back to you tomorrow. Next day, they have an answer. Hey, it's coming out of an innovation budget. You should be talking to this person instead. Right?

So what made it better is that instead of us having to navigate all of that and not knowing the little idiosyncrasies of that company, we had one person who almost felt like they were-- there were a former VC, had worked in many startups before. They know what we're looking for-- that we went to that helped us navigate that company and would check in if it was taking too long and say, listen, they clearly-- it doesn't matter for them, right? You need to move on. So this really, really, really worked effectively versus the mortar startup accelerator innovation programs that we've encountered in our past.

MARCUS DAHLLOF: Great anecdote. Thanks for sharing. Anyone else?

ELI PASTER: Yeah, for us, so we've engaged with a lot of corporates, and we understand as a startup or even as a large corporation, progress is incredibly inefficient. And so the best engagement-- and corporations are very large, complex organizations-- is sort of casting a wide net and saying maybe batteries fit in here, or maybe they fit in there, or you should talk to so-and-so. Really it's not just a cheerleader, but it's an individual that understands the various branches, and they knock on doors. And then some of them slam in your face, and some of them open up to you.