Goliath, time to play with David?
In this week's column, Camilla Karhukorpi, a startup analyst at Avanto Ventures, talks about the story of David and Goliath – and startups and corporations.
We all know how the story goes. Goliath has been an unbeatable soldier his whole life. When young and inexperienced David accepts Goliath’s challenge with only a stone in his hands, everyone thought they knew how the story would end. But the much more agile David surprised us all.
Forbes’ study shows the same is happening again. Fifty years ago, Fortune 500 companies’ life expectancy was around 75 years, when today it’s less than 15 years and declining. In other words, it’s time to admit it: David might suddenly take you down. So what about starting to play with David? David’s agility and Goliath’s strength and experience combined sounds desirable for anybody in his right mind.
In Finland, we have this thing called “startup-pöhinä”. Everyone’s talking about them, but only few seem to know how to play with them. The same rules don’t apply when you play with little ones, so below I have created steps of success to Goliaths to follow.
Before Goliath starts cooperation with David, he should define his needs and goals by answering questions like what he wants to achieve with cooperation, how he will measure the success and what kind of capabilities he has. A corporation should familiarise itself with the startup scene or find someone who understands both – corporation and startup world. To guarantee success in the long run, the most important step is to obtain and maintain executive sponsorship and funding, preferably all the way from the CEO level. Without executive support, it’s difficult to motivate people to build a new operating model from a scratch whilst knowing it probably won’t show any results for a while.
After committing to play the game, Goliath should know his capabilities including areas of responsibilities, budget and methods he is going to use. When starting the game, Goliath and David can make guidelines by answering questions: Who is going to invest time and money and how much? Who owns the ideas? How will the results be shared? Simple contracts usually work best.
Making themselves visible on different forums and being active in the field are important for corporations to make the inbound grow. In the startup world, every eight out of nine startups fail, so in order to succeed, Goliath should make sure the scope is wide enough when executing.
A corporation can start from low involvement, low risk, low cost and short-term engagement frameworks. However, to benefit from the cooperation in the long run, it should learn and document its pilot and refine and improve its operations. In the end, the key to the success of the cooperation is patience and scaling. Goliath’s story wasn’t written in one night, so he can’t expect that from David either.