Innovate or Die: who brings innovation to corporations
On September 7–8, the first federal practical conference “Innovate or Die“ on corporate innovations takes place. One of the main organisers is Dmitry Maslennikov, an experienced entrepreneur, venture investor, innovator helping to develop startups and corporate innovations.
— How does “Innovate or Die” help corporations? And will this event be useful for startups?
For now this is the first and the only conference in Russia where we examine specific practical cases. I think the most valuable is to learn firsthand about the experience of these corporations in the development of innovations. Not stories about how cool they are, but a real case of how this or that company launched innovations in different sectors.
The first similar event was held in Moscow in November 2016. After that conference for this year more companies engaged in the development of innovations have appeared and there is more understanding of the issue. More people are interested in this, so everything grows, develops, more information and more experience. This year there will be two conferences, the first one in Innopolis, September 7–8, and the second one in Moscow, November 15.
— What do you think, why do corporations now need to invest in innovations and to develop in this direction? Why do you pay such attention to corporate innovation?
— There are several reasons. The first one is exclusively commercial. The corporate segment is one of the strongest nowadays, as there is practically no venture capital market in our country, there are no venture investors in the amount that is needed, no competition for projects, and a lack of potential clients. Therefore, corporate innovation is a good segment in which you can engage in startups and innovations, where there is significant demand. The second reason is the whole ecosystem problem in Russia, the venture market problem. There are very few outputs, and therefore, very little investment. The audience to sell startups is unclear. So, corporations have to start playing a key role, and without all that I bring to these big companies, it’s difficult for them to start innovating fully, that is why the whole market suffers.
— Why do corporations have problems with innovation?
— They just have another mindset and this is the main problem. But at the same time, it is opportunity. This characteristic feature allows them to successfully implement and develop their current business, but creates many problems in launching innovations. But since any current business has its own horizon, it is limited, and sooner or later it will begin to die under the influence of technology, the market, trends, etc. Therefore, there is a need for innovation, you need to think different and to try other approaches, tools, a different view of the world to start and develop them. There are many things simply missing, as in two different cultures.
— Is this problem more significant for corporations or for startups?
— The problem is mutual: they depend on each other, even if it seems to them they don’t. Large corporations depend on startups, because often startups overtake them and become big companies themselves. And the same thing on the opposite, many startups die because they can not sell themselves, their technologies. There is no one here who needs one more than the other.
— Is your project “KnowHouse“ aimed at solving the problem of contact between startups and corporations?
— Yes, this is an experimental project in inicial stage, although it exists for many years as an idea. The background is the following: when I studied interactive communication in advertising, we were visiting digital agencies. There we were getting to know people, talking and exchanging experiences. It seemed cool and useful to me, and I want to repeat this practice in the startups and corporations market, because I see that they do not have enough mutual understanding. To achieve it, it is necessary that corporate employees go to startups and see how they work, and on the other hand, that startups go, get to know, talk and look at how big companies work to better understand their potential clients.
— What is your attitude to corporate accelerators?
— I treat them as a tool in the corporate innovations development. This is just one of the mechanisms that can and should be applied when it is necessary for the corporation. It should be understood that any accelerator is a venture investment tool used to reduce the risk in working with a project. Often corporations use it as the first available tool and do not get the expected result. Their business expectations differ from the results they receive, and periodically this tool gets negative tone.
I think this is a good, right tool that we need to continue using, but only with a deep understanding of why and how.
Corporate accelerators can be done much better, but it depends on the company itself. Now only the necessary understanding of this is maturing, the necessary experience appears … in general, this is the way that many companies will have to pass through: to make mistake, to fail somewhere, but continue doing. We will have a session in “Gazpromneft“ in a few days and we organise a panel together in Skolkovo, where I invited colleagues from PepsiCo, Alfa Bank, QIWI and GS Group. Each of them already has experience in launching a corporate accelerator. I think that such communication and exchange will be very useful, and the colleagues from Gazpromneft act very correctly — before launching, they study this topic and the experience that other corporations have.
— How do you define the concept of a startup for yourself?
— It has a concrete definition which I adhere to. It is a temporary organisation aimed to search for a repeatable, profitable and scalable business model in conditions of extreme uncertainty and rapid growth.
“All that is not a unique competence has to be outsourced, in order to avoid doing what others can do. We must do what no one else does“.
— Why did you prefer to develop and promote startups, and not to support existing business projects?
— First, startups need most of all the expertise that I can provide them. Second, I just like everything new. They say that such people are not focused, in a negative sense. But I think it’s the other way around, I like to work with something new. This is a trait I have. All my defocus, which may be seen in the number of projects I run, is compensated by the fact that they all belong to the same market, to one type of client. It’s like creating an ecosystem of projects, inside of which everyone has a synergistic effect on the others.
— What startup where you participated do you consider the most successful?
— I only have one success story. Regardless of how I like other projects, for now I can be really proud of only one of them, the app “VKarmane“ (“In the pocket“ — translator’s note) that we sold last year to Tinkoff Bank. It stored users documents: passports, credit cards, driving licenses … all those documents that surround us. When we sold it, there were about 2 million documents and about 700 thousand units. I participated in this project for more than 2 years and during this time we developed several business models, showed stable growth and made an output through the sale to Tinkoff bank.
I also want to highlight my wife’s project, in which I take part as much as I can. It is children’s travel set “The box by A.M.“. Traveling with a child is a test for both parents and other passengers. Therefore, in order to distract a child on a trip or even at someone’s home, my wife came up with this project, knowing all the details on her own experience, as we travel a lot with our child. It looks like a box, where there are many different elements distracting and entertaining a child on a trip. For now, there are about two and a half thousand boxes sold, and we go to the first growing stage, passing from manual to semi-automated production. Before they were completely customised sets, individual for each child. Now we will keep the individuality at the gender and age level, but without specifying that the child likes Leonardo form The Ninja Turtles, and not Raphael.
— In your opinion, how should the universities develop startups, what are the difficulties here?
— At the moment, nobody wants and, moreover, doesn’t know how to develop startups at universities, because there are no entrepreneurs there. Therefore, all that I see now in Russia, well, if we are not speaking about the Higher School of Economics and the Moscow State University, it is a fiction of the development of entrepreneurship. While at universities there are no entrepreneurs, there will be no sense in the so-called acceleration.
Although I consider this is the basis for the ecosystem development, because it is in universities, first of all, where talented people, innovations, technologies, products appear … but there must emerge an ecosystem that will help all these new ideas and people develop. As long as there is no ecosystem, it will be very difficult.
There have to appear entrepreneurs and people whose motivation, first of all financial, would depend on the results of their work, rather than on hours or years they spent assisting lectures and all that does not contribute to entrepreneurial motivation. There is even such a concept as entrepreneur in residence, which is more applicable to corporations, but it can also work in universities. In universities, there should be entrepreneurs who will rack their brains to develop the these people’s potential, for their own and the university benefit.
“I understand and respect failures. Who makes no mistakes, makes nothing. It is better to do something, try and make mistakes than not to do anything“.
— What mistakes can make those who help startups to develop? And how do you evaluate your role in the projects?
— Those who invest, they start to think that they lead the project and have the right to influence it however they want, but it is not true. You didn’t found this startup and you are not a member of its team, you are an investor, so you have to earn money as an investor, not by working with your own hands in the project. And this is the most difficult and important thing, to be aware of this and to moderate your intentions.
In projects, we act as a tool, which can be applied to something. But we need a point of support to apply communications, skills, resources, knowledge … this does not work when there is no force application point in the form of a leader and a team.
— Why do you want to build an “innovation bridge“ between Russia and Israel?
— I saw the needs of both sides, where the possibilities came from. Israel is a great ecosystem and a significant market in terms of innovation and startups. The technology and venture money market. But this is a very weak market for project implementation — few people, small territory. As for Russia, there is another problem: we have a large market, a big country and population and a great demand for innovation. Actually, I try to remain at this intersection of needs to satisfy, on the one hand, the need for innovation and on the other, the need for a large market.
— What is innovation for you?
There is nothing new in terms of defining the word “innovation“. This is something that did not exist before, that changes the world and life for the better, that helps to do something more effectively and differently from how it was before.
I am sure that all the good things we have, appeared thanks to innovations, and innovations appeared thanks to people who realised the imperfection of the world and rack their brains to change it.
— Is the entrepreneurial concept “lean startup“ which you were referring to before still relevant in your business management?
— Everything I do is based on it, and I constantly develop and complement it. In general, I strongly adhere to this methodology, because it still proves its relevance. Using this concept, I prepare a new product that will be launched this autumn, “MatchPoint“. Its task is to help corporations to search for startups and to facilitate their interaction, systematising and streamlining internal work. Initially, I did it for myself, because I saw the need while working with my clients to find startups for their request, but soon I realised that the whole market needed such a tool. Let’s see, time will tell if I was right or not.
— There are many different guides to how to develop your business, promote ideas, etc. Is there any sense in it, or is it all the same hidden under different text?
— I read a lot, and I try to read everything that is relevant on the topic that we are discussing. In my opinion, books are just a tool to launch your own thinking process. Of course, you can learn some basic things, but the main idea in each book is quite understandable. In fact, the information in them is the same, but you need to read each one, because different authors use different words that can push you to create new ideas. The question is if you can set up your brain to find new ideas by reading a book.
— They say that the same idea comes to a thousand people. In your opinion, when you have a new idea, is it necessary to start immediately or is it better to think it over for more time?
— If the idea comes, of course you need to start working on it. You do not need to postpone it and live with it for a long time, because nothing good will happen during this period, it will not grow by itself. When you immediately start working on it, checking all facts, it can grow and develop. This is the first.
Second, indeed, the same idea comes to the minds of many people, and you should not miss the moment. It’s better to start running in the right direction, and then you’ll see.
— You are focused on people, work with the team, and not just with the idea. What is the advantage of this approach?
At the beginning, all ideas are either equally brilliant, or equally bad. The idea itself does not really matter if it has a bad team. The same is true in the opposite — if the team is good, strong, then it is able to turn even a bad idea into a good product, dealing with its development. Therefore, the leader and the team are always at the first place, and then what they are working on at the moment is not so important.
— Does it often happen that the original idea changes completely during work?
— This happens almost always as any project develops. In the course of hypothesis testing, if everything is done correctly and quickly, the project is constantly updated, the vision that the team has is changing. Thus, everything can turn upside down, and there is even a special term for that — “pivot“ — a radical turn of the business model, a critical change in the project.
— They say “take venture money even when it is no longer needed“. What do you think about it?
— A controversial statement close to a foul. I don’t know. Venture money is quite expensive money by itself, so if you can avoid taking it, then it’s better do it. And the fact that money can be taken when it is no longer needed, it depends on the conditions you will receive them. If this is cheap money for you, then why not. If you understand that you will have to give away too much from the company, and you can reach the next level of development yourself, it is better to do it on your own.
— What do you think about the statement that there are no friends in the business?
— Yes, they say that you can not build business with friends, but many people deny it. I do not have a determined opinion on this matter. I once created a business with a friend and by the way, the company first developed well thanks to this friendship, but at one point the business became more important for my former friend and he behaved extremely indecently. This led to the fact that we broke up both in business and in life. It often happens that with the end of the business partnership, friendship ends too. Therefore, if I have an opportunity, I would not develop business with my friends, but would become friends with the one who I started to carry out the business with. I have such friendship with my previous business partner with whom we created the accelerator MetaBeta. This is by the way the first and so far the only successful goodbye with the business partner that I had. I think this is more important than any business results that we could get.
— What is your business motto?
— It will probably sound silly, but “do it right and it will turn out right“. It is so true, I think.