Flying in From SF: Lisa Barnett Urges Startups and Enterprises to Take the Next Step
Lisa Barnett is flying into Helsinki from San Francisco via the direct Slush Flight. Original post by Pauliina Martikainen. Follow Lisa Barnett on Twitter @LisaBarnett_11.
- You are currently Partner at Sherpa Foundry, which aims to bring together corporations and cutting edge startups. Can you tell a little bit more about the company, your own work, and the next milestones of Sherpa?
Sherpa Foundry works to connect the world of innovative startups and long-time incumbents. Together, we believe we can create unprecedented growth across industries.
I spend most of my time working with the top founders — whether they are in or outside of Sherpa’s portfolio — help think through how to grow and scale their businesses. Many times, this means orchestrating deals (investments, partnerships, etc.) with Sherpa’s corporate members. When I meet impressive founders, I’m constantly thinking, how can I use my network to help grow their businesses faster? Seeking to answer this question is what gets me really excited everyday, and my work at Sherpa Foundry enables me to do this in a scalable and valuable way for all parties involved.
In terms of the next milestones, Sherpa Foundry was founded about 3 years ago. Since inception, we have worked with companies such as Salesforce, eBay, Conde Nast, Dreamworks, and others. I see the next stage as building out this corporate membership network even further across lots of different industries, and using it to drive conversation, relationships, and deals among the founders that can benefit most from such connectivity. Ultimately, Sherpa’s vision is to continue to help companies grow together.
2. The relationship between startups and corporations is somewhat changing. It is often claimed that corporations need new business opportunities and new innovations inserted into their current services in order to survive, whereas startups are quick to adjust their operations in the market or with customer to suit new situations. How do you see that this playground between corporations and startups will develop in the future?
There is always going to be this interesting, synergistic yet competitive relationship between corporations and startups. As you hinted at in your question, corporations have what startups struggle to get: scale and resources; startups have what corporations fight to bring back from their early days: agile, out of the box thinking. Corporations tend to launch products that they can make, whereas startups tend to launch products that fulfill a clear market need. What I see changing is each party’s willingness to engage with one another, and I think we will see more and more examples of significant relationships between the two. The strongest corporations and startups are taking on the perspective that they can grow together.
We will see corporations continuing to become more comfortable with looking at new technologies and taking risks with startups in a couple of ways. From an investment perspective, in 2015, corporate venture groups deployed about $7.5Bn into 905 deals. This was the highest investment total and deal count since 2000, and comprises 13% of all venture capital dollars invested for the year and 21% of all deals. Big, traditional companies are finding that in order to see growth in mature markets, they need to engage with the outside, startup world.
We are also seeing companies more directly embrace the value of incubation and external thought leadership in corporate labs models. One example of this working in a big way is Tinder, which was actually founded and incubated inside Hatch Labs, part of IAC. Tinder is arguably among the most culturally relevant and influential startups that have launched in recent years, and it’s delivered a ton of value back to the corporation that incubated it.
Lastly, we are seeing more and more large scale partnerships emerge. Consider Cue, a revolutionary at-home diagnostics developer. Cue recently partnered with J&J to create a portable, inexpensive and internet-enabled HIV viral load test that would enable doctors in poor countries to more easily determine if a drug regimen is effective or not. This partnership creates greater impact than each individual entity could have had separately and is just one example of corporations realizing that they don’t always need to (or can) build the technologies to innovate in their markets but rather than partner with startups that do and can.
There are going to continue to be many more examples of these types of relationships and a blurring between the “startup world” and “corporate world” as the innovation economy evolves.
3. As there are thousands of eager startups coming to Slush again this year, what would be your most important advice for them on how to operate in the world of corporations?
If there is ONE thing startups take from me I hope it is this: It is never too early to invest in building relationships with industry leaders (and really, anyone you think is interesting and has a unique experience to share).
I have known all too many startups that shy away from engaging with corporations — worried that taking a strategic investment could limit their exits (it could, but this is signaling factor is waning), worried about them taking your idea and building it way faster and with a ton more resources (sure they can, but if it’s that easy, then you’re already in trouble), etc. But engaging with corporations early on can be a significant source of growth. Further, as a founder, while you should strive for Plan A — creating true industry impact — you should always have a Plan B, C, D and E, one or all of which should include an exit strategy. That exit opportunity won’t emerge from thin air, and if you find your company struggling to get funding, to get traction, it is going to be all that much harder to get acquired if you only start to build the corporate relationships during a time of need. So talk. To everyone.
4. What are the major barriers between startups and corporations in their collaboration? How could those barriers be tackled?
The single most significant barrier between startups and corporations is conflicting or misaligned visions. Often times, we see startups fail to create partnerships with corporations because the two are thinking only transactionally — what can we get from one another? Sure, any deal must work for both sides financially, but before you put ink to paper, you should make sure there is alignment on the mission and early product/service that is being scaled through such partnership. My experiencing brokering these deals is that having an aligned mission and vision has more sustainable long-term benefits than a mere transactional deal.
Aside from that barrier, most of the other significant barriers between startups and corporations in their collaboration are often internal to the company, related to issues of strategy, corporate structure and processes, and/or corporate culture. There is also a broader challenge in the innovation economy around a lack of transparency and asymmetric access to information in the that often slows or blocks startup-corporate relationships from forming.
The Fix?
A lot of what we try to do at Sherpa Foundry is help mitigate the aforementioned barriers by being Switzerland, for lack of a better term, between startups and corporations so we can best match the right people and technologies at the right time. But whether it’s us, or other people who have proven to be successful in navigating inside big and small companies alike, corporations and startups should invest time in learning from these people/groups how to best work with the other party. For startups, it often takes finding the right champions and top-down support in a large organization to help get a deal done. And for corporations, they can get better at working with startups by creating a culture of experimentation via internal structures (e.g., labs, venture partners, participation in startup events, etc.) and clearer processes and forms of communication to the external innovation economy.
5. What are the three key points to take into consideration when startups and corporations start to plan collaboration?
1. The end goals of both sides — are they aligned? If not, rethink this partnership and/or investment as it may not be beneficial in the long run
2. Finding a clear point of contact on the corporate side. Deals are more likely to get done, and be successful when you find the right champion and clear point person to communicate with you, and they are more likely to work when there is clear buy-in from the top down. So startups: spend time building the right relationships with corporations.
3. Timing and cadence. You must have patience as a startup. Make sure you understand the internal processes at work and where the deal could break, but also understand that corporations tend to work at a different pace than startups do. And that’s a tension you may just need to factor into your scaling plans.
6. I can see you are interested in AI and VR. Can you share examples of the startups and industries you find the most exciting at the moment?
From an investment perspective, VR has a long way to go. We are currently still building the infrastructure and equipment to penetrate the mass consumer market. I am positive we will be laughing at ourselves in a year or so when we look back and see how cumbersome it was to set up the HTC Vive and how hard it was to avoid tripping over its cable :). In the near term, though, I’m pretty fascinated by the potential of mixed reality, entertainment experiences being built by innovative startups like the VOID. The VOID has developed advanced VR technologies that allow you to see, move, and feel digital worlds in a completely immersive and realistic way. Its vision is to create the ‘Virtual Entertainment Centers’ (VECs) that will be distributed across the world in malls & parks. It’s an interesting company because they are creating these spaces that can be built anywhere — quickly and at scale — and innovating on the tech to make the experience truly magical. I had the opportunity to test out some of the VOID experiences, and I immediately saw the potential.
On the AI side, there are a ton of companies! I am most interested in two areas. First, on the enterprise side, AI companies solving problems for the healthcare space, improving diagnostics and decision making (think Explorsys, acquired by IBM in Spring of 2015); and second, on the consumer side, AI / bots for entertainment purposes. Everyone has been talking about bots for consumers to help make their lives simpler — bots that can schedule appointments, email back the laundry service, cancel a subscription to the gym, etc. Those are no doubt useful, but the ones in the short term that we are seeing getting picked up by consumers are for entertainment use cases. For example, the most popular bots on the Slack platform are not travel bots that can schedule flights, but rather ones that provide comedic relief. Further, consider a company called Luka (one of our portfolio companies). Luka is building an AI platform that allows consumers to create their very own bots by layering in personal text-based data sets (e.g., your best friend’s text messages) and teaching the bot to sound and write like that person. Think, suddenly people can start talking to a bot that sounds like their friend, or a celebrity. That’s a cool opportunity to provide utility (I don’t feel lonely) and entertainment (that bot made me laugh).
7. You’ve already achieved a lot throughout your career. What do you still aim to accomplish?
Tons! At the highest level, I want to continue to surround myself with people who think differently and push the boundaries and norms. One of my favorite quotes is by Nelson Mandela, who says “There is no passion to be found in playing small — in settling for a life that is less than the one you are capable of living.” I will strive to continue to live by this mantra, and if I do, I’ll consider myself successful no matter what the outcomes are.
8. How do you see the Nordic startup scene? What are your expectations for Slush 2016?
A year or so ago, I read an article from Inc (I do not recall the headline or author) that said something along the lines of this: The Nordic region is the upcoming startup scene few people talk about. Not New York, or Seattle, but the Nordics. I remember this because while I knew to be true that a ton of notable startups come from the region (Spotify and Skype, most popularly, along with companies I admire like Truecaller), I didn’t realize how this scene compared to the rest of the world until I read that article. Did you know that the Nordic countries have the highest percentage of unicorns per capita in the world? So how do I see the Nordic startup scene? Rich with opportunity — and a place global investors and corporations should make sure to track.
I’m excited for Slush so that I can experience first hand all the innovation and truly globally-minded entrepreneurs, who call the Nordic region their home, in action. I’m also looking forward to figuring out where my work fits into the Nordic startup scene, and hopefully partner more closely work with some great entrepreneurs from the region who are thinking about how to grow and scale their companies (and any startup that is interested in doing so, please reach out to me — I basically make a living talking to people. Read: I love talking to people :) ).
9. What else than a 3K run do you get done in time of 10:39:77?
Ha! I’m not sure I can even do that anymore. My college days of running are long over, though I do go for a run every morning! Some of my colleagues make fun of me for how much I love efficiency — and I’m definitely a byproduct of the app economy. I use an app for just about everything, not because I have to, but because I love the idea of saving time and multi-tasking. How cool is it that I can start preparing my dinner, finish writing emails and get my laundry done all at once? Yes, I am that person who wakes up early, works out, but is still too lazy to go to the grocery store. Guess we can chalk it up to being an inherent dichotomy and leave it there :-)
