Internal Disruptions: Fourteen Tips for Starting a Startup Inside a Large Company
If you’re an entrepreneurial person who believes the fact that you work for a large company means your best ideas will never materialize, I put together the following tips for one single reason: I want to prove you wrong.
In 2017, the Silicon Valley company I worked for was acquired by TDK, a huge, established Japan-based company best known for cassette tapes that revolutionized how we take music with us wherever we go. A year after the acquisition, as a relatively new employee, I was struck by an idea that refused to go away.
Thanks to a lot of hard work, the support of several individuals who were generous with their time and wisdom, and a significant amount of luck, my persistence paid off, and what started as an idea jotted in a notebook during a class at the Stanford Executive Program became TDK Ventures, a division of TDK that I now lead.
Not long ago, I was asked to contribute a chapter to a handbook TDK is producing for employees. Its purpose is to underscore how important employee-driven innovation has been at critical points in the organization’s long history, and how that innovation continues to drive its bold vision for the future. Without the innovation tenaciously championed by employees, the company simply would not have survived the cultural and economic disruptions that proved insurmountable for many other businesses. In fact, when you started reading this post, you may have asked yourself: Is TDK still around? Our top management strives to encourage employees to champion innovation, and TDK, in turn, champions its employees. This is an important part of the company’s ethos: Rather than resting on your laurels — the cassette tapes, for example — think and plan years in advance, and then execute accordingly.
In writing the first draft of the chapter, I outlined the steps I’d taken to carry my idea from the classroom to boardroom. It became clear that a few of the steps I’d taken were not applicable beyond the realm of TDK and its culture. But it became equally clear that many of them speak directly to entrepreneurial people working inside large companies regardless of industry or location. In the spirit of generosity that was shown me by so many throughout my entrepreneurial journey, the following tips are for you — the entrepreneur, the innovator, the employee who has a brilliant idea and the persistence to see it through.
1) Assume you know nothing
This is the best way to prime your mind for learning. And if you’re not a humble person by nature, assuming you know nothing is a great way to practice humility, which, as we’ll see, is important.
2) If an idea won’t leave you alone, pay attention
If you are an entrepreneur, if you’re passionate about the power of innovation, pay close attention to the idea that refuses to leave you alone.
3) Don’t become discouraged
As determined as I was, the idea for TDK Ventures — the new corporate venture arm through which TDK invests in promising startups — got off to a perilous start. At Stanford, I took a course that revolved around the wonders of open innovation, which then also included extensive discussions and proof points on how corporate venture capital endeavors almost always fail. Such history of failure was daunting and could have dissuaded me to continue exploring. If you’re in the early stages of learning, keep in mind that feeling discouraged is an important part of the learning process. Don’t get disheartened, keep exploring.
4) Revisit, refine, repeat
Once a person with an idea commits to pursuing it, which usually happens only after wrestling with it for a while and talking to people wise enough to recognize a good idea when they see one, it’s tempting to incorporate every suggestion. That’s because people are enthusiastic about good ideas and the people who have them, and enthusiasm is contagious. My advice: Don’t. Continue to revisit and refine the core of your idea.
5) Focus relentlessly on your why
And don’t let up until you’ve achieved absolute clarity. When your CEO considers your proposal, when people decide to join your team, or when partners sign on to support your effort, it will be because they are aligned with your why. For TDK Ventures, the why is rooted in exploration — new markets, emerging technologies, helping our company continue to make meaningful contributions to society in a rapidly evolving world. I suggest asking that one-word question of every aspect of your design. Continuing to ask yourself “Why is my idea critical to my company’s ability to thrive in the future?” will provide a powerful, clarifying starting point.
6) Commit to a steep learning curve
Because you still have to do the job your employer hired you to do, signing on for what feels like another full-time role can be challenging. But the investment you make now will pay off later. It may absorb your evenings and weekends for the foreseeable future, but learn as much as you can by reading books and articles and blogs, and by listening to podcasts and presentations. It will pay off in the long run.
7) Be humble
Again, assume you know nothing. Then set out to learn from the best. Beyond reading and listening, one-on-one meetings are important opportunities and should be approached with humility. Don’t enter conversations to brag or impress the other person. Instead, listen and learn about that person’s experience and perspective. When I met people throughout the venture capital community I reminded myself that the person I was meeting with knew infinitely more than I did. Barring my ego from the conversations dramatically improved my ability to learn about what makes corporate venture capital entities succeed or fail. I learned what to aspire to, and, just as importantly, what pitfalls to avoid.
8) Embrace “no”
Get used to “no.” A lot of people are going to use it as an initial response to your vision. My advice is to embrace it as a learning opportunity. When it comes to ideas, I never hear or see the word “no” as purely “no.” Instead, I interpret it as “yes, but only if …” When I was planning TDK Ventures, I heard “no” from many people at TDK. To be clear, there were certain conditions that, had they not been met, would have caused me to stop pursuing my idea. But every single “no” I heard pertained to something I could be flexible about, usually something I hadn’t communicated properly, or did not fully understand. For example, I didn’t take into consideration TDK’s previous experiences investing in startups, which was at the root of many “noes.”
9) Find your ally
The value of sharing and iterating with many people in your company about your idea is that you discover others with whom you should connect. One of the most important things I learned during this process was that our head of corporate planning, Taro Ikushima, had already begun discussing the value of starting a corporate VC to TDK’s top management. Rather than categorizing him as a competitor, I came to him as the person who would become my ally inside of TDK headquarters, prepared to share my thoughts and to hear his. This was the right call. Taro challenged me to strengthen the proposal by tailoring it directly to the concerns of TDK’s leadership. One of the most important things he shared with me was the history behind our company’s previous investment in startups. Then, I was able to incorporate that knowledge, in a contextualized, nuanced way, into a stronger joint proposal than either of us could have delivered.
A good ally will educate you on how your idea is likely to be received by leadership, how, if applicable, previous endeavors fared, what needs to be communicated clearly to address concerns before they become barriers, and other issues that may arise. The design of TDK Ventures is stronger thanks to what I learned from my ally, and I’m confident yours will be as well.
10) Find the best experts
Remember: No entrepreneurial endeavor has ever succeeded entirely on its own. It’s important to search for and partner with the best experts you can find, because you will need people whose expertise will fill in the gaps in yours. Acknowledging you need help is not an admission of weakness but a way of strengthening your plan. Still, the process is often challenging. Because it’s often just the two of you — you and your idea — so there’s an intimacy there, making it difficult, in the early stages, for many entrepreneurs to part with the “me against the world” mindset.
When searching for, identifying and partnering with the best experts you can find, remember (again) to be humble, and to be patient. At the same time, do your due diligence to make sure a person who claims to be an expert is, in fact, an expert. If that expert has not racked up a list of demonstrable accomplishments, be cautious.
11) Find a coach
I met Paul Holland of Mach49 shortly after I had the idea for TDK Ventures during an evening class at the Stanford Executive Program. He was a long-time general partner at a top-tier financial VC and had just started exploring how to help accelerate the development of new venture workforces inside large corporations to drive growth.
Today, Paul brings decades of experience to his role of general partner in residence, a term I coined to reflect his mission with us. Paul draws on his deep and wide venture expertise to fill the gaps across the TDK Ventures team. He coaches us on how to avoid potentially fatal pitfalls. He shows us the absolute importance of developing financial discipline, a portfolio mindset, metrics, and best practices in order to make investments as shrewdly as possible. And he teaches us how to partner with investors, engage with startups, and ultimately for us to drive real value and innovation across the core businesses. Paul is a great example of the importance of connecting with those whose expertise fills the gaps in your own. As you build relationships, think about how the individuals you’re connecting with will address the issues likely to concern the executives you ask to invest in your idea.
12) Don’t underestimate the importance of design
Execution is a huge part of success, but so is design. Keep it simple and bake best practices in from the beginning. Assuming you know nothing, listen carefully and learn from the best. Ask everyone for input (but do not let that input distract you from your why). Meet with people throughout the ecosystem in which your idea resides. Ask open-ended questions that cannot be answered with yes or no. My discussions took place throughout the venture capital (VC), corporate venture capital (CVC), and startup ecosystems, and were driven by questions such as: What pitfalls have you experienced? If you had a bad experience, what are the reasons you’d never want to work with corporate venture capitalists again? What would you like to see from corporate venture capitalists?
13) Align the DNA
Once you’ve incorporated what you’ve learned into your plan, it’s important to then align your plan with your company’s DNA. Take the time to learn what’s important to the people who lead your company. When I presented to TDK’s leadership, I incorporated my understanding that TDK is receptive to new, bottom-up initiatives as long as they add value in a very particular way to end customers. It was essential that I acknowledged and made explicit the essential goal of our current president and CEO, Shigenao Ishiguro: Contribute to society. TDK believes in a sustainable world where digital, energy and environmental transformations will improve billions of lives. If TDK Ventures was to deliver on this mission, it had to be designed to invest in startups with a similar idealism, and do so in a scalable way.
14) Share what you’ve learned
What’s working for you? What’s not working? What is your biggest fear? For those of you who have either taken your idea to launch phase or are close to it, what’s been your biggest surprise? What do you wish you’d known when you started out? Please share what you’ve learned by leaving a comment, so that we can honor and practice one of the most fundamental principles of entrepreneurship — learning from each other.