In this week’s column, Kehlan writes about the way large companies are trying to learn the secrets of startups. By thinking like a startup, big firms are seeking to freshen up their ideas and company organisations
‘Stay lean and stay mean’ has been the mantra of startups for decades. How to stay lean while at the same time getting the best out of your workforce has seen the development of what can be termed as the ‘startup mentality’ within big businesses.
The popularity of Startup Weekends in Galway and Limerick has grown in recent years, but now they are also attracting a lot of interest from corporates on how the process works.
One novel seminar is called ‘Fifty-four hours to build a startup’. However, large multinationals are now turning to the startup model for ideas within their own companies.
Taking an idea from inside a person’s head and validating it in the market is a process that needs to move smoothly.
I recently had the pleasure of talking with a key figure in one of Ireland’s most formative technology companies.
The managers have created an in-house startup programme for developers and engineers to come up with an idea and make it work — all within 90 days.
They created a proposal from an idea and tested the market for it. The intense programme demands a lot of time and commitment, but the premise behind it is sound.
How do we make it faster and easier to bring ideas forward?
Big companies such as Unilever and LG have used this model to develop products more quickly.
Company structures must change too.
If you bring a product forward quickly then you need other departments also to react quickly. From engineering to marketing, processes need to accelerate to keep up with the demand of new products.
The company becomes leaner and learns that ideas need to be acted on rather than constantly discussed.
The process of product development and company culture changes.
We’ve all heard of the ‘spin-out’, involving a startup that comes from research or development. Well, now this new process involves the ‘spin-in’.
It is about the internal process of creating so as to produce a viable product or service that can help the company as a whole.
Some of the biggest companies in the world now have these internal start-ups within their company.
Some are even using venture capital money to fund a team’s idea after a successful pitch.
The truth is that companies need to encouraging creativity.
Doing this in a global company can be hard, especially when there is a vast swathe of middle and higher management.
Younger people are also far more likely to want to work for a startup than for a big corporate business.
That means that the competition for new talent and people who can give them the competitive edge is intense.
This has big implications for not only finding talent but also retaining it as well.
Companies are now hosting events based on employees pitching their ideas or creating internal conferences based on ‘failure and failing well’.
I wouldn’t quite say that this is a new paradise of corporate business but it is a good example of how attitudes are changing in order to encourage better creativity within a company’s culture.
Performance evaluations and constant job appraisal are not what people look for in a job.
So large companies are now doing away with that too and inviting a more responsive policy on workplace evaluation.
The positives of this change are there to see.
Just like startups, big companies want to encourage creative thinking, to keep their best staff, invest in people and the company.
If you want to stay big, it seems, you need to think like a startup.
What do you do at Deposify?
Well, Deposify at its core is an escrow service, where parties engage with a third party in order to hold either cash or other assets on their behalf. I was a corporate finance lawyer in a previous life and lots of what we did involved an escrow service.
I thought that it was something that could be an everyday thing and I thought the best use for it would be in deposits.
When deposits are put down either between landlord and tenant or in retail, as soon as you hand over the money you have very little recourse, other than a legal one, to get that back.
That can cause time and money. So we thought “let’s wrap technology around this service and make it an everyday thing”.
So why leave what I’d imagine is a good paying job to start this?
I’ve always been an entrepreneur at heart. My dad is an entrepreneur and he’s been through many years of going through all that entails.
I was around it with my own family, even when I was a corporate finance lawyer. I was around startups and businesses.
So I think it all played on me as well.
So after some careful negotiations with my wife, I decided that I would go make this work in the next few years.
Was there a time limit on making the business work for you?
Yeah, but I think there is also a commercial reality to this as well. We had kids and didn’t have an endless supply of money, so I think there is reality too. You have to call these things when they aren’t happening for you.
I know a couple guys, just in the past few months alone, who have had to call it in and go back to the real world because they just didn’t get there in the end. The reality in all of this is that a startup is hard work.
You can read the newspapers every day and see some company has raised capital or has hired this amount of people, but there is so much that has gone into that, that people don’t see. It’s a bruising experience.
So if the business didn’t fund itself I would have had to go back and get a real job.
What brought success for Deposify?
It was kind of one day at a time. I know that might seem trite or clichéd, but it’s true. What I did was to set short-term milestones.
I’m not a technologist and yet I had created a technology solution to a problem. So thankfully I knew people in the Escher Group, an Irish transaction management company, and went to see them first.
Then I needed to get a banking partner, because we weren’t a bank but needed a banking solution. So then we worked closely with Bank of Ireland to develop that side.
Once we had the tech and banking solutions in place it was about getting the right team around it. A guy called Tony Kelly joined us.
Tony was a former CEO of Demonware and so that brought the big brain that we needed to get behind the technology. We then had to go out and make the sales.
We had a plan and a vision, but in startups you can identify what you’re going to do this week.
It gets much greyer when you are looking at what you need to do for the rest of the month. So six months down the line, you honestly have no idea where you going to be.
Things move very quickly and sometimes in different directions that you expect. You just have to keep turning up every day and try and get some road behind you.
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