How your company can collaborate with a startup
Be a first customer.
Pay your bill on-time (if not earlier).
Provide connections to your network.
Help tell their story to others.
Share expertise.
The key to supporting entrepreneurs is really simple – just open a door for them. What do I mean by this? The figurative door in this metaphor represents multiple barriers that entrepreneurs often struggle to overcome. You don’t need to open all the doors, just one. So let’s talk about some of them and how to open them.
Be a first customer
The easiest door to open for corporations is the first customer door. The benefits of being a first customer outweigh the alternatives. First, you get significant input on how the product or service is being developed. This allows for significant customization to your specific needs. The relationship is much more akin to a partnership with feedback flowing in both directions. This is critical during early stage development. Second, as a first customer your importance is magnified. Educational Research on class sizes shows significant differences in student outcomes when teacher to student ratios are small (think 1 teacher to 4 students). Once the ratio reaches 1 to 10 it might as well be 1 to 100 because student outcomes are the same. The reason behind this is teachers can give individual attention to each student when there are only 4 students – once you get to 10 – the teaching style changes. The same can be said for startups and customers. All things being equal when companies are one of four customers you receive on average 25% of a startups time (or more if you are the biggest customer). This also means you need to pay the bill on-time.
Pay your bill on-time (if not earlier)
Paying bills sucks for everyone, but the difference in startup land is often magnified. Startups typically don’t have the financial resources in place to sustain 60 to 90 to 120 day reimbursement cycles. No operating reserves – no line of credit – just cash in hand. When the cash in hand isn’t available then circumstances become …well… shitty. How do I pay my employees/wholesaler/dev shop/babysitter/barista/student loans/myself? The answer is “they don’t” until your company does. No founder will tell you that, but they should. Experienced founders will often recognize these potential pitfalls and take steps to insure they can survive in the interim, but it should be a requirement when paying the bill on-time removes all these problems.
Provide connections to your network
If being a first customer isn’t an option for your company, chances are you know someone who should be. Offering to connect a startup to potential customers is super easy, but often easy to overlook because the benefits are difficult to measure. Ask yourself if you have ever done this calculation in your head – if I connect (insert startup founder name) to (CEO of corporation) what do I stand to gain? Money? Additional access? Box seats? Good will? The answer is probably none of these things (maybe a T-shirt). In fact, the calculation is often more about avoiding risk - how will this negatively affect my relationship with (insert CEO of corporation name)? This perception is one that depends upon a multitude of factors to which you have no control, but these scenarios still play out in our minds trying to predict the future, trying to predict behavior, trying to measure the potential risk. This really comes down to how much you trust your own judgment. So, don’t make it a judgment. Just make the connection. The upside always outweighs the downside in this case because it is based upon the trust.
Help tell their story to others
If your company isn’t in a position to be a first customer or to make connections for whatever reason, then be an evangelist. Maybe write a blog, maybe hang a poster at work, maybe wear a startup t-shirt, maybe tweet your excitement, maybe host or attend an event, or maybe do all of the above. Increasing knowledge and exposure is the goal here. Why? Again, the startup world is different. Building a brand costs money and it takes time – two things startups lack initially. The limited marketing budget doesn’t get spent on ad words or television commercials. It gets spent on word-of-mouth because the brand is still developing as customer feedback comes in the door.
Share expertise
The final way, on our list, companies can support startups is to share expertise and local knowledge. All of us have made mistakes in our personal lives and our business lives. There is absolutely no reason these lessons can’t be learned the easy way. The world needs more lighthouses and less shipwrecks. But a lighthouse in Seattle or New York doesn’t really help startups navigate the waters of Omaha. Local companies can act as lighthouses for startups by illuminating the path. It doesn’t mean they won’t sink, but it makes getting to shore a lot easier.