As technology advances in many sectors, traditional companies inevitably need a digital innovation strategy. Often times it includes working – and sometimes competing – with startups at different stages of maturity. To help us understand the innovation process in large corporations we spoke with BayBrazil member and mentor Anish Srivastava, Founder and CEO of Vinaj, a management consulting services firm providing highly specialized services in commercially viable innovation strategy and execution.
He lived 15 years in Recife, his father was a professor of Organic Chemistry in the Universidade Federal de Pernambuco for 35 years.
In our interview, Anish talks about entrepreneurship in the San Francisco Bay Area and abroad, the relationship between corporations and startups, and the challenges for foreign companies to establish an innovation presence in Silicon Valley.
BayBrazil: As you have a long experience in San Francisco Bay Area, how do you see the evolution of entrepreneurship in the region? Is it easier to be an entrepreneur now?
Anish: Entrepreneurship in some ways has become easier and in other ways more competitive. It is easier because the cost and resources needed to bring an idea to life with software and hardware has become cheaper, faster and easier in particular in the very early stages. In addition, in the Bay Area, there is a wealth of experience from seasoned entrepreneurs, investors and the whole ecosystem providing a huge support network to entrepreneurs. On the other hand, because it’s easier to become an entrepreneur and start a company, it has become more competitive. The bar continues to increase for entrepreneurs to have a strong founding team, track record, a well thought through business opportunity, and differentiation. It’s exciting to see the continuous flow of entrepreneurship across industry sectors and the disruptions that are helping drive efficiencies, connectivity, and new possibilities.
BayBrazil: How are large companies engaging with entrepreneurs and what are the objectives of these companies?
Anish: Large companies across sectors are seeing threats and opportunities emerging as the rate at which innovation is coming to market continues to accelerate. Digital solutions are driving automation, enabling better experiences for businesses as well as consumers. Large companies see opportunities for cost avoidance and are seeking new revenue opportunities. Startups at different stages of maturity in some cases are becoming competitors to large companies. In other cases, large companies see partnership opportunities or vendor solutions that allow large companies to operate more cost effectively or create new capabilities and businesses. Large companies are increasingly welcoming the opportunity to work with startups by engaging them in proof of concepts, pilots and/or establishing a commercial agreement.
BayBrazil: How can large companies prepare themselves to work with startups?
Anish: There are two high-level aspects large companies need to engage with startups. One is to create the internal environment to support working with startups. The second one is to build the pipeline of startups to engage with. To create the internal environment requires a mindset, culture, processes and an organizational structure that supports working with startups. This is not easy to establish and often touches many parts of a large company that are more setup to work with established companies and vendors rather than startups. As for building the pipeline of startups, there are a number of types of programs that large companies engage in with varying degrees of effectiveness. These include incubators, accelerators, innovation labs, EIR programs, challenges, hackathons, venture investing, etc. All these programs can be exciting, but to derive tangible value requires a variety of considerations as we have seen many large companies establish these types of programs only to kill them after a few years.
BayBrazil: Could you talk about innovation trends of large companies in Silicon Valley?
Anish: Large companies from all over the U.S. and from around the world are establishing or have established innovation presence in Silicon Valley. These range from small scouting outposts, to corporate venture capital, to large scale innovation and corporate venture groups. Establishing the right presence to be effective is not easy. It’s important to establish a clear strategy, objective, resources, and programs that support meaningful impact. Various programs such as accelerators, incubators, EIR programs are continuously evolving. Many large companies are experimenting with different approaches to leverage innovation from startups and also exploring ways to effectively build new businesses from within. Interestingly over the past few years, innovation has become more strategic in nature and in some cases is a function of corporate strategy, in other cases digital transformation, the business units themselves and/or IT organizations. The level of visibility for innovation has also been elevated in many Fortune 500 companies to executive level roles. As for topics that many of these large companies are focusing on include artificial intelligence, blockchain, IoT, AR/VR and cloud solutions.
BayBrazil: With your international experience, can you see a difference between US and startups abroad?
Anish: There are so many new startups emerging all over the world in not only the big cities but even smaller cities as well. Each ecosystem has characteristics that are unique, take into account local market conditions, cultural nuances and technology adoption. In many emerging markets, the literacy rate is far lower than most developed nations and yet we are trending towards a smartphone penetration of 80% in the next 2 years. This has opened up a lot of opportunities for entrepreneurs in these regions that will approach solutions in a different way than we might in the U.S. Israel is another hotbed of tech innovation. While Israel has been known for great security startups it also has a broad range of startups across so many topics and industries. But the journey of a typical startup in Israel which has a relatively small population evolves quickly to expand into international markets. Whereas startups in the U.S. may think of international markets a bit later as they have a large opportunity in the US before they set their eyes on international opportunities. Brazil is at an interesting stage right now and having met several entrepreneurs and startups, there is a huge talent and educated pool that is immersed in a tough economic time. This is bringing great entrepreneurial opportunities for startups tackling pain points for the Brazilian market.
BayBrazil: In your workshops, you teach how to successfully start a business and access Silicon Valley. How prepared are these entrepreneurs around the world? Is the presence in Silicon Valley a target for most foreign startups?
Anish: I see amazing entrepreneurs around the world starting companies. But many entrepreneurs are in cities where there isn’t as mature of an ecosystem of investors and VCs to support all stages of a tech startup’s growth needs. This can sometimes force these startups to be more conservative and take less risks because if they don’t show revenue growth and a path to profitability sooner, then they may not survive. Yet their aspirations and innovation could be more disruptive if they could get funding to validate and develop their solutions. Some of these entrepreneurs start looking at Silicon Valley and the U.S. market as an opportunity to pursue their larger vision. Many entrepreneurs abroad also value the culture in Silicon Valley and are looking for mentorship, inspiration and learning that helps them grow. Some markets such as China are very advanced. They are creating a ton of innovative startups and are building/scaling at a very fast pace in a highly competitive environment.
BayBrazil: Do you think the successes of former startups that are challenging traditional models are pushing large companies to pursue innovation or is innovation a natural path?
Anish: The success of tech giants like Apple, Google, Facebook, Uber, Airbnb to name a very few are certainly driving more attention for innovation in traditional companies that have been around in some cases for 200+ years. We are seeing this happen in transportation, hospitality, financial services and energy sectors to mention just a few. Some traditional companies certainly have a history of having pivoted, or made breakthrough innovations in the past. But now that the pace of innovation and the growth of startups has increased so dramatically, the approach to innovation and the timelines for innovation are very different than the past. Competing with digitally native companies and adopting digital capabilities is not only a necessity for traditional companies but is seen as a survival and growth capability.