Infusing the Spirit and Heart of a Startup into a Corporate

In his recent letter to the amazon shareholders, Jeff Bezos states: “Amazon is still at Day 1. Day 2 is stasis. Followed by irrelevance. Followed by excruciating, painful decline. Followed by death.” Accordingly, Jeff stresses the importance of Day 1 and fending off Day 2. In a humble way, he then admits that he does not know all the techniques and tactics required to keep the vitality of Day 1 inside a large organization. But he shares four elements of his starter pack of essentials for Day 1 defense: customer obsession, a skeptical view of proxies, the eager adoption of external trends and high-velocity decision-making. Here is the link to the complete letter.

After having elaborated on these four elements, he concludes with a sentence that I believe perfectly summarizes how big corporates can remain successful in the long run. He states: “We can have the scope and capabilities of a large company and the spirit and heart of a small one. But we have to choose it.” So, if the secret ingredient may be the combination of the advantages of a big corporate with the characteristics of a startup, corporates need to understand what startups stand for and how startups differentiate from corporates. And this is why I would add corporate venture capital as a fifth element to the starter pack of essentials for Day 1 defence or the starter pack for getting back to Day 1 (for the corporates that are at Day 2).

In particular, if a corporate is already at Day 2 and characterized by executing business models rather than exploring new models, by unanimous and low-velocity decision-making, by politics and waterfall processes that lead to years of product-go-to-market, the company will probably not get back to Day 1 by just asking its employees to be more innovative, agile, risk prone and entrepreneurial. In contrast, by continuously investing in young startups and entrepreneurs that embrace the lean startup methodology, that pivots to find the right business model and embraces risk-taking and high-velocity decision-making on the basis of partial information and by constantly exposing the corporate to the startup mindset, the corporate may infuse into its employees the entrepreneurial spirit and heart of a startup.

To be fair, corporate venture capital cannot be reduced to just investing into startups. If you want to successfully invest and compete against classical venture capital funds you don’t only need to establish the right structures and processes; rather you also have to bring more than money to the table. And as a corporate you indeed have more than money, e.g. access to assets and customers, in-depth industry knowledge etc. If you then also deliver on your promise that you bring more than money to the table and can thus avoid a gap between value-promised and value-added; you may become a successful corporate venture capitalist that helps your company to remain at or make a backward roll towards Day 1. In addition, you will help your company’s employees to stay young and foolish, as Steve Jobs once put it in his famous Stanford University commencement speech.