Joseph’s papers have been some of the most interesting academic research on corporate venture capital in recent years. We do (eventually) get to this at the second half of the podcast, but honestly I could have talked to him for hours and kept going down fascinating tangents around how innovation really works in the early part of the episode. Each of these topics could have been their own podcast. I hope to have Joseph back on Agile Giants again soon. But in the meantime hope you enjoy today’s episode. Also, truly I’d encourage you to follow him on Twitter if you aren’t already.
Show Links
- Joseph’s LSU Personal Homepage
- Joseph’s Twitter Account
- Joseph’s Google Scholar Page
Full Transcript
Sean Ammirati (00:08):
Welcome to Agile Giants, lessons from corporate innovators. I’m Sean Ammirati, your host, Co-founder and director of the Carnegie Mellon Corporate Startup Lab and partner at the early stage venture capital fund, Birchmere Ventures. Each week, I’m going to talk to guests who are experts at creating startups inside large corporations. I believe fundamentally a startup within a company is the same as one inside the proverbial garage. A group of entrepreneurs trying to make the world a better place using new ideas and inventions. However, I also believe some of the techniques and processes are just inherently different. This podcast is going to explore those similarities and differences.
Sean Ammirati (00:56):
Welcome to the second episode of season three of Agile Giants. On this season I’m going to continue to talk to academic thought leaders, and this is the first of those in this season. I have Joseph Cabral, who’s an assistant professor of entrepreneurship at LSU. Joseph’s taken quite an interesting route to get to LSU and most important for this episode has a really unique perspective on corporate innovation.
Sean Ammirati (01:23):
I first became aware of him through some really interesting research he’s helped publish in the last few years on CVCs. And we do get to a little bit of that at the second half of this interview, but honestly, I could have talked to Joe for hours. Like I kept getting ready to transition to that and having one more thing I wanted to talk to him about. So I’ll probably figure out an excuse to get him back on Agile Giants at some point, but I think you’ll really enjoy his perspective on corporate innovation, as well as some of the papers he highlights at the tail end of the interview.
Sean Ammirati (01:54):
I’ll also say, Joe is a great follow on Twitter. So if you’re not following Joseph on Twitter already, would encourage you to do that right away, and we’ll include a link to his Twitter profile in the show notes. There you can engage with him about the research he’s doing, and he also just tweets out a bunch of interesting stuff. So I would encourage you to follow him there. So again, here’s my conversation with Joseph Cabral from LSU.
Sean Ammirati (02:24):
Well, Joe, thank you so much for making the time to chat today on agile giants. I think a good place to start is maybe if you could just let the audience know your background that led you to LSU. And then we’ll talk a little bit about the research and the work that you’re doing.
Joseph Cabral (02:39):
Sure thing. Well, thanks for having me, Sean. I was one of the average people that graduates from their undergrad degree and has a little trouble finding themselves. And over time I ended up at Brown University and my role there dealt a lot with their research portfolio, more on finance side of things, but I got to see a lot of the research that was going on, the research process, if you will.
Joseph Cabral (03:06):
And one of the things that struck me is we tend to think of ideas and entrepreneurship as manifesting in startups. But this is one of the times … This is going back seven or eight years ago. And what became really apparent was oftentimes the faculty didn’t want to start a new company, they’ve discovered a new drug or a new book or whatever it happens to be that has this market opportunity, but they don’t want to start their own company, there’s too many hoops to jump through.
Joseph Cabral (03:39):
And what we saw a lot of was the idea is pairing up with the larger companies and that opened my eyes to this fact that ideas oftentimes come to market through these collaborations between this idea generator, whether it be an individual entrepreneur or a startup company and leveraging insights and resources that are at this larger partner.
Sean Ammirati (04:02):
Yep. I mean, this is sort of not a new theme on Agile Giants, but it’s something that took me a little while to figure out, because I was a traditional entrepreneur and then I was a venture capitalist and the very traditional sense of the word. But I’ve come to appreciate that there are certain ideas, frankly, that the best way to make them real is exactly what you just described. There are certain ideas that actually they’re easier to commercialize inside a large hospital system or a large insurance company, not three students in a garage wearing skinny jeans and T-shirts, even though that’s increasingly become our mental model of entrepreneurs.
Joseph Cabral (04:40):
Yeah. You’re spot on. One of the things I think that’s changing over time is people are starting to appreciate these different pathways, services like yours, understanding that entrepreneurship manifest everywhere. It can manifest in large corporations, it can manifest in nonprofits. It’s not just at Silicon Valley model of people in the garage tinkering and discovering something brand new.
Sean Ammirati (05:01):
And so then you’ve been kind of doing some really awesome work in this over the last few years. Maybe continue your journey and talk a little bit about some of the stuff that put you on my radar screen in terms of the research you’ve published here.
Joseph Cabral (05:15):
Sure, absolutely. So when I decided I wanted to pursue this, this idea of entrepreneurship, merging between startups and the corporate setting, I had to decide where I would go do my PhD. I went to a similar college, much like your own. So I went to Rensselaer Polytech, which is an engineering heavy school, but they had three important things.
Joseph Cabral (05:39):
First and foremost, they were known for corporate entrepreneurship. They did a lot of early case studies that really put the school on the map, this marrying of engineering and technology and the corporate setting, and how do you actually build a culture or processes to see it through. Number two, I’ve never been an entrepreneur. I didn’t have very many friends that were the startup type entrepreneur. So I wanted to be in an environment where I knew those ideas were being born and I could see the process, it’s great to be this academic that can talk about things, but you get a much greater appreciation and your research has much more relevance when you see it. And you realize you’re not picking up spurious things, you’re picking up what’s really happening.
Joseph Cabral (06:29):
And finally, much again like Carnegie Mellon, they had a little bit more collaboration with company centric research going on. So a little bit more openness to this idea of applied research, sponsored contracts, many big companies coming in, saying this is a problem we have, what would you do with it? So for me, this was the logical place to end up.
Joseph Cabral (06:55):
So then the question was how do you get into corporate venture capital? So the truth was, I’ve always been interested in venture capital, the broader theme, but one of the things that’s unique about much of our education system is that tends to be delegated to the finance department. But then when you talk to venture capitalists and they talk about what their value added is, or why an entrepreneur should come to us or choose us over any other option, it doesn’t have anything to do with dollars, it has to do with coaching, professionalization, life experiences, this value add, above and beyond, money.
Joseph Cabral (07:36):
So in that regard, I said, well, I guess I could still do something with venture capital if I took that slightly different mindset and give more towards an entrepreneurship and strategy lens, and that’s what I ended up pursuing. And then ultimately I was fortuitous because I hooked into corporate venture capital early, going back to say 2013, we’re coming out of the financial crisis and what we saw. And I don’t think enough people talk about is there has been some scaling back in terms of internal R&D and internal idea development. And there’s this broader adoption of open innovation and figuring out different ways we can collaborate with people across the marketplace. So I was lucky that I got in at a time when not only was the relevance of it picking up, but so was interested in the phenomenon and that’s how we got where we are today.
Sean Ammirati (08:30):
That’s awesome. And so today you teach at LSU and you-
Joseph Cabral (08:33):
Oh, sorry. So that was the second part of your question.
Sean Ammirati (08:36):
Yeah.
Joseph Cabral (08:36):
All right. So I ended up at Louisiana State University, I’m an entrepreneurship professor there. And I think one of the … Maybe we can talk about it a little bit more later on, but one of the promises I see for corporate venture capital is providing resources, institutions that can support ecosystems where there’s not that typical private venture capital dollars.
Joseph Cabral (09:04):
And in many ways what I was researching held relevance to places that are not in the Northeast and the West Coast, a few buzzy cities like Austin or Boulder that things are happening, there could be a different model for different ecosystems or different entrepreneurship in different parts of the country. One of the things I think that we do a disservice to is trying to recreate Silicon Valley everywhere. Everybody has their unique strengths. It may not make sense for everybody to go after the same types of startups.
Joseph Cabral (09:39):
So when I was here during my interview, that’s a lot of what I talked about in terms of there’s a lot of excitement about entrepreneurship. We’re launching this program at LSU, we’ve got some momentum and then this is what I think I would bring to the table that’s different than a lot of other people. We have plenty of companies in this area that have money. Unfortunately, at least in Louisiana’s context, a lot of those companies are in industries that we wouldn’t be surprised if are not as profitable or big in 50 years, talking specifically about their energy or petrochemicals. And those companies know it. And those companies are engaging in a lot of corporate venture capital figure out energy, the energy of tomorrow. I thought it was a logical place for my research, my interest fit, luckily my bosses and colleagues felt the same and that’s how I ended up here.
Sean Ammirati (10:38):
Yeah. It’s interesting the energy space specifically. So Yale Hackenberg was on at the tail end of last season. And being in Houston, she has kind of some similar sort of corporate colleagues. But this point that you made, I do want to push on this for a little bit. We’ve been spending a lot of time looking at this. And I think Pittsburgh is a particularly interesting example of what you’re saying, because I’ve been broadly in the Pittsburgh Tech ecosystem for 20 years. I was a graduate student that dropped out of Carnegie Mellon because that’s what entrepreneurial graduate students do, much to the chagrin of many of the people who I now work for, but I dropped out and built some startups. All of them had at least cut some connective tissue back to Pittsburgh.
Sean Ammirati (11:28):
And I will tell you, the tech economy in Pittsburgh is as strong as it’s ever been. I invest in local startups in Pittsburgh as well. Part of that is there are great startups in Pittsburgh, but I think part of the reason for this is two things you touched on. And I think people miss the CVC part of this, especially, or just the corporate innovation part specifically. So one part of it is, I think Pittsburgh has stopped trying to be other cities. Like 20 years ago we talked a lot about how can we be Austin? How can we be Boulder? And thanks to a lot of … I call them colleagues, but they were more like mentors, they were kind of 10 to 20 years older than me.
Sean Ammirati (12:14):
Richard Florida, who was one of my advisors when he was here. Bill Peduto, who at the time was a Councilman, he’s now the Mayor of Pittsburgh. I think they’ve kind of shocked the system to say, you know what? We don’t want to be a better Austin, we want to be the best Pittsburgh we can be. And part of the best Pittsburgh we can be is absolutely taking advantage of the talent pipeline and the IP pipeline out of CMU and creating startups where it makes sense like Duolingo.
Sean Ammirati (12:40):
But part of that is also, we’ve had $7 billion of corporate investment in Pittsburgh region over the last few years, just in autonomous vehicles. And I think sometimes we commingle these things. We also have one of the largest Google offices in the country, especially when you … If you ignore sales, I think we have, outside of the Bay Area in New York, the largest Google office in terms of other engineering presence there. One of the former deans of the computer science school runs that program.
Sean Ammirati (13:13):
This whole sort of full stack. So I think you’re observing similar things in Louisiana, but if you were going to like offer advice to some regions that may be thinking about this, how can they think about engaging with those corporates? What’s the right way? And maybe you can think about the engagements you have with the petrochemical companies in Louisiana, or some of these other maybe legacy businesses that are cash flowing really well. But the things that made them relevant probably won’t keep them relevant in 50 years, but they can be this source of innovation that’s absolutely unique to the region that they’re in.
Joseph Cabral (13:57):
One of the things that becomes a problem and I think becomes the real friction point is, it’s really tough for politicians and union members and often just corporate top management to think about the jobs that are going to replace their jobs. And that’s a logical friction point for these people that have a number of stakeholders that are relying on them.
Joseph Cabral (14:23):
Unfortunately then, people emphasize, in my opinion, some of these wrong things. I don’t want to talk specific about the state, but does it make sense to invest in more via tax subsidies or training of your job force to invest in oil production or oil refinement, but not offer similar incentives or infrastructure to jobs that you think could be coming along the way. It’s a lot easier to be flexible and to engage your stakeholders, when there’s a logical, what next?
Joseph Cabral (15:05):
One of the, not to throw stones, but when you think about West Virginia, more towards your area, how much emphasis can you put on reviving this coal industry when the market has spoken? Hindsight is 2020, but if you could go back and say is there a reason that solar panels can’t be made there? Is there a reason XYZ can’t be made there? The reason was because it’s easy to get elected, if you say, I’m going to save your job. And I think from a broader perspective about engaging, you talked about industry, but I’m talking about the whole community. If we could have honest conversations about the world is ever evolving and there’s going to be pain points, but we’re going to invest in alleviating some of those pain points. But we have to understand that yesterday is not coming back and tomorrow will come, whether you want to participate in it or not.
Joseph Cabral (16:09):
A lot of it ends up being, can we get incentives on the same page? Can we get mindsets on the same page? Can we think outside the box a little bit? I mean, that’s kind of this catchall, but if you think your city or your state is not going to look the same in 10 years, then what new policies or actions are you going to undertake so that you’re ready?
Sean Ammirati (16:36):
Yeah. I do want to get to CVC, but I do want to pull on this thread just for a minute more, because I think this is important. We’re having our big forum that we do every year at CSL here in November. I’ve titled this year’s forum, A Crisis is a Terrible Thing to Waste, and that’s not a … I’ve caught a little bit of flack that people think I’m making a political statement, which I’m not. I think it is true that Hillary Clinton said that in the Obama administration, but I think the actual first principle point is when these opportunities for kind of massive disruption happen, they are accelerants. And obviously if I could wave the magic wand, I would prefer we weren’t dealing with the challenges that we’re dealing with and the health crisis that we’re in. But we are, and like being realistic, I think is important.
Sean Ammirati (17:27):
I do think to what you were just talking about, it’s an interesting time to have these conversations because there is so much change happening already. And so I’m just curious from where you sit, what are the things that maybe you would kind of look at as opportunities to kind of quickly accelerate into this future? You can’t go back, to use your West Virginia example. You can’t go back and change what the students you maybe made 20 years ago, but you can change the decisions you’re going to make over the next six months. And are there things that you’re talking to folks in the community about around this in this crazy time that we’re in?
Joseph Cabral (18:09):
If there was this magic wand, it would be that easy, right?
Sean Ammirati (18:12):
Yeah.
Joseph Cabral (18:13):
One of the things we need to think about is how do you maintain flexibility? If we don’t know what the future is going to be, it may be worthwhile given limited resources, to invest in programs or institutions or infrastructure that has multiple uses depending on how the world shapes up. If we want to talk about, say transportation, do you really want to put all of your eggs into autonomous cars, where maybe it could be just an electrified grid of powering vehicles that could be used by trains or bikes or what have you. I know I’m kind of speaking pie in the sky, but one of the things to … What I would like to say, if you want to be ready and accelerate, the further you get down a path that doesn’t end up working out, the more you have to undo.
Joseph Cabral (19:08):
And it gets dangerous if you put all of your eggs in one basket. If I was to say, how can we maximize our ability to capitalize on the future, it’s can we identify areas that make a lot of sense, whether it be in the things we emphasize in terms of education, whether it be in terms of maybe certain social programs that maybe offer assistance or retool retrain in a faster way. It’s almost too late to start retraining somebody once they’ve lost their job and it’s not coming back. And by the way, the thousand other people at their plant are also in the same position. So is there a way to maybe rethink education from a public policy perspective that it’s this constant learning as new opportunities or new knowledge is created?
Sean Ammirati (20:02):
That’s awesome. And I think there’s a portfolio element to this too. In some ways this almost comes full circle back to the work you’re doing at Brown, like one big swing I’m not sure is as smart as 10 smaller swings that you can learn from, so that you can kind of allocate your resources better overall.
Joseph Cabral (20:22):
Yeah. I can actually build off of that.
Sean Ammirati (20:24):
Yeah. Go ahead.
Joseph Cabral (20:25):
Because it’s one of the things that really interests me about CVC and broader venture capital investing or equity investing outside of say Silicon Valley, Boston and New York City, is there a different model where maybe a winner take all isn’t the best? This is one of my concerns I have when everybody wants to chase those same companies that are at a winner take all market. And that means all but one city, are going to be left out.
Joseph Cabral (20:57):
So although some of these industries or opportunities may not be as sexy because they’re not going to grow to multibillion dollar companies really fast and crush everyone, from a broader economy and public policy standpoint, investing in things with a little bit more appreciation for time and doing it right instead of a grow at all cost mentality, if we started to emphasize, there are really solid businesses where there could be multiple players or regional reasons why there should be major players in a given region, and they’re not a university health, I think that may shape what investors, what corporations, what society and politicians emphasize in terms of what’s something that’s worth our resources, worth our attention.
Joseph Cabral (21:43):
And indeed one of the benefits you see from corporate venture capital, this patient capital, this wait and see, I’ll see what you’re doing, and then I may have multiple different uses for it, instead of having to commit to one business model in one company, I think that’s an underappreciated element of this portfolio approach, and what I would like to see society more broadly emphasize or embrace as a mindset.
Sean Ammirati (22:11):
Yeah. I want to get to CVC because I don’t want to get … I mean, this is such an important thing to me. So for really the whole time I’ve been back at CMU, one of the things that I keep coming back to is the importance of entrepreneurship being more representative of the world. And so the easy … Not easy in the sense of like simple, but the straightforward way to think about that, which is incredibly important is to make sure that we’re pulling from all different socioeconomic groups and we’re pulling from … We’re a diverse gender, those are really important, right?
Sean Ammirati (22:57):
But also age is another part of this. Like it’s really important that entrepreneurship is not just a twenty-something activity, because the reality is, if you think about entrepreneurs as looking out at things that are broken in the world and fixing them, which is one of the fun ways that I like to think about entrepreneurship, then what you end up with if only 20 somethings are doing entrepreneurship is they basically build things to fix things that their parents used to do for them, because that’s basically what they see as the world’s problems. Like, ah, it’s a problem to do my laundry. I’ll build a crowdsource network of laundry cleaners. That may be good, but there are other big problems in the world that needs solving. And that certainly is more true today than it even was 10 years ago when I came back to campus.
Sean Ammirati (23:44):
And I think many, many, many corporate state, they don’t appreciate how integral they are into this mission of more equally distributing innovation and entrepreneurship across all of society. And so maybe as we start to talk a little bit about this, Joseph, it would be interesting to start thinking about corporate innovation at large, because I know you’ve done work at that. And then I’d like to go into specifically CVC. So let’s start with corporate innovation at large. If someone is listening to this and they’re responsible for innovation activities, not just CVC, but all the innovation activities at a Fortune 500 company, what may be are a couple of things from your research that you would say would be important for them to take into account? And then we’ll drill in specifically to the CVC elements of that, as a subset of it.
Joseph Cabral (24:41):
Yeah. Well, first let me say, I totally agree with your perception of corporations have this unique ability to bring innovations to the market that are more broadly applicable, that represent more concerns. We tend to have a male centric or a white centric, a young centric, typical entrepreneurship vision and things that come to market. But if you’re thinking, not to overly generalize, but if you’re thinking about people like Procter & Gamble that are running, and they have products that apply to everybody in the household. And in many ways then, you have people that are focusing on those verticals, and as a result, there tends to be a lot more playing field in terms of where resources get shifted and identifying blind spots.
Joseph Cabral (25:38):
I alluded to the fact that they may be able to identify blind spots that … Because people aren’t seeing them because they don’t grow fast enough or they’re not winner take all, but totally, these other consumer-focused, these female-focused, these elderly-focused are areas where not only are they sensitive to it, but in many ways, because of their experiences, because of their infrastructure, their market knowhow, they’re uniquely positioned to go after these, if they accomplish innovation more successfully.
Joseph Cabral (26:09):
To your broader point about what are things I would emphasize, one of the things that’s really stuck with me, when I was at RPI, I had the ability to work with colleagues that are both now at Babson College in Wellesley, Jean O’Connor and indirectly Andrew Korber, formerly [Lowes 00:26:29] Peters.
Joseph Cabral (26:31):
One of the things that they really … They have a new book out, and genome more specifically drilled into my head is, what does a career in innovation look like? You look at everybody’s mission statement, everybody’s press release, innovation is just listed there. Okay, I get it, you’re starting to emphasize it. If you’re going to make this a core function, what is somebody going to do if they join your company? How are you going to identify the traits you want to see? How are you going to identify the skills that you want to identify, nurture and promote on behalf of?
Joseph Cabral (27:12):
I think unfortunately these careers in innovation, they tend to just involve bigger budgets. But speaking from your portfolio standpoint, there may be, if you are better at innovation you can manage multiple portfolios, engage different stakeholders across your organization better. These are skills that I think are not traditionally emphasized like they should be, and part of ingraining that in your culture is going to be innovation in your HR policies, innovation in terms of how you structure your organizations and you build career paths. That’s something that’s really stuck with me and I’ve tried to think about what I would do.
Joseph Cabral (27:49):
Two other things that I don’t think are any mystery and I won’t be knocking anybody over with these, a firm commitment, particularly with CVC, but generally with organizations in general, they tend to ebb and flow, they get into something, they hit some financial hardship or it doesn’t work out and they tend to retreat. And as a result, when you’re hiring people to do these things, to have a passion for these things, this inconsistency really makes it difficult to develop a culture. That’s making things and challenging and pushing boundaries.
Joseph Cabral (28:26):
And then putting money where your mouth is. It matters when everybody can see from the top, this is an emphasis of the CEO, he or she is putting real resources behind it. And as a result … Let’s take Toyota, for example. I was on a webinar the other day with somebody from Toyota’s AI group. And they’ve put a billion dollars behind this driving. You’ve talked about Uber and Pittsburgh, but the point is, no matter where you are in the Toyota organization, if somebody calls you and says, I have this idea, I have this person I want you to meet, I want you to sit on something, that has to do with AI, it’s clear it’s a priority, you’re better off making time for it.
Joseph Cabral (29:16):
In many ways I think a lack of clarity about where you’re going, but also a lack of commitment to both the culture and projects, become a real problem. And I think if you think of them as a triangle, I think all of them kind of feed off of each other. If you have commitment, if you put true resources and you emphasize structures in HR policies in hiring and career paths, then you get a sustainable model. It’s no good if you come up with something great, and then you disappear, but you can’t expect for this to just happen magically to you as opposed to anybody else, over and over again.
Joseph Cabral (29:57):
So CEOs need to be thinking about, and top management team more broadly, but CEO is because ultimately it lands on their lap. They need to be emphasizing and thinking about these things. A press release is one thing, but how have we fundamentally changed? One other thing, there’s things like career paths, those things like culture, those things like alternative structures, those are things that are sustainable, but also that your competitors cannot easily identify. You come up with a great product and it has market attraction, somebody will figure out a way to work around your intellectual property, and come up with a competing product. And that’s why they’re building a sustainable model over and over that’s tough to replicate, is one of the new sources of sustained competitive advantage, tough to identify, tough to replicate and all the pieces build off of one another. And that’s why from the top down, and resources are really required to make it happen.
Sean Ammirati (31:01):
Yeah, that was awesome. And it’s interesting, a thread that I haven’t … I mean, I think it’s there now that we’re talking, but as I’ve read your papers, I haven’t really focused on as much is I think you have some really good insights around how incentives drive these behaviors, which is actually, I just kind of, whether we’re talking about sort of regional economic development, the corporation themselves as an atomic unit, within that region it’s really interesting.
Sean Ammirati (31:29):
Let’s double click down into CVCs specifically, because you’ve done a bunch of interesting stuff on CVCs. So we have a lot of groups who run CVC groups who listen to Agile Giants and many other companies who are in the process of setting up CVCs. Maybe just talk a little bit about, if you were sitting across the table having coffee with somebody doing that, what’s the advice you’d give them based on all the work you’ve done on corporate venture?
Joseph Cabral (32:01):
I’ll talk one external and one internal. Externally, venture capital is a tight knit network and your behaviors matter. We tend to focus both in the literature and in some of the popular press about this idea of stealing ideas. True, that’s a risk. But when I talk to practitioners such as yourself, venture capitalist, I don’t really hear concerns about that. On the one hand they say if they could do it, they wouldn’t need CVC, what have you. But also they could do it once and then they wouldn’t get future opportunities, it would get out.
Joseph Cabral (32:41):
But what I consistently hear is they’re too slow to make decisions. They’re kind of flighty in terms of their strategic emphasis. Their budgets fluctuate, their human capital fluctuates, and as a result, it gets tough to rely on them. Meaning you come to the table and you’re saying not only are we bringing money, we’re bringing market insights, we’re bringing corporate assets. And that’s great until the organization, the startup doesn’t invest in these things. And then you decide you’re not interested in them anymore. And now all of your co-investors were engaged in this, assuming you are going to provide something, and they’re now hurting.
Joseph Cabral (33:25):
Make sure if you’re going to start a program … And then the last thing I’ll say is, it takes too long to make decisions. I’m sure you’ve seen this too. One of the very first things I heard was, it’s like they don’t understand how quickly things need to happen at a startup. I simply can’t wait three or four months to know if you’re engaged in the next round or not. I simply can’t wait for you to go up the hierarchy, down the hierarchy and then come back, especially if that answers ultimately, no.
Joseph Cabral (33:52):
So if you’re going to launch a program, you have to adopt some of this mentality of terms of how fast things has to happen. This mutual dependence that investors have on one another, and you have to play by the rules of the game. And as a top manager, you need to give people the freedom to do that and the budget to do that, so that it can’t happen.
Joseph Cabral (34:14):
Now, offsetting this on the internal side of things, I don’t think anybody that’s a practitioner CVC, this is going to shock them. But what I hear constantly is, we invest in great ideas. We’ve been told this is roughly what we’re going to do as a strategic focus. And then there’s a real friction point. We invested in a great startup company. We got some great ideas. Now what do we do with it? How do we translate that into actionable items at a corporate business level? Whether it be a partnership, whether it be this market insight or business model insight that we can leverage in other activities?
Joseph Cabral (34:54):
I think that’s still being worked out. How do you make that happen? We talked about incentives. It shouldn’t surprise you that when you’re a CVC unit and you bring an idea to a business unit, that’s going to kill the things that they get bonuses off of, it’s tough to get buy in. But returning now to motivation from the top, true dollars, developing new processes and roles and careers that get good at doing this, ultimately you can smooth over that process because there’s some sort of legitimacy, there’s some sort of interpersonal relationships, that there’s trust in what you’re trying to bring back to the organization, somebody is willing to put their credibility out on the line, to believe in what you’re saying.
Joseph Cabral (35:44):
So those would be the two things I would emphasize. Number one, you’re stuck in between two worlds. And as a result, it’s tough to do either one of them perfect, but being sensitive to both of those things. Continuing with the latter point about integrating, it’s one of the reasons why, I know a number of companies have been successful in almost outsourcing their corporate venture capital, outsourcing the deal selection, outsourcing whatever.
Joseph Cabral (36:12):
If I was an internal R&D person, I could certainly see why I would be hesitant to adopt an idea from somebody that doesn’t understand how we work. Doesn’t understand all of our other internal competing priorities. And that’s just a trade off to when you’re using these outsourced vehicles. I think a better model would be if you could staff some of your CVC with people that have credibility, have networks across multiple business units, that could call up somebody and say, I know you’re working on this, or I have this idea, would you consider talking about it at your meeting and see where you could go with it, relationships matter, we’re social people, and I think unfortunately we sometimes lose a lot of that, more broadly in the innovation process in general, but particularly with these boundary spanning arrangements, where you’re going out to find ideas and you find them, and then, well, what next?
Sean Ammirati (37:14):
Right. Yeah. Absolutely sometimes you can partner with someone like a touchdown and do it external. But if you’re going to try to build it internally, who should they report to and how do you give them this kind of security?
Joseph Cabral (37:30):
So I have an issue telling people that have been very successful, what they should do, but what I will say is, things to maybe think about. Because if you tell somebody what they should do, it’s then saying that every company is the same situation, and now we get into the, it’s no different than the region. Everybody has different histories, different strengths.
Joseph Cabral (37:50):
What I think you need is however you want to accomplish it, you need to have a communication channel up to the top decision makers so that they can emphasize, here’s kind of broadly what we’re thinking about, in terms of what our company will look like in 10, 20 years. And then you have some guidance in terms of what you’re going to invest in. And then you need to be able to get that information back up to those top meetings. This is what we’ve been doing over the last year. These are our successes. These are what we’re not pursuing anymore. This is what we’re thinking. And then there can be a true dialogue in terms of no, no, keep doing that and see what happens. Or, by the way, we don’t see that as an option, maybe focus on something a little bit differently.
Joseph Cabral (38:35):
If you want to say that should be a chief innovation officer and the CVC should talk to them, for sure. But going back to my other point, you do want to make sure CVC is not completely different than your own internal development. And that’s why I’m apprehensive to prescribe a one size fits all because the organizations are always different. You want to have, again, returning to my triangle, or actually let’s make it a diamond. You want the CEO, you want internal development, you want external idea sourcing, and then also the market kind of feeding both of those, those idea generators.
Joseph Cabral (39:13):
So your best way to accomplish that, given your idiosyncratic differences as an organization, do it, but emphasize communication, emphasize resources, and then be okay with when you don’t really know what the output is. I kind of alluded to and stop myself short in saying we’re not going to do that anymore, impersonating the CEO, because when you’re fundamentally talking about the future and what could be, you don’t know how this is going to fit into your business, as you don’t know what that market’s going to be, because it hasn’t been created yet. You don’t know what you’re going to look like. So you need to have a degree of flexibility and follow up to see what happens. And that’s why communication becomes so important.
Sean Ammirati (40:00):
That’s fantastic. Well, I could probably do this all day, but in the interest of these podcasts lasting the target length, let me ask you just quickly before the final question, if people want to stay up to date on your work and kind of watch as you continue to do more of this research, what’s the best place for people to find you online?
Joseph Cabral (40:20):
Sure. So the easiest way to find me is on Twitter, @JosephJCabral, that’s my Twitter handle. I’m quite active. I do a lot of musings about corporate innovation, about CVC, about regional differences. So you can follow me there, but also my DMs are open. One of the things I take pride in from a research perspective is talking to practitioners and make sure I understand what they’re facing, given that I’ve never been a corporate venture capitalist, given that I’ve never been a chief innovation officer. So I’m always interested in hearing what they have to say, whether they agree or disagree, or if they want to talk about projects moving forward, I’m very open to that.
Sean Ammirati (41:03):
Awesome. And we’ll include a link to your Twitter handle in the show notes. So last question, I like to ask everybody this, but you’ve ended up on a very interesting career path. And I think there’s probably a lot of people listening to this who are students of mine who are thinking like, this could be an interesting thing for me as well, an interesting path for myself as well. What advice might you give to, imagine it’s later, and you’re basically just coming right out of school right now, or just kind of figuring out this is what you want to do right now. What advice would you give to young students right now trying to follow a similar path to yours?
Joseph Cabral (41:38):
All right. Well, let me first say this, a more broad comment is it’s true that you can do what you love. You can really find rewarding professions depending on what’s important to you. But I think that we often glaze over the fact that you often can’t do that right away. It’s not necessarily a millennial thing, but I think one of the most important things to emphasize is, you can have a job you love, but you have to be patient. It’s likely not going to be your first job, and if it is, you probably won’t be very successful at it. We grow, we change over the years, we develop skills that are more valuable in different contexts, so students be patient.
Joseph Cabral (42:26):
But if you have an idea where you want to go, if you want to be a faculty member, if you want to be in corporate innovation, you can have that as an end goal. And your inner dialogue with yourself as you go through life is, you’re going to have a number of opportunities. And the question you can ask yourself is, will this get me closer to that angle or not. Because as you’re investing in skills, it’s important you have flexibility, but also am I doing this just to do something or does it actually get me where I’m trying to go?
Joseph Cabral (42:59):
And then the third thing I would say, emphasize finding somebody that believes in you, in your organizations, somebody preferably with some sort of influence. I already talked earlier about having an advocate for your projects and talking about them or advocating for resources for them in meetings, an underappreciated asset, because we use this word networking and it kind of just becomes a word, but if you really think about, can you find somebody that has credibility and is willing to put that credibility on the line for you, to get you on a project, to believe in you when you really want to try something that’s outside the box, in many ways your career is a new venture in an organization.
Joseph Cabral (43:52):
If you’re a person that doesn’t know anybody, nobody’s going to go out on a limb to advocate for you, if they don’t know who you are. So if you can figure out a way to be visual, to emphasize meeting certain people, especially where you have a strength that may be complements one of their areas of need, it’s a strategic way to build opportunities for yourself moving forward. Visibility and relationships matter, and not from a networking perspective, but because you want people to believe in you.
Joseph Cabral (44:22):
And if they actually know you, they could say, “Sean, this isn’t a good fit for you. I understand you want to do this project, you want to be in on this team, I don’t think you’re ready, or I don’t think it’s good for you, and here’s why.” That’s what I would emphasize. Patience, thinking about where you’re going and are you getting closer to it, and then finding … A mentor is probably not the right word, but emphasizing meeting people at different stages of the organization in different areas of the organization.
Sean Ammirati (44:52):
That’s great. Joseph, I really appreciate you making the time today and look forward to staying in touch. And for everybody again, please follow him on Twitter and not just follow, but engage with him there.
Joseph Cabral (45:03):
Thank you. I appreciate it, Sean.
Sean Ammirati (45:05):
Thanks so much. I hope you enjoyed this episode of Agile Giants. If so, consider sharing it with a friend. And if you think it’s worth five stars, which I hope you do, please go to iTunes and rate it so that others can find this content as well. (singing)
