Lessons from Corporate Innovators

Season 4 Finale- Q&A

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Episode description:

As we wrap up an incredible season of the podcast, we’re going out with a special episode. Join us for Q&A where we turn the spotlight on you, our dedicated audience. 

Your questions have poured in and they fell into three broad categories:

  1. Corporate-Startup Collaboration: Given this season’s exploration of the corporate-startup collaboration landscape, it’s no surprise that many of you were curious about partnerships, their impact, and their role in a company’s innovation strategy.
  2. Current Trends: Business is changing faster than ever, and there were queries that reflected an interest in my perspective on a few pressing current issues. 
  3. Personal Insights: On a more personal note, several of you were curious about my own professional journey and what’s on the horizon for “Agile Giants.” So we finish with a glimpse behind the curtain.

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Full Transcript:

[00:00:56] Sean Ammirati: Welcome to the last episode of Season Four of Agile Giants. We’re actually 60 episodes in across the podcast at this point, which is truly incredible. You know, the concept of a season in a podcast is kind of a weird thing. I’d be the first to admit that, but it has been really great to have a bunch of different conversations from a bunch of different people’s perspectives about how startups and corporates can collaborate and do more together than either could do by themselves.

[00:01:27] Sean Ammirati: And so I wanted to kind of wrap the season up by talking about some of the questions that you all have around startup and corporate collaboration. We went out to social media, created a Typeform, and got lots of different input on things you’d like to learn about. The questions really naturally divided up into three categories, and so we’ll go through each of those.

[00:01:48] Sean Ammirati: The first really being a couple follow on questions from the season that we’re in right now, this concept of startup-corporate collaboration. The second was some questions around current events and trying to understand maybe what’s going on some relatively recent news events. And then the third, which was kind of both humbling and a little bit weird, but went ahead and went with it.

[00:02:12] Sean Ammirati: There were a few questions around what I’m doing, and I haven’t talked about this much on the podcast, but if you follow me on LinkedIn or Twitter, you’re probably aware there’s been some career changes going on and people were curious about what’s coming next. So I’ll kind of wrap the podcast up talking about that. As well as weaving that in to talk a little bit about where we’re heading for the next quote unquote season of Agile Giants. So let’s jump into the episode.

[00:02:40] Sean Ammirati: So the first question came via Typeform from an anonymous listener. And it really was humbling to me because it just shows how varied the audience here is on Agile Giants. The question was, “Hey, Sean, first big shout out to your podcast. Love what you’re doing. I’m a coffee shop owner from Alabama”, which I got to be honest when I was starting Agile Giants, I never imagined coffee shop owners in Alabama would be listening to the podcast, but that is just the wonderful thing about digital media.

[00:03:10] Sean Ammirati: He or she says, “We’re doing pretty well here, three branches and things are rolling pretty smoothly. Lately, I’ve been toying with the idea of expanding and I stumbled upon Blank Street’s story about building a coffee shop chain and attracting venture capitalists. But here’s the deal. I’m not exactly swimming in a sea of connections beyond my cozy coffee shop circle.”

[00:03:32] Sean Ammirati: “So, I’m wondering, is it even doable for someone like me to try the corporate startup partnership strategy? Any advice would be appreciated. Honestly, I’d do just about anything to avoid the dreaded cold emails again.” 

[00:03:50] Sean Ammirati: All right, so there’s a couple of things here again. First of all, you’re an incredible writer. The question was submitted anonymously, but incredible writer. So if you’re looking for things to do on the side, let me know. I’d love you to help with some of the content that I’m putting out there. But as it comes to this concept of startup-corporate collaboration and talking about Blank Street Coffee, My sense is actually probably as much as the concept of collaborations between startups and corporate.

[00:04:14] Sean Ammirati: What you’re really getting to is the second part of this, which is, is there a path for me to raise lots of capital similar to what I read about Blank Street Coffee doing? For those who may not be familiar, I’ll include a link to a New York Times article about Blank Street Coffee in the show notes, but it’s a coffee shop chain that’s raised literally over $100 million from private equity looking to kind of scale up this unique business.

[00:04:42] Sean Ammirati: And it has kind of mixed reviews from people in the coffee industry. And so if the question is, is there a way to raise capital, whether that’s corporate capital via some kind of partnerships or that’s through direct private equity or capital connections, the answer is possibly, but I think you want to understand really what are the kinds of businesses that need to raise venture capital and the concept behind venture capital, whether it’s Blank Street Coffee, or it’s, you know, the tech startup, maybe that an engineer is in your shop right now, writing code to build. The concept behind venture capital is that these are businesses that need to lose money for a period of time. Because at scale, they make so much more money and whether Blank Street ends up looking like that or not, it’s clear that they’ve convinced investors, a series of investors, that that is the profile of their business.

[00:05:36] Sean Ammirati: Most coffee shops don’t have that profile. Most coffee shops often need a little bit of money to get started. Bank loans, things like that. And those may be the dreaded cold emails that you’re talking about, but over time they tend to cashflow, and scale their growth via that cashflow. There are certainly exceptions, you know, Starbucks, Blue Bottle, and now Blank Street Coffee have all raised venture capital, but, those are companies with much more scale ambition than most coffee shop owners.

[00:06:08] Sean Ammirati:. So I think a couple of questions for you to ask yourself are like, how big do you really want the series of coffee shops that you run to be? And do you really have this profile of losing a little bit of money to get to this scale, where a little bit could be tens of millions, millions, or even hundreds of millions, in the case of Blank Street Coffee to ultimately scale up to a large shop.

[00:06:34] Sean Ammirati: If that is your profile, then absolutely think about the right way to approach venture just like anybody else. And I would just say, because again, I was really touched by how kind your words were. And also, just how thoughtful the question was. If you do think this is a business that makes sense to raise money and that you kind of understand those concerns and you’re thinking about it still, reach out to me.  I would love to talk to you about it and, and maybe help make some introductions for you.

[00:06:56] Sean Ammirati: Okay. So the next question was, “ Aside from the guests this season, can you share some examples of corporate-startup collaborations that you consider successful and the factors that led you to classify them as such.”

[00:07:15] Sean Ammirati: And so there’s two things I wanted to do here. One might be a bit self-promotional, but I know that every, every episode we add a bunch of listeners. And so not all of you have gone all the way back. So I do want to call out three episodes that predate this season. One with Duquesne Light, one with Priscilla Beal, back when she was at Bayer. And then the third one was Paul Nielsen back when he was at Optum. I think all three of those give some additional context around this concept of corporate-startup collaboration and opportunities and good models.

[00:07:58] Sean Ammirati: And so those are some earlier episodes in the archive that may be helpful for you. But beyond that, I also think it’s important to think about. I think the real spirit of this question is, are there some people who you wish you could have included in this season of Agile Giants? And the answer to that is, absolutely.

[00:08:13] Sean Ammirati: I would have loved to get the right person or group of people from Salesforce on Agile Giants this season. I do think Salesforce does an incredible job both providing capital as well as access to their platform and network to really help a lot of startups scale up and do it in a way where one plus one is a number greater than two.

[00:08:35] Sean Ammirati: Unfortunately, I just didn’t have the right connections, or I wasn’t able to make my way to the right connections inside Salesforce to to have that conversation or get them to have that conversation. But I do think it’s another wonderful example of a company that may be worth considering as you think about this concept of of startup and corporate collaboration.

[00:08:58] Sean Ammirati: Okay. And then, the last question here from this first bucket of questions was, “Were there any notable trends or emerging models in the corporate startup collaboration that businesses should be aware of?” And I’m going to interpret this as really, are there trends that startups should be aware of or corporate should be aware of?

[00:09:20] Sean Ammirati: So we’ll try to take it from both perspectives. I think I’m going to point out the same thing as they think about startup corporate collaboration, and we’ll talk a little bit more about the economy in a few minutes here, but I do think it’s hard to talk about this question without pointing out how different the venture landscape is than it was even two years ago.

[00:09:43] Sean Ammirati: And so this, this means a couple of things. It means that maybe people who before felt like they had a limitless number of capital sources available for them that they may be more constrained. And so that does change the power dynamics between the corporate and the startup at this point. Well, it’s a bit unequally distributed.

[00:10:04] Sean Ammirati: And again, we’ll talk about that in a moment. It does in certain areas create a little bit of a power imbalance, and so I think both sides need to be aware of the implications for that, but more to the point for I think one of the things that I’m beginning to see happen a bit in some of these collaborations that is not a great thing is the larger companies trying to add a bunch of extra terms to their investments to their biz dev deals that may seem a Opportunistic or they may seem beneficial when kind of negotiated in the vacuum, but you have to remember that, like these relationships that you’re doing are long term relationships, and it’s really important to make sure that these these start off on the right foot.

[00:10:50] Sean Ammirati: And I guess what I’m saying in a nutshell here is we’re seeing a bit more of that these days, and I’m not sure that’s a good thing. So I’d encourage both sides to resist us on the corporate side.

[00:11:09] Sean Ammirati: Remember, these are long term relationships. Think about the conversation we just had with Merck and Acadia, six, seven year commitment and, and all the different ways that relationship has evolved. Don’t try to extract every term on the first deal you do with them. And similarly from the startup side, it’s hard to do.

[00:11:31] Sean Ammirati: Sometimes you got to take the deal that’s given, but in general, push back and make sure you’re not adding terms to a deal that end up boxing you in later. Okay, so that was kind of a couple questions around startup and corporate collaboration. The next thing we want to talk a little bit about was a couple questions that came in focused on kind of current issues in the startup and corporate innovation ecosystem today.

[00:11:59] Sean Ammirati: And the first goes back to Silicon Valley Bank and what happened there, as well as the aftermath around that. And the question really, as written, is what lessons can startups learn from these events to safeguard against other similar Vulnerabilities and a couple of things here. So, so the SVB stuff happened actually happened on March 9th and 10th.

[00:12:24] Sean Ammirati: And the reason I remember that is my birthday is March 10th. So it was quite a birthday present to watch many of our portfolio companies have to do with this and, end up on board calls kind of through the weekend, they’re trying to figure out what we were going to d if indeed Silicon Valley Bank didn’t work out. And the reality is here, the question has written is similar vulnerabilities. The problem is, I don’t think I can at least say for the boards I was on, none of us were thinking about treasury management in January of this year as a vulnerable issue for many of the startups we were involved in.

[00:13:03] Sean Ammirati: And yet, you know, certainly in April till now, treasury management has been on the agenda of many of these same startup board meetings. The reality is I think it’s hard to forecast what the similar vulnerabilities are because at the end of the day, these are kind of events that are by definition a little bit rare and hard to forecast.

[00:13:32] Sean Ammirati: I know many people, many people are trying to say like, well, what’s the next SVB? I think the next SVB risk is really hard to focus and I’m not actually sure. That’s the right thing for entrepreneurs to focus on what I do think is really important for entrepreneurs to understand coming out of this is that there are a number of kind of core financial metrics about your business that you should just know at all times and I don’t mean.

[00:14:02] Sean Ammirati: Where your money lives, although certainly going forward, there’s no excuse not to understand the treasury management elements of your starts. But I really mean things like the unit economics of your business, your burn rate and the levers around that amount of runway. Things like that. One of the things that became obvious quickly is like some companies that we invested with had their money in S.V. B. Yeah. Others did not. That was certainly a bit of luck to. But you know, in terms of did you have your money there or not, but, but the bigger point was whether you did or didn’t understanding how you could kind of adapt and change based on the cards that you had been dealt that weekend were significant.

[00:14:46] Sean Ammirati: Right. And understanding those core financial metrics. This leads to a concept of, of course, I used to teach at Carnegie Mellon for a number of times, which was called finance for product managers, because most finance professionals think about finance at the company level, but what, but really is often important is kind of finance metrics at the product or the, the unit level.

[00:15:08] Sean Ammirati: And it kind of came back to me how important that content was, and it actually makes me want to figure out a way to get that content to a. A much broader audience, which I’m actually spending some time thinking about these days. But I think that’s really the, the takeaway that you can have from that SBB experience much more than the exact challenge that, that, that many folks had to go through over that kind of early March time period.

[00:15:34] Sean Ammirati: The second question in this area, again, came in anonymously via Typeform, but it was this. The sensational debut of ChatGPT sparked a tidal wave of investor enthusiasm over the rise of artificial intelligence. But with a multitude of businesses diving into AI related ventures, where should investors focus their attention?

[00:15:56] Sean Ammirati: What are the real AI investment gems worth my money? Okay, so there’s a lot I don’t know about you. And again, a couple of these type form ones that came in anonymously are a bit tricky. But when we think about where you should put your money, I think it’s unlikely that you’re going to be able to invest into Early stage venture back startups, right?

[00:16:21] Sean Ammirati: You know, unless you are a V. C. Or you have money that you’re putting to work in different venture for venture firms. So I suspect the heart of this question comes to where should I put my money in the public equity markets, right? And there’s a bunch of different layers that even in the public equities market, you can make investments.

[00:16:41] Sean Ammirati: And so you can certainly invest in a company like Microsoft, given their relationship with open a I. You can invest in companies like NVIDIA, given the type of array mathematics that a lot of these, a lot of these technologies take advantage of the GPUs are some of the most important processors to do, and you’ve seen them kind of ride that wave, right?

[00:17:08] Sean Ammirati: So there’s a number of different places in the stack that you can invest. But in many ways, this reminds me a bit of the early 90s, and in fact, that’s a theme I will, I will come back to again and again, when we think about this tidal wave of interest in generative AI right now, the reality is that we’re going to create a lot of Amazon.

[00:17:30] Sean Ammirati: coms. And a lot of pep. com. And so what’s important to you as an investor, I think, is you want to have a basket of stocks that you’re investing in, whether it’s index funds or just diversifying yourself, because it’s really hard for most public equity investors to understand like, well, Is this the next Amazon or the next Pets.com? If you’re trying to invest around this [00:18:00] trend, I would encourage you to diversify your investments across a bunch of these different things, because again, it’s going to be really hard over the next couple. Quarters to figure out what’s hype and what’s reality, but I do think the consensus, and I certainly feel this way is that the world will be different moving forward than it is today, and that actually kind of leads to this last question.

[00:18:25] Sean Ammirati: I got a number of people who asked me, well, can you tell me a little bit more about your professional plans? And just again, because I haven’t talked about this at all on the podcast, I did recently announced at the beginning of the summer. That I would not be returning to continue to run CSL day to day as the director, CSL as the corporate startup lab, I’ll still be involved, I’ll still be supportive of the group, but for a variety of reasons that felt like it was time to find somebody else to take that over.

[00:18:56] Sean Ammirati: Super excited that we recently announced Jim Jen, who I’ve known for 20 years, has come in and taken over that role, as well as Jim has become a professor of entrepreneurship at Tepper, along with myself and a number of my colleagues there. So, really a win all the way around. If you don’t know Jim Jen, you’re probably not in Pittsburgh.

[00:19:17] Sean Ammirati: Jim was the guy who started Alpha Lab. He actually had 20 year run at Innovation Works, and most of the success of Innovation Works over the last 20 years points right back to Jim. And so I couldn’t be more excited to have him taking over Corporate Startup Lab. And I really do believe the best days of CSL are to come.

[00:19:39] Sean Ammirati: But they’re really exciting. Thank you. There were a number of reasons why this was the right thing for me to do, but one of them is exactly that this does feel like the late 1990s. I have been saying for 20 years, if many of you know this, I dropped out of Carnegie Mellon graduate school to do a startup that was broadly in the AI and machine learning space.

[00:20:01] Sean Ammirati: And a couple of those back to back, one we sold to Morgan Stanley, one we sold to LinkedIn. But, but all of those were frankly, starts that were just a little bit too early. But for 20 years, I’ve been saying this is the year of AI, and like a broken clock, I think. The good news for me is I’m eventually going to be right, and it feels like this is the year I’m going to be right into that point on building a lot of Pets.com, but also building a lot of Amazons.

[00:20:28] Sean Ammirati: It was clear that I needed to really jump in and focus on building and learning, spending more time around this trend myself. So I worked with the school to find somebody to take over. CSL day to day, which I’m super excited about. Ultimately, that was Jim Jen. I did take a fellowship on at Carnegie Mellon.

[00:20:47] Sean Ammirati: So I’m one of six generative AI fellows at Carnegie Mellon this year. I’m specifically focused on generative AI and entrepreneurship and kind of processes around entrepreneurship. There’ll be more to come. By the time this podcast comes, the first paper, that kind of lays out my plan for the sort of area I’m going to be investigating over the year will be published.

[00:21:14] Sean Ammirati: And so I’ll include a link to that in the show notes, but it is absolutely amazing the world that we’re entering into here. And it is much broader than just large language models. It’s being interacted with via chatbots, but that is absolutely also the aha moment that has made this real for so many, so many people in all walks of life.

[00:21:37] Sean Ammirati: But, but most interesting to me, so many executives trying to figure out how it is changing their industry. And so spending a lot of time looking into that, researching that, working on that again, I’ll have a paper that I’ll include a link to the kind of layout, the area I’ll be investigating for this year.

[00:21:53] Sean Ammirati: And I’m really excited about it. And that actually ties also right into the last question, which is a few of you wanted to know, what’s the next season of Agile Giants? The next season of Agile Giants is going to pick up on exactly what I’m researching. So in the same way that in many ways, the last 60 episodes have been different things around this broad topic of the corporate startup lab and the things we’ve been looking at there.

[00:22:19] Sean Ammirati: This upcoming season, I’m going to really focus on the fellowship that I’m doing and this concept of how can generative AI support innovation and entrepreneurship. And so we’ll be having guests who are bringing different perspectives to that conversation, some who bring kind of analogous research that they’ve done and couldn’t be more excited about kicking that off later this fall.

[00:22:40] Sean Ammirati: So I hope you continue to stay subscribed, continue to stay engaged, and we’ll even be putting more content out going forward as this, the synergies between this fellowship that I’m doing and the Agile Giants platform continue to grow. But with that, that’s a wrap on season four and episode 60 of Agile Giants.

[00:22:59] Sean Ammirati: Thanks so much as always. If you enjoyed this or liked any of the questions, the best thing you can do to help me out is you can forward this to a friend, and if you’re not already a subscriber. Subscribe on Spotify, iTunes, or wherever you listen to podcasts. Thanks so much and hope you have a great rest of your week.

[00:23:21] Sean Ammirati: 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.

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