Building Startups inside Corporate Giants

Google has built Area120, Walmart calls it Store no. 8 and GE has created GE FastWorks — all of them built with the objective to incubate startups within their respective organisations. In the wake of AI shaping every aspect of their industry, corporate incubators act as an insurance against a possible disruption of their business model.

I started my career building a Fintech startup inside a $35bn banking giant in India. Later on, I went to join the new ventures team at Unilever to build an eCommerce business grounds-up. At Fractal Analytics, we are now incubating multiple AI startups in the areas of Healthcare and Business Intelligence. Personally, these intrapreneurial startup experiences gave me a high that no corporate role can ever match.

It is not easy to build a startup. It is harder if you are building one inside an enterprise. By definition, startups take huge risks to generate an extraordinary, albeit a low probability outcome. This concept is alien to the well-oiled machinery of large enterprises. Strong corporate culture, well-honed processes & robust policies form the identity of large organisations. Startups challenge all of these notions in some form or another. Unsurprisingly, most of the corporate startup experiments fail.

So, how does one go about building a startup ecosystem inside a corporate giant? Here are some of the learnings to get you started.

Pick the right founding team

VCs invest in founders as much as in the idea itself. It is no different for a corporate startup. Look for hustlers in your organisation who have a deep passion for the idea and perennial dissatisfaction with the status quo. More often than not, the right leader for your startup could be lower down in the corporate hierarchy. Do not allow seniority & corporate structure come in the way of assembling the right team. Getting the right founding team is half the job done.

Make sure at least 50% of the early team are external hires

Startups need a healthy dose of external stimulus and new skills to be successful. Do not take the easy route of filling up all critical positions with the internal team. That is a classical setup for failure.

Empower startups to make their own decisions

At Unilever, we decided to work out of a warehouse-office in the outskirts of Mumbai to build our eCommerce venture. If we would have stuck to Unilever’s plush downtown offices, the cultural overhang of the parent would have thrown the baby out of the bathwater in no time. Allow startups to build their own culture, hire differently and run their own show. There is a reason why they are incubated as startups and not just run as a special project.

This is the most important indicator of startup progress

‘The goal of a startup is to figure out the right things to build — the thing customers want & will pay for — as quickly as possible’ — from The Lean Startup by Eric Ries. In its early stage, startups should be focused on only one goal — validating the most important assumptions that they have made in their business as quickly as possible. Use product sketches, mocked-up prototypes, hacked product MVPs — whatever is the fastest way to test your assumptions, quickly. Startups progress only when they rapidly iterate to test the most important assumptions in the product.

Be comfortable with failure

Startups aspire to create a new product or service under conditions of extreme uncertainty. Basic probability suggests that most startups would fail. How would the organisation respond to this eventuality? What would happen to the team working on this startup? In today’s environment if you cannot fail you cannot learn. Do not confuse the failure of an idea with the personal failure for the team involved.

AI will present unprecedented opportunities & challenges in coming years for organisations across industries. Business models will be redefined through clever use of data, design & AI. How organisations respond to these challenges by unlocking entrepreneurial energy in their teams will separate the men from the boys.

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