Business-to-business, corporate innovation, innovation lab, management, startup collaboration, startup ecosystem, startup partnership, Tech Startups

Corporates and startups: Can these two become BFFs?

This is part of a content series where Tech in Asia’s marketing team highlights corporate innovation initiatives and successful startup partnerships in the region. To learn more on how we support corporations, check us out here.

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“Sometimes when I meet a startup, the kind of things that they share with me within the first 15 minutes amazes me,” says Nicholas Sagau, group general manager of Media Prima Labs, a unit under Malaysia’s Media Prima Digital – the digital arm of the media conglomerate.

Set up two years ago, Media Prima Labs functions as an incubator where Sagau and his team experiment and develop products that can be monetized on Media Prima group’s existing intellectual property (IP). The Labs team create solutions to help Media Prima Digital access the growing mobile space

“The aim was to just go out there, do partnerships and get lots of ideas from the startups,” Sagau recalls. “I would advise corporates to do the same – go out and experience for yourself the kind of ideas and innovation that startups have to offer.”

While corporates struggle to create disruptive technological breakthroughs due to business priorities and longer approval processes, they are established brands in their respective sectors and hold extensive market reach. On the other hand, startups are able to innovate rapidly with their ‘fail fast learn fast’ culture but lack the market access and customer networks. The pair may sound like a dream team, but the coming together of these two drastically different worlds brings a unique set of challenges.

How the partnership started

“If you were to mention Media Prima in Malaysia, I think most people would think of terrestrial TV channels. So I never thought that they would be looking outside their organization for solutions, much less from startups,” says Steve Chong, business developer at Supahands.

Supahands started in 2014 as a virtual assistant company. Now, they specialize in content moderation and data management using machine learning.

“Initially, we had a small pool of clients supporting our business, and we were making a good amount of revenue from it,” shares Chong. “But we were aware that in Southeast Asia, there are fewer wealthy people willing to spend money on virtual assistants compared to the United States. This means our market is pretty limited.”

As such, the startup began to explore working with businesses directly to relieve them of tedious and repetitive data management tasks. “If Supahands were to scale, it would make more sense for us to work with corporates instead of individuals,” explains Chong.

Media Prima Labs was a corporate initiative Supahands considered because the parent company Media Prima is a major player in the traditional media scene in Malaysia.

According to Chong, the collaboration with Media Prima Labs “didn’t pose much of a challenge” because “lots of young people” are part of its staff. “Everyone was pretty much tech-focused and using the same online tools,” adding that the incubator was also receptive to the technological solutions Supahands could offer.

Recruiting more young people was a conscious effort on Media Prima Lab’s end. Sagau points out that of their recent hires in the innovation team, 30 percent had startup experience.” He continues, “They help to bring in the startup culture and I can already see the fast and agile working style rubbing off some of the colleagues. We do hope that one day, the whole corporation can function like a startup.”

Finding the right startup was not easy

In the beginning, Media Prima Labs had explored working with about six to seven startups.

But along the way, Sagau and his team had a discovery. “We realized that it’s either we were too slow, or the startups had their own ideas of how things should work. For some of the partnerships, it was basically a mismatch of expectations.”

One area where this is apparent is in online-to-offline services. Sagau observes that startups often overlook how extensive Media Prima’s audience reach is, thanks to traditional media. “Our TV show Jalan Jalan Cari Makan (Traveling for Food) can have a viewership of up to 700,000 per episode. This figure can be too much for, say, a food-delivery or restaurant-booking app. Therefore, we would put it upfront to startups when they are pitching to us because this is serious operational management that they need to look into.”

They hit the sweet spot with Supahands, and currently have quarterly contracts with the startup.

“With Supahands, we operate based on a client-vendor sort of partnership. Their services weren’t directly integrated into our products, but it’s more of an outsourcing of the data and machine learning work. This helps us to streamline our workflow. Working together was a lot easier as compared to doing a joint venture with a startup,” notes Sagau.

Chong says challenges of working with corporates mainly comes from long bureaucratic processes and not operations. “As we all know, larger organizations tend to have a lot of red tapes.” Contracts and payments are also an issue.

Differences in speed and processes

Another challenge that was the difference in the speed at which the companies operate. Generally, startups can move in for the kill after deciding to try out a new idea. But corporates have certain limitations that require a more reserved approach.

“We would love to function more as a startup, but unfortunately as a corporate, we do have a responsibility to our stakeholders. We are also a publicly listed company, so there are a lot of things we need to consider in every decision that we make,” says Sagau.

Chong agrees with this, adding with a laugh, “For Supahands, I wouldn’t say there were partnerships that didn’t work well. But there were a few that didn’t take off at all because we weren’t able to align the timelines.”

Sagau also faced another obstacle: corporate buy-in. “Getting the internal guys at Media Prima Group to understand the value that startups can bring to us was a challenge,” he says. A lot of times, stakeholders were also skeptical about the capabilities of startups, and wanted to hold back until they see results.

“So we would start off some projects within the innovation lab, show some results to convince the stakeholders on how the startup can help optimize our operation processes, then expand it to the rest of the organization,” explains Sagau.

For instance, Media Prima Labs could engage Supahands to provide big data services for a two-month digital campaign, instead of hiring data scientists to work on a two-month contract. The latter option would lead to an increased workload for other departments within Media Prima, such as human resources and finance.

Outsourcing the work to Supahands helped make the business operations leaner. By delivering on this, the rest of the organization grew to trust the startup.

An open ecosystem

Despite red tapes and difficulties in obtaining corporate buy-in, Supahands “ realized that there was a change in receptiveness in large corporates towards working with startups,” says Chong.

Another takeaway that Supahands gained from the partnership was the knowledge of how a big corporation works. The startup get a closer look at how a legacy company functions in terms of processes and what sort of stakeholders they deal with.

Chong also recognizes how the collaboration boosted the startup’s credibility. “ Subsequently, when we approach other corporations of a similar size, it’s easier for them to trust that we know what we are doing.”

Playing to each other’s strengths

If executed well, startup-corporate partnerships enable both parties to benefit from each other’s assets. While startups have fearless entrepreneurial spirit, legacy businesses have the market expertise and resources to grow innovations faster.

This may be easier said than done, and not every partnership becomes successful – or even take off. But as Richard Branson, founder of Virgin Group, once said, “You don’t learn to walk by following rules, you learn by doing, and falling over.”

This post Corporates and startups: Can these two become BFFs? appeared first on Tech in Asia.

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