Corporations Need To Spend Millions After They Buy A Start Up
Start up entrepreneur Robin Liss says that for brands and organizations to innovate they have to keep investing in their acquisitions long after the M&A deals go through
M&A often, especially small companies, the math doesn’t exactly work out. That culture that you bring in through an acquisition is impossible to just create in a large corporation unless you give people the permission to fail, the permission to waste money.
Really, spend money and in hindsight money that seems totally unaccountable and totally wasted is the only way you can get to real innovation. That’s why startups work because we/re allowed to lose massive amounts of money to find the thing that works. We’re on Version 27 or 28 of Suvie. Each of those prototypes was pretty expensive.
Piers Fawkes, Founder of PSFK: How does that work?
Leaders have to give people permission to make mistakes. Our friend loves to use a platitude, “Fast failure. We encourage failure.” Unless your leaders actually feel that they can spend money and get a result eventually but, maybe, waste money or go down the wrong road for a while, they’re not going to be willing to take the risks in order to have true internal innovation.
I have to commend the leadership of Gannett for Review. They let us explore and try new things, and gave us the space to lose money on projects.
Piers: They not only spent billions of dollars buying your company…
I wouldn’t say that.
Piers: but they also were willing, or you persuaded them that they needed to keep spending.
Robin: We looked at the Smarthome, IoT, and those things were happening. We said there’s going to be a massive transformation over the next five to six years in the appliance space. We want to be the leading home appliance review website for millennials and new home buyers.
We got there, and we did it. It required massive investment and a lot of wrong turns, but we got there. It’s that patience and that willingness that venture capitalists and investors have that you have to import into the culture.
Piers: Yeah, it sounds scary if you’re…
Robin: It’s super scary. Startups don’t necessarily have better ideas. They don’t necessarily even have better people. We can’t pay people the same amounts of a large company.
We do have a willingness and a cultural ability to make mistakes, to fail, to spend money, which is how you actually innovate. People have this revisionist history, “Oh, I came up with this great idea and it took me five years, but I came up with this great idea.”
They don’t talk about the 50 or 200 ideas that were terrible in the process.
Filmed at PSFK’s CXI 2018 conference: psfk.com