Collaborative Innovation: The Enterprise + Startup Connection

Transcription

1 ACG Breakfast, Feb 2017 Collaborative Innovation: The Enterprise + Startup Connection Brian Steketee, founder and CEO of Modustri

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3 Serial Entrepreneur with some Fortune 500 experience Before that. I cut my teeth on leading Innovation for many other fortune 500 brands

4 By 2020, sharing is a global $26B business ~Forbes Magazine, 2013 People will maximize asset utilization as a way of life and share products, services, labor, transportation, materials 4

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6 Your team distilled down 70 years of our technology in one year and executed a better strategy Ken Hoefling, Vice President and Officer, Caterpillar

7 + Our parts monitoring and management tool has been a leader in the equipment management industry for 75 years, but we re always looking for ways to step up our game. Our relationship with Modustri will allow us to take advantage of emerging technology that gives our customers more information on parts and components to maximize uptime. The days of being reactive are over. Doug Hoerr, Vice President of the Reman, Components & Work Tools Division We are at the forefront of a revolution in the heavy equipment industry. Emerging technologies are changing the way we can help customers maintain a competitive advantage and achieve new levels of equipment productivity and profitability. Our alliance with Modustri will be key in making this happen. Greg Folley, Vice President of Analytics & Innovation Division

8 Some key themes for today 1. What is innovation? 2. Identifying your path to growth 3. Vetting you partner 4. Structuring the right kind of deal

9 Innovation is not just... A new product

10 Jump the curve Guy Kawasaki You can t do things 10% better, you must do things 10 times better.

11 1.0 Ice Harvester

12 2.0 Ice Factory

13 3.0 Ice Box (aka Refrigerator)

14 If you define yourself by what you do, and not the benefits you provide then you can t jump to the next curve Guy Kawasaki

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16 Identifying your path to growth

17 What type of relationship are you looking for? I want to be a supplier Consider special circumstances IP, incentives What motivates an entreprenuerial and innovative team doesn t always work within corporate guidelines Freedom to operate I want to be a partner Think of the vehicles JV, Alliance, Equity Think of the complications IP, goal alignment, fit

18 Mutualism both entities benefit Channel Speed

19 What am I looking for from you? Fortune 50 Company Small Market Company Can you support us globally? I need commitments to support scale Are you going to be around in 12 months? We want your speed but probably wont be able to go as fast as you do Let s share the risk / reward and have the right provisions to address that Let s account for that in our plans We want consistency and stability So do we Do you have IP? How can we both benefit from it

20 Vetting the partnership (It s a lot like dating)

21 Alignment

22 When you are ready to start dating Mutual due diligence is crucial. Talk to her ex-boyfriends Make sure to meet her parents Is this a long term or short term type commitment? Are you truly aligned? Will she get jealous if you are spending time with other friends? Will your friends like her friends?

23 No plan has ever survived the REORG If it s not in writing it doesn t matter Does your success metrics align with your partners? Are your KPIs in your documents? Simple contracts survive Pricing, Volume, and the importance of guarantees Consider your governance and voting structure Set rules for governing key issues you may have to delay the discussion on Don t forget about the soft metrics Address IP up front

24 Without an executive champion (on both sides), find something else to do

25 Prepare for the antibodies

26 Create mechanics to address

27 Structuring the right deal Don t underestimate the value of experts that know what good looks like

28 Respect the process MODUSTRI, COPYRIGHT 2015 ALL RIGHTS RESERVED 28 CONFIDENTIAL // CATERPILLAR

29 You can t measure a partnership purely on a DCF model How Angry Birds started

30 Financing the deal Drive towards a contract with bankable terms (involve your bank or investors in this process) Don t forget about the tax implications Licensing v IP sale v standard Get innovative upfront loans with capped paybacks for programs Investors like revenue numbers technology will not be your problem Find alternative financing mechanisms and make sure not to overspend Never underestimate the time it takes to get a deal done Always maintain at least 12 months of funding and appreciate the time to get a deal done Make sure it s a win/win zero sum games fail in the end

31 What to capture in the agreement Design the business model, goals, and projections into the contract and stick to them A clause that plans for a renegotiation Include break up clauses and rational plans to address disagreements If you have IP, or joint development, define up front the the compensation methods that may last beyond the term Soft Metrics Governance Warrants, Options, and mutually aligned goals

32 Planning for the exit Crabs in a bucket Perception is more important than reality Up front v earn out Assume up front your five year plan won t happen Don t underestimate the unknowns Line up your buyer ahead of time

33 Q & A Brian Steketee, Founder Modustri m // o Brian.Steketee@Modustri.com Modustri.com