00:00welcome to the a 16z podcast I'm Michel
00:02Copeland and I have here in the podcast
00:05room tiny though I may be Elizabeth
00:08welcome thanks for having me Elizabeth
00:10is on our market development team and
00:12you spend a lot of your time most of
00:15your time sitting in between kind of
00:17startups the startup world Silicon
00:18Valley and big fortune 500 global 2000
00:21companies who are coming through the
00:23doors all the time and who you visit and
00:25so I want to talk to you about how those
00:28two worlds come together here at the
00:31firm and and really throughout Silicon
00:32Valley there seems to be this constant
00:35stream of big companies coming to
00:37Silicon Valley either putting down sort
00:39of roots of their own setting up shop
00:40you know to help them with research and
00:43automobiles and healthcare and you know
00:45in retail for that matter why do you
00:47think there's so many big companies
00:49coming to the valley looking to learn
00:51and and I think that they are there's no
00:53question but what are they looking for
00:55and how does that relationship really
00:57begin I think there's a variety of
01:00stages and I would say the most nascent
01:03it's just coming and visiting and now
01:05you know there's this term of of coming
01:08into corporate tourism but sometimes
01:10that is a way to start get a sense of
01:13what companies are out here and the way
01:15we look at it is come and get a sense of
01:17what the valley is sometimes the company
01:20the larger company is really experienced
01:22and has been here and has already
01:24visited the types of tech companies that
01:26are peppering these streets and
01:28sometimes they've never been and this
01:30place is scary and they want to come and
01:32see innovation and so we try to
01:34elucidate and shed some light on what's
01:36going on in the valley so why do they
01:38feel this sort of draw to the valley to
01:40begin with them and we talk a lot about
01:42how software is seeping into every
01:44industry and honestly that that's what
01:45we believe but I mean is that why
01:47they're coming in and kind of what are
01:49they looking for when they get there if
01:51they don't even know what they're or
01:52maybe they don't know what they're
01:53looking for that is an entire spectrum
01:55as you can imagine but often it stems
01:58with knowing that their business is
02:00going to be innovated on and torn up by
02:03these smaller companies they see more
02:05nimble teams you know fast small groups
02:08of people being able to throw ideas up
02:10and absolutely take over a large part of
02:13in various areas and they know if
02:15they're not paying attention to it this
02:16is gonna continue to happen is it really
02:19a matter of physically getting on a
02:21plane or getting in your car whatever it
02:24might be and and coming out here in
02:26person we like to meet people in person
02:29I think this doesn't have to be done but
02:32by getting a sense of the vibe of the
02:34valley I think you have more willingness
02:36to work within the constraints that are
02:39here the larger companies that we see
02:41come out they've put together an idea of
02:44what they're hoping to get from it and
02:45usually they're getting even extra ideas
02:47that come from just being around or
02:49visiting a company often we have teams
02:51that give us a variety of areas that
02:54they want to meet companies in and as
02:55far as innovation goes and the different
02:58themes but really they want to meet the
03:00founders the small teams they want to
03:01talk about how do they hire great people
03:03how do they set up a culture that really
03:05incentivizes great talent to stay and
03:08love and work at and how do they really
03:10grow and connect with with just great
03:14business practices to work in today's
03:16age how do they get here with an open
03:19mind and how are they able to sort of be
03:21comfortable with with the startups
03:23coming in to see and/or to learn from
03:26usually companies are already working
03:28with some of the bigger startups like
03:30the googles and Facebooks and Twitter's
03:31of the world so spending a little bit of
03:33time with the people that they're likely
03:35just interacting with through email and
03:38and things like that right now but then
03:40coming and taking a deeper dive and that
03:43step what I like to encourage is the
03:46executive team has thought about what
03:49those innovation areas and buckets they
03:52want to push into are and giving us
03:55those often I try to get small teams and
03:58the the leadership teams on the phone to
04:00just talk about what is going on in
04:02their business well are you interested
04:04in cloud security and are you using
04:06Hadoop right now are you already working
04:09on the Pinterest platform have you been
04:11interested in the sharing economy things
04:13that seem so basic to people that are
04:15ingrained in the Silicon Valley but are
04:17so foreign to these larger companies
04:20okay so I've come out I've brought the
04:22the right people we've met with
04:24companies startups that you know sort of
04:27the villain I think might help my
04:28business what's the next phase and how
04:31does that then progress I think the
04:33second thing is coming with a clear
04:37framework of these areas of interest so
04:40once you've done that then I think the
04:42third step is really having some clear
04:44budget attached to it and the
04:46partnerships that we've seen work out
04:48the best or when you know that this is a
04:51trial and things might fail but that's
04:53expected but when a startup is seeing
04:56that they will actually get some revenue
04:58from taking on a large corporate client
05:00and partnering things go a lot a lot
05:02quicker a lot better and usually you
05:04start to see some fast results I think
05:06also for the the large company to keep
05:08in mind is startups can't always and
05:11ingest your entire business or footprint
05:13or do exactly what needs to be done so
05:16have in mind maybe a sub product that
05:18you can trial with a company or say a
05:22few to geographic locations that you're
05:24going to do a pilot rather than the
05:26entire entire United States and be
05:28prepared for it to not work I think the
05:32best way we've seen some of these
05:34partnerships form is being optimistic of
05:37course that it is going to work and
05:39setting up the relationship with that in
05:41mind but not everything does and you
05:44should be willing to take a chance on
05:47some sort of interesting technology or
05:49trial in hopes that it will work I would
05:52say that's a lot more on these creative
05:54partnerships to some of the partnerships
05:57we see on the enterprise side though
05:58these companies are there at a place
06:01where they can scale and it is it is
06:05able to be a clear partnership that that
06:08will have a great great outcome there
06:10there is my sense that big companies are
06:13not as scared of working with startups
06:16as they used to be because there's
06:17plenty of startups who actually do work
06:19at massive scale because of the cloud
06:21etc yes I think the the teams were
06:25seeing they know that startups have done
06:29it better they've done it more
06:31efficiently and they've leveraged the
06:33services that are actually going to be
06:34taking us into the future so they know
06:36they need to start working with them or
06:40on the flipside if I'm a start-up what
06:42do I need to be prepared to do
06:44differently if I'm working with a large
06:45company that you know and it's an
06:47experience that maybe I haven't had you
06:49know often I've you my job as a
06:51translator and I think it's just as hard
06:55for the portfolio companies to work with
06:58or with it's just as hard for the
07:00startups to work with the fortune 500 as
07:03it is for the fortune 500 to figure out
07:05how they can they can do something
07:07smaller with a start-up being that that
07:10language translator means the startup
07:13might need to get their head around
07:15working at a different pace or they
07:18might have to set clear boundaries where
07:20they aren't going to change their
07:22business model but they are willing to
07:23do a few custom tweaks for these larger
07:26companies often the fortune 500 are
07:28running on old old systems and sometimes
07:31there's something that you would never
07:33expect to have to do to make an
07:34integration work and sometimes those
07:36little pieces need to be figured out
07:38right what are you seeing trend wise
07:41that that these big companies are coming
07:43to the valley looking for I mean what
07:45what do they tend to want when they come
07:47and maybe that's they know it but what
07:50do they tend to walk away with so I
07:52spend my time mostly focused on the
07:54consumer side versus versus Enterprise
07:56and some of the large buckets we see on
07:58the consumer side right now and those
08:00these have evolved over time digital
08:02content is one customer engagement is
08:06huge in addition employee engagement has
08:09become a hot topic and a lot of these
08:12you know consumerization of the
08:14enterprise tools and things that are
08:16taking over now also some of the
08:19platforms the the social platforms are
08:21still not totally clear to the fortune
08:24500 and how to utilize them how to find
08:27and get the best ROI also this online
08:30offline collaboration piece I spend a
08:33lot of time with CPG companies and still
08:36being able to put the clear attribution
08:38on what's going on in that overlap of
08:41online and offline is a huge question
08:44right now describe that a little bit
08:45more for us what is that the online
08:47offline confusion I suppose yeah right
08:50now take a even take a Procter & Gamble
08:54ample we they might be spending a lot of
08:56marketing dollars online digitally and
08:59you know about their products because of
09:01of seeing them on the web and you
09:03actually do go to Safeway and buy that
09:05product or if you're my case you Amazon
09:08Amazon and explore I'm Amazon Prime or
09:12Google Shopping Express shows up daily
09:15so somehow I am learning about their
09:17product it's been marketed to me I put
09:19it in my cart on on instacart because I
09:23know about it but how do they make that
09:25correlation right and some of these
09:28creative partnerships and some of this
09:30online offline has been really hard to
09:32show clear our ROI to the retailer so
09:35how do you actually close that loop okay
09:37I've started these relationships I'm
09:39trying things it's actually working
09:41pretty well you know I'm look I'm in
09:42business with some of these startups is
09:44there a next step do I get more serious
09:47with startups do I start a venture arm
09:50do I buy them do I you know invest in
09:52them like how do you see that evolving I
09:55think it depends on what the end goal is
09:57for for the company often the the large
10:00corporate really just wants to get up to
10:02speed and we see this especially in the
10:04enterprise side of the business think
10:06you just want to be running on the
10:08efficient systems that'll take your
10:09business forward on the consumer side
10:13one partnership that we saw saw take off
10:17was with instacart and a CPG company and
10:20the CPG decided to pay the shipping for
10:25paid the delivery fee for an insta car
10:27purchase if there were a certain amount
10:29a dollar value of items in the cart and
10:31they saw a great conversion of increased
10:34basket size as you can imagine and
10:36actually overall basket size for for
10:39instacart so things like this whereby
10:42trialing you realize this really could
10:43scale and then you could start to theme
10:45it for different times of year and
10:47larger things so taking that first first
10:50trial and extrapolating what works
10:52really can start to to lay the
10:53foundation for a great partnership yeah
10:55and these companies that sound like they
10:57get more and more and meshed if things
11:00work definitely definitely and some of
11:02the the systems that are our portfolio
11:07our solving is they're moving a large
11:09part of their business to a certain
11:11platform for example or a technology
11:13system that that company is has built
11:15and these can be super successful after
11:18the main integration is done but what's
11:20the recipe for disappointment
11:22you know if you come in thinking X or Y
11:24as a large company or even on the other
11:25side if you come into this sort of the
11:27beginning of this relationship as a
11:29start-up thinking something you know how
11:31do you both sides get disappointed I
11:34think when there isn't a clear a clear
11:37list of what they hope to accomplish
11:38it can be very high-level and broad but
11:41I think there needs to be some desire
11:43for action and outcome going forward
11:46some of the worst scenarios we have or
11:49when the fortune 500 comes and learns a
11:53lot but then there's no desire for a
11:56next step and the best thing has been
11:59having a clear leader assigned to who
12:01will be that follow-up point and as a
12:03leader need to be - CEO know I think
12:07when it's not in that that c-suite it
12:11works the best actually I love seeing
12:13the executive buy-in at the top but then
12:16a clear person to be handed off if this
12:18is the digital mobility team and that
12:20startup company falls directly in their
12:23assign who is going to be that follow-up
12:26point of contact often it comes with a
12:28quick call right after and then maybe an
12:30on-site visit and the company gets
12:32further and further engrained and more
12:34comfortable working together and when
12:36there's actual people that are assigned
12:38to that outcome I think it works the
12:40best the large companies come out here
12:42to learn from startups it sounds like
12:44I'm from Silicon Valley but what can
12:46Silicon Valley and the startup world
12:48learned from these large companies
12:49I think startups are set to gain a lot
12:53from working with large companies I mean
12:55first to be honest is what that logo on
12:58your slide can't can do when you're
13:01working with a large company it shows
13:02that a that you actually are a real
13:05company that can support something
13:07bigger but it also starts to give you a
13:10little little track record of success
13:12secondly these fortune 500s have spent
13:16so much time growing in a variety of
13:18areas and things that you can be
13:21learning from them we see this every
13:23single day and it may make you open your
13:26mind a little bit differently about
13:28doing business in a certain place or a
13:30part of the market that you didn't know
13:31you could tackle and take on and these
13:33big companies have experienced so much
13:36over time to grow and maintain the
13:38positions that they're in they have
13:39spent so much time building a
13:41world-class brand and often our
13:43portfolio companies are struggling to
13:46both put themselves on the map and
13:47figure out how to navigate the larger
13:49larger world and great learning they can
13:52take away from these bigger companies
13:55have you seen that that sort of the gap
13:57whether it's cultural or otherwise
13:59between the Fortune 500 is is as wide as
14:02maybe some people believe or is is there
14:04common ground usually that's easy to
14:06find and people get comfortable with you
14:08set with each other fairly quickly there
14:10is common ground but there are a number
14:12of cases of a number of cases that there
14:15is a huge difference in vibe culture
14:18environment how do you sort of how would
14:22you describe that some of the things
14:24that seem so shocking when you know I've
14:26spent my entire career in the valley
14:29things that seem so oh of course to us
14:33like yes we use Google Apps and and
14:35Google for our email and we got into a
14:39conversation about slack and how it can
14:42make you more productive and efficient
14:43and teams to be able to collaborate so
14:45much better and the what this big
14:48company said they could never put slack
14:51into an organization where it stands now
14:53they're still on outlook and they're not
14:57able to log in remotely they also aren't
15:00allowed to access websites like Facebook
15:03and bring open that tab and things that
15:05seem so normal to my business are
15:08foreign are for to these fortune 500 and
15:12that is not all of them right but there
15:15are some of these cases that make you
15:17squint and say yeah it's good to have
15:19met these edge cases because it does
15:22frame your perspective in an entirely
15:23different way as these relationships and
15:26business relationships are succeeding do
15:29companies get a better sense of how to
15:30innovate themselves big companies I mean
15:34something that if that's what they're
15:36coming to learn do you think that they
15:37truly are learning that I think it's a
15:41start right now so much of the company
15:45needs to shift to really be able to be
15:47as nimble as say we are out here but I
15:49think it's a start by spending some time
15:52with some smaller companies I think that
15:54just puts a different pace into your
15:56work and also puts some willingness to
15:59take on some risk too and the culture
16:02that we've been set up with it's okay to
16:04fail and it's okay to try a partnership
16:05that might not work so I just I think
16:07getting into more of the mentality here
16:09kick-starts things and it just shows
16:12that if we do spent in some time some
16:14great things can come of it well I know
16:16you have to go translate between big
16:19companies and small companies right now
16:20so I appreciate your time and thanks for
16:23joining the podcast thanks so much
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