Facebook, Salesforce, Apple, and even Google were – at one time – considered to be startups. However, while they may have the open office plans or flexible working hours, they aren’t quite the agile organizations they once were. Larger companies can therefore become vulnerable to startups that are more nimble and better positioned to adapt to customers’ needs.
Take for example, MicroVentures’ portfolio company Loom, which was acquired by Dropbox in 2014 to help the large file-hosting provider develop and improve its photo management and sharing application. Loom’s straightforward design and space-saving photo storage technology appealed to Dropbox’s existing user base and allowed the large company to integrate Loom’s user experience.
So what can large companies learn from startups?
- Create opportunities for new ideas to develop. Every new company begins with a great idea – but getting to that great idea can take trial and error. From product development to building a team, startups learn and improve over time by evaluating what works and what doesn’t. For a large company to adapt and grow with the times, it also needs to be able to try things like different sales approaches or expanding product lines. While large companies can’t necessarily pivot or introduce new services with the same ease of a startup, they can research new developments in the field, encourage an active research and development department, develop rapid prototyping methodologies, and pilot proof-of-concepts and minimal viable products.
- Attract and support top talent. Since most startups have smaller teams than larger companies, they emphasize hiring the best possible person for each role, as a bad hire can be felt by the team more fully at a smaller company. Another MicroVentures portfolio company – Bonobos, acquired by Walmart in 2017 – showcases this reason why large companies turn to startups. Andy Dunn, previous CEO of Bonobos, is a prominent thought leader in the next generation of retail, according to Forbes. With Bonobos, Walmart has gained this intellectual capital along with brands that are reinventing the way retail businesses operate. Likewise, with small teams come an increase in opportunities to connect with these thought leaders – something large companies can integrate into their day-to-day operations as well.
- Increase responsiveness. Even with their customer service departments, large companies can’t always respond urgently to customers’ needs. And when acquiring a new customer costs far more than maintaining a customer, every customer that stays counts for a startup. However, for a large company, it is easy to lose sight of customer service efforts due to the sheer scale of the business. Startups have an immediacy and responsiveness across the entire team – replicating that attentiveness at a large company can help you better turn your customers into brand ambassadors.
Overall, large companies should recognize that their next big idea may be outside their walls. If they make organizational changes with the goal of encouraging flexibility, thought leadership, and responsiveness, they can implement the best practices of startups and combine them with the scale of big business. Not a MicroVentures investor? Sign up today.