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| | August 9, 2016 | |
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| | For years corporations have tried to show off how innovative they are by adopting superficial markings of startup culture—open office floor plans, pingpong tables, and cold-brew coffee on tap. It became trendy to launch corporate-run startup accelerator programs, which I used to mock as "innovation by osmosis." There's a whole new class of corporate venture arms from non-tech corporations ranging from the insurance industry to Campbell Soup. Fortune 500 companies have hired "startup scouts" and opened innovation hubs in Silicon Valley. A lot of it is "corporate innovation theater," a way for corporate sponsors to give themselves a halo of innovation and good PR, while soaking up a bunch of good ideas from startups and delivering little in the way of mentorship. Will MasterCard or Sprint or Lowe's or Anheuser-Busch InBev really strike a meaningful partnership with a three-person, three-month-old company without a viable product? But lately I've noticed a shift in these strange, sometimes awkward relationships. Corporations take startups—even very young ones—far more seriously. Look no further than these recent Fortune 500 acquisitions as proof: General Motors spent around $1 billion on Cruise Automotive, a 30-person autonomous vehicle startup that hasn't even launched a product. Unilever spent $1 billion on Dollar Shave Club, a razor startup that adds just $200 million in revenue to Unilever's €53.3 billion bottom line. And of course, yesterday Wal-Mart spent $3.3 billion on Jet.com. A new study on the state of startup/corporate collaboration from MassChallenge and imagination shows that not only are corporates more eager to work with startups, 23% see it as "mission critical, and 82% said it's at least "somewhat important." Most importantly, 67% of those responded that they wanted to work with earlier stage startups. You can thank inflated valuations for that. There's the fear factor of a company like Uber being worth more than the majority of Fortune 500 companies. And there's the affordability factor—the shareholders of most Fortune 500 companies would not appreciate spending $1 billion or $3 billion on a hot startup. By the time most large corporations notice a startup like Airbnb is hurting their business, the startup is way too expensive to be acquired. It's better, then, to partner with an eager friend and potential target much earlier. When asked whether GM would acquire $5.5 billion Lyft, which is reportedly for sale, at Fortune's Brainstorm Tech conference last month, GM President Dan Ammann essentially said the $500 million investment GM made in January was a big enough deal for the automaker. That's not what venture investors are used to. The normal acquirers for tech startups are tech companies, and they're willing to pay up. Facebook can drop $18 billion on WhatsApp and its investors will hardly wince. Apple could buy the Big Three automakers with its cash on hand. Non-tech corporates can't do that. They're interested in buying tech startups, but they're a lot more conservative than their cash-rich tech peers. They can wait for valuations to come down. In the meantime, they'll be seeking to partner earlier and earlier. Erin Griffith is a senior writer at Fortune. This essay ran in both Data Sheet and Term Sheet, Fortune's deals newsletter. Reach her via email. | |
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| | BITS & BYTES | |
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| | Note to airline techies: Backup plans matter. The reason for all those canceled Delta flights on Monday? An inadequate data center disaster recovery plan, which is essentially the same root cause for all those botched-up Southwest flights several weeks ago. (Ars Technica, Bloomberg) Google buys hot e-commerce startup. It's paying an undisclosed sum for Orbitera, which sells software for managing subscriptions and other customer relationships that involve recurring bills. (Fortune) Twilio uses two revenue numbers to report financials. Many cloud software companies have come up with creative ways to discuss their growth. Newly public Twilio is no exception, using two metrics to call out its business from some of its "variable" customers. (Fortune) Verizon pulls no punches with latest ads. The wireless carrier is hitting back against Sprint, criticizing its rival by name for claiming to have just as good a mobile network. (Fortune) This could be the reason for a spate of retail hacks. Oracle has discovered malicious software on systems running its network of MICROS payment terminals. (Fortune) Alibaba wants to help foreign firms crack the Chinese market. Its cloud division has already created e-commerce marketplaces for several tech companies looking to sell to local Chinese businesses, including SAP and Hitachi Data Systems. (Fortune)
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| | THE DOWNLOAD | |
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| | This software analytics firm wants some face time with your CIO. Tableau Software was among the first business intelligence software companies to come up with technology that lets business analysts visualize trends based on corporate data without having to rely on someone in the IT organization to pull the information for them. As Tableau eyes larger customers, however, it is making more explicit overtures to those in charge of controlling data access. Read more about its strategy shift.
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| | WATCH FOR IT | |
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| | Honeywell could buy a supply chain software company. The industrial conglomerate is reportedly in talks to acquire JDA Software, which has about 4,000 customers for its warehouse and inventory management systems, in a deal worth about $3 billion. (Reuters) | |
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| | IN CASE YOU MISSED IT | |
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| | Veteran Job Site Monster Finally Finds a Buyer, by David Meyer Why the New Apple Watch Might Not Be Any Thinner, by Aaron Pressman Apple's MacBook Pros Could Get Two Major Upgrades, by Don Reisinger Qualcomm Flaws Leave 900 Million Android Devices Vulnerable to Spies, by David Meyer AT&T Is Using This Former Apple Retail Guru's Delivery Service, | |
| | ONE MORE THING | |
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| | Take a ride on a big, green dragon! Nokia and Disney teamed up on a new virtual reality film to promote the Pete's Dragon remake. (Fortune) | |
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| | This edition of Data Sheet was curated by Heather Clancy. Share it: http://fortune.com/newsletter/datasheet/. Find past editions. | |
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