The following article from a recent episode of the SE Tech Podcast Hosted by MMM Tech Law, in which co-founder K.P. Reddy discussed corporate innovation, The Combine, the computer mouse, Windows, Atlanta, and emerging trends in tech startups.
A Brief History of Corporate Innovation
Ask anyone under the age of 25 today “who invented the mouse?” or “who invented the graphical user interface (GUI)?” and you may get a lot of blank stares and fun wild guesses. These two inventions were the sparks that launched the personal computing revolution, and both were invented by Xerox. What a great illustration of the amazing innovations that large corporations are capable of creating, but not capable of unleashing and monetizing. It is this history that forms the basis of what we’re building at The Combine.
Windows and the Mouse
The reasons that Xerox receives credit for these two inventions only in the history books are many, but can be explained in short order. Xerox invented both the GUI, which became Windows, and the mouse, which Apple implemented on its first PC. But it was startup entrepreneurs (Gates & Jobs) who took those innovations that xerox didn’t know what to do with, and made them famous. Large enterprises spend billions and take years to research these types of innovations. That time and that amount of money are simply not available to startups. But then the innovation gets stuck inside the four walls of the big company with no way to get out.
If a publicly traded Fortune 100 company creates a new business unit, and that unit doesn’t get to $150M in revenue in 3 years, then it’s not worth the company’s time. The company is publicly traded, issues dividends, and is viewed as a value stock. Launching a new technology innovation is not in such a large corporation’s DNA, structure, or governance. It would be disingenuous to the company’s shareholders to risk its resources on such a small ROI. But to a startup, $150 million by year 3 would be almost unheard of, if not impossible.
We work with large companies, typically $100M in revenue and up. We identify interesting intellectual property and orphaned innovation projects. Then we spin them out as startups, and take them off to the races. Large corporations get beat up a bit because they “can’t innovate.” That’s not true at all. They do, but they have no way to unleash their innovations, compete with startups, and do fun, interesting, and risky things. Microsoft licensed the original version of DOS for less than a typical startup Seed Funding round today. That’s a great example of taking an innovation out of the four walls of a larger corporation and unleashing its potential as a nimble startup.
The Combine’s role, mainly through our team in Atlanta, is to take innovations to the market, generate and increase revenue, build product dev teams, and create sustainable businesses. We also work with select startups in Atlanta to take them to next level, once we’ve done the diligence on the founders and the market opportunity.
The Next Mouse?
We’re seeing two specific trends in various industries. First, we’re seeing a lot more focus on deeper technology. What that means is that, while the startup world has been very heavily focused on software to automate workflows and sales and marketing tasks, we’re now seeing more focus on machine learning and AI. What we’re now doing is using software to show us things we don’t normally see, as opposed to software automating things we already know. We’re just beginning to rely on analytics to tell us what’s going on and then deploying software to act on it to make things better, and then repeat that cycle.
Second, we’re starting to see a resurgence of hardware, devices, things people can touch. The internet of things is driving a shift from only cloud software to creation of new kinds of hardware to connect different kinds of industrial machinery.
The connection between the deeper software/analytics/AI tech and the massive increase in intelligence driven devices is going to be a very exciting space. Part of the reason The Combine resides on the campus of Georgia Tech is to have direct access to the talent and technology present there.
No Risk, No Reward
All this sounds fun, exciting, and even romantic to many in Corporate America. I’ve got a few things to say about making that jump. In fact, I have so many things to say about it that I’m publishing a book about it later this fall. The book doesn’t have a name yet, but it’s all about “what you need to know before you go do your own startup.” Once you make the move into building a startup, there’s no going back. You cannot unring that bell. The idea you’ll just go back to corp if startup doesn’t make it back is 100% false. You might go back to your corporate job for a short time. Then you’ll be miserable and you’ll immediately start looking for your next startup.
Then there’s what startups do to your life and your loved ones. Financial planning is a good place to start. However, there are also are many psychological factors to actually loving what you’re doing and working nonstop. It’s easy to turn off your “J-O-B” when you get home at night. That’s just not so with your startup because you really do love what you’re doing. That goes far beyond just the economics. My book will be your first homework assignment if you think you’ve got the startup bug.
Here’s the SE Tech podcast episode in which all this conversation came to light. Thanks to Morris, Manning, and Martin for having me on the show. Enjoy.