This Is The Absolute Best Model For Startup Success. Here’s How to Use It
Cincinnati created the blueprint for how to create successful startups.
PHOTO CREDIT: Getty Images
It's not complicated. But I think we overdue the role that luck plays in business success. Luck is part of it, there are no guarantees but you can-and should-put your startup in the best position to succeed.
In Cincinnati, a very intentional collaboration between big companies and startups has been taking place for a decade. This is why the city ranks 6th nationally in Steve Case's Rise of the Rest rankings. CincyTech has turned $50 million of raised capital in to $850 million in follow-on investment.
The turnaround in Cincinnati has been the most dramatic. While cities like Denver, Atlanta and Charlotte have been steadily growing for two decades, Cincinnati had to work harder to get noticed.
You can see it visually when you walk through Over The Rhine, one of the best revitalized neighborhoods in the country. This is where startup incubator Cintrifuse, Cincinnati's hub of entrepreneurship, is located.
How Cincinnati created more than collisions with big companies
How Cincinnati turned things around is a model for how any city, tech scene, cluster of businesses can grow. You start with your existing assets.
Cincinnati has big, legacy companies. Procter & Gamble, Kroger, Fifth Third Bank and others are headquartered there. They aren't the only city that has these kinds of companies but they've used them best.
Most of us look at the relationship between big companies and startups through the lens of corporate social responsibility. The big company uses CSR budget to donate a small amount to help the ecosystem. And that helps but it doesn't ensure success.
"BigCo's create demand for startups for specific, urgent needs and market themes.," said Emily Geiger, VP of BigCo Innovation, Cintrifuse. Therefore, including BigCos in the startup ecosystem means creating an unfair advantage for startups to access enterprise customers, guidance on products and also really well-trained talent pools."
Cintrifuse connects large companies directly with startups. If you're a startup that makes sense for Kroger, they will pair you with them and now you have the business support of billion-dollar company.
There is an entrepreneur-in-residence from Kroger at Cintrifuse, Kevin Willey, who will take your idea and help mold it in to something Kroger and other companies will want to buy. Maurice Coffey does the same for P&G.
The success rate of any startup, if they have a billion-dollar company as their first client, is exponentially better. And these partnerships aren't solely for the benefit of startups. Big companies see these startups as ways to grow and innovate faster outside of the normal processes of a big company.
"When forming this alliance, we set our intention to work with startups to develop programs and pilots to help us accelerate our digital and tech transformation; partner with other big companies to advance the startup ecosystem in the Midwest; attract more talent to the region; and build relationships with entrepreneurs, innovators and consultants," said Willey.
How you can duplicate this
There is a lot of competition out there when it comes to cities, startup scenes, talent pools. Having a differentiator is key.
"When you look at other Midwestern cities, they all start to get a little vanilla in how they describe themselves. Of course, everyone's got good schools, excellent work/life balance, low cost of living (I think building a condo on Mars would still cost less than a four-bedroom in Pac Heights) so a lot of these benefits aren't really differentiators," said Eric Weismann, VP, Cintrifuse.
"Our advocates from big companies take coffee meetings, participate in hack-a-thons, and more importantly work with startups as customers. It's not just a petting zoo, it's actual engagement," added Weismann.
If you're building a business, line up the companies and organizations that can actually help before you even get started. Otherwise, you're just leaving things to chance. Understand the motivations of a big company.
Do they need to innovate quickly? Do they need to get in to a specific technical area? Creating partner companies from the onset of your company will help it succeed and help them succeed too.
Don't be afraid to feel that you have leverage in that kind of relationship. Even though they are a big company and you're just a startup, your expertise may put you ahead in certain categories. Identify the angle and create the right partnerships before you even go after consumers.
That's how you get as close as you can to ensuring success.