Innovation outposts in Silicon Valley allow big companies to sense and respond to rapid changes in technology. Big data is changing how we view the world, and is the fuel for machine intelligence.
How to make corporate innovation work and drive success in startups were the topics of discussion with the guests on today's Entrepreneurs are Everywhere radio show.
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Clips from their interview are below.
Ashok N. Srivastava leads Verizon's innovation outpost (their Silicon Valley R&D center) in Palo Alto focusing on building products and services powered by big data and analytics. He is also a Consulting Professor at Stanford in the Electrical Engineering Department and Editor-in-Chief of the AIAA Journal of Aerospace Information Systems. Ashok formerly was the Principal Scientist for Data Sciences at NASA Ames Research Center.
A thought leader in the area of big data analytics, social media, optimization, machine learning, and data mining, he also served as a Venture Advisor focusing on big-data analytics at Trident Capital, and was on the advisory board of several startups.
Ashok explained how our use of data continues to evolve:
Issac Newton said, "We can understand the world through physics-based equations." We certainly did. We have a tremendous understanding of the physical world through equations.
Now we're in a world where we have the ability to take data and try to understand the physical world again, moving from mathematical models to data models, to reveal new things about the world.
I view the kind of the work that I do ... as part of that continuum.
The right data can deepen understanding of a problem, he added:
Ashok: What we see today are tremendous numbers of data points, billions, trillions of data points, coming in through various systems, but we want to have a deeper understanding of the systems that those data points are generated from.
Steve: Is that what makes machine intelligence possible, not only having the hardware and the algorithms but the a stream of data that was never available before?
Ashok: Absolutely.... If we have hardware and if we have algorithms that doesn't complete the picture. The third element you need is data. You need to have it at scale, it needs to be updated regularly.
It also needs to be depicting the data-generating process.
For instance, if you want to model an economic system, you need to have economic data. You can't use weather data to do it. You might be able to use a bit of weather data to understand some parts of the dynamics but you really need to have data that's relevant to the process you're trying to understand.
It sounds very obvious, but I'm amazed sometimes that I see that people are trying to solve a problem using data that's not particularly relevant to a problem.
Evangelos Simoudis is the founder and managing director of Synapse Partners. His investing career started 15 years ago at Apax Partners and continued with Trident Capital. Today Evangelos invests in early- and growth-stage companies focusing on the enterprise in the areas of data and analytics, SaaS applications, and mobility. He is a senior advisor to several multinational corporations and a recognized thought leader on corporate innovation, big data, cloud computing, and digital marketing platforms.
Prior to his investing and advisory career, Evangelos spent 20+ years in high-technology industries, in executive roles spanning operations, marketing, sales and engineering. He was the CEO of two startups.
In his current work, Evangelos helps corporations innovate:
As corporations start to think of how to take advantage of innovation ecosystems like Silicon Valley, they often confuse the vehicles to innovation -a venture fund, or an incubator or something else -- with actual innovation.
What I'm trying to make them understand is how to separate those two and to do so they need to create an organizational structure, an outpost, here in Silicon Valley, to do two things.
They need to be able to sense what is happening in the ecosystem of choice and then respond.
To hear the clip, click here.
He also counsels startups to think about potential partnerships with large companies:
Just having an idea is not enough. You need to be able to understand how to take advantage of the market you're operating in, including how to take advantage of corporations.
A lot of times entrepreneurs want to create distance from corporations Today's environment creates some wonderful opportunities and conditions of the two to come together and create slingshots for taking companies and giving companies and startups, escape velocity.
To hear the clip, click here.
Ashok has taken a Lean approach to innovation at Verizon:
Within a couple of weeks of joining Verizon, they said, "Before you learn a lot about the company, write down what you think we should do." So I wrote a 9-page charter of what I thought we should do.
It included things like advertising, marketing analytics, cyber security. There were things like drones in there. Very, very far-fetched ideas, frankly. I presented them to our chief product officer and our CTO. Both of them started to see that these things could be executed. I said, "Rather than making a huge investment first, and seeing whether we could do it, let's build some small prototypes." Let's define an MVP, a minimum viable product. Let's just see if it'll work. We started to do that in the advertising space first. Just took some things together, wrote some code, made some partnerships.
Together, as we brought the code, the partnerships together, we started to see, "Yeah. This could be a business."
Then we ended up buying AOL last year ...
Having the buy-in of the company's highest executives is crucial:
When we had our first discussions about what the Verizon Silicon Valley innovation outpost might look like, the senior executives within the company -- the CEO, the CTO, our chief product officer, -- said, "We understand that if we're going to do this, it's not going to be in Basking Ridge, New Jersey," which is where our headquarters are, "It's going to be in California and it's going to be in Palo Alto."
They made very, very deliberate choice to do that, to their credit because in formulating the hypothesis that data could be turned into a product, that's leaping out into the unknown.
Secondly, to do it in a physical geography removed from the headquarters is also a pretty big idea.
They invested in it with capital but, equally importantly, they invested in it with their own attention to detail and attention to the vision that I started to lay out.
As in a startup, listening to customers is paramount for a big company's innovation efforts, he added:
If it's an individual, if it's a company, they all have a point of view and I always assume that they're acting in good faith and they're telling me what they really think.
I try to listen wherever I go. Whether it's with a brand-new employee, whether it's with a CEO of a big company, anyone, I always try to understand where they're coming from and what I need to communicate to them so that they have a better understanding of who I am and what I'm doing and why I'm doing it.
Generally speaking, I find that if I take this approach, people realize that I'm there to collaborate and I can listen and ... also tell you what's possible and what's not possible and why.
To hear the clip, click here.
In his experience with large companies and startups, Evangelos found one thing critical to success:
Evangelos: For me, there is a common lesson that has come from different perspectives in every stage of my career: the importance of the team.
As an entrepreneur, and later as an investor, I came to see sometimes, by associations, and sometimes very directly, what a good team can do. (And) what an incomplete or a mediocre team cannot do.
The difference is in how you can ... achieve the goal that you're setting up to achieve.
There are a lot of people who make things happen.
The right team can make the right things happen, and make them happen in the right way.
To hear the clip, click here.
And he offered the following insight into the VC- founder relationship:
Evangelos: As you understand product-market fit, this is where finessing and reworking of the management team, is very important. You need to understand given who you have and where you need to go in order to capture that value, to create that spectacular success-
Steve: Does that mean changing out people or does that mean growing people?
Evangelos: You need to be able to change people, you need to be able to put the right people in the right role. This is (why it's important to have) a cohesive board and a cohesive investors' syndicate because the investors sit on the board of the company and make the company work.
Steve: And they need to agree.
Steve: Did you sometimes tell the founders they won't be taking the company to 10,000 people?
Evangelos: Actually, I have said that to founders more times than I thought I would and that didn't always endear me to the founders. Though what has been rewarding is that a number of founders who I had to either change roles or even let go, have told me, "You were right. Now I understand what was happening because I applied it to my next company."
There is certain amount of ... reward in having that acknowledgement.
Tune in Thursday at 1 pm PT, 4 pm ET on Sirius XM Channel 111.
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