Five Observations from Co-Developing with a Startup
What do you get when you cross a Fortune 500 company with a couple entrepreneurs with an idea worth pursuing? An amazing learning experience!
Part of my job has been to act as liaison between our company and the co-founders of Socialeads – a Milwaukee startup that uses artificial intelligence to analyze social networks – winner of our first-ever Reverse Pitch MKE event. Thanks to their winning idea (and a great pitch), Larry Hitchcock and Matthew Salzer received investment funding from Cream City Venture Capital and are currently working as a “startup in residence” in our innovation space, Cream City Labs.
Working with them represents a whole new model of innovation. Here are five observations we’ve had as we’ve adapted to this new way of working:
We've taken on an entirely different role. Traditionally at Northwestern Mutual, when we’ve wanted to solve a business challenge, we’ve either developed the technology ourselves or bought an existing product. This time, we did neither. Instead, we invested in a startup we believe can develop a solution in a unique way – but in the end, it's their company and they are making the decisions as the product is being developed. We may offer suggestions about features and functionality, but they can say “no” to us. In fact, saying “no” might be in their – and our – best interest. What if Socialeads builds a product that meets our needs perfectly, but nobody else will buy it? We don't want to be the startup's only customer – we can't be. We invested in Socialeads because we see the company's potential for growth. So, there's a delicate balance and we're figuring it out as we go.
We had to develop a new way of engaging. Until Socialeads came along, Northwestern Mutual never had a “startup in residence” working within our headquarters on their own intellectual property. We have had policies and procedures in place for working with contractors and vendors, but this was different. So, we had to develop an entirely new method of engagement. We created a code of conduct in Cream City Labs for intellectual property protection and open space. We agreed to milestone objectives that Socialeads would need to meet before receiving additional investment. And then, of course, we've had to answer all the logistical questions that arise, like whether we should give Socialeads access to our network, data and financial representatives as the product is being developed. We anticipated some of these things, but not all. Again – learn as you go.
We work differently. This wasn't entirely unexpected. The Socialeads team moves quickly; in some cases, more quickly than we’re accustomed to moving. We've all had to make some adjustments. For example, as Socialeads was building its initial prototype, they asked for some of Northwestern Mutual’s data to allow them to build out the best possible minimally viable product (MVP) tailored to the company’s needs. It was an understandable request, but they asked for a lot of data all at once – more than we could quickly or easily deliver while maintaining confidentiality and security. Since then, we've had more success working together by taking baby steps, building momentum, proving value and then letting that support accelerate the pace.
We're learning to embrace the reality of entrepreneurship. Reid Hoffman, one of the founders of LinkedIn and an early employee of PayPal, said being a founder is like jumping off a cliff and trying to assemble an airplane on the way down. You take this eternal leap of faith and try to figure it out along the way. That's the reality of entrepreneurship, and in this case, I think we've learned to embrace it. There was no concrete model for any of this; we just did it. For the leaders at Northwestern Mutual to take that on (and feel comfortable with it) says a lot about our commitment to innovation.
We’ve seen entrepreneurs want to pay it forward. One of the things that has been especially inspiring is that Larry and Matthew are willing (and eager) to share their time with anyone at Northwestern Mutual who asks for it – and the value of that has been incredible. Originally from Milwaukee, Larry spent years in California and recently moved back to head up Socialeads. He brings with him a lot of expertise from his time working with startups on the West Coast. He is also looking to help the Milwaukee Tech Hub movement by trying to create a new recruiting program to bring more of that talent and innovation to Milwaukee. And Matthew’s experience architecting a complex AI system (processing more than 50 million disparate data elements from multiple social platform sources) has also been an interesting use case to share with Northwestern Mutual and the Milwaukee development community.
Based on my experience with its co-founders, I believe Socialeads will be successful in creating and selling a product that delights its users. There are significant challenges when using social networking data (in terms of security, complex algorithms and dynamic regulations), but the opportunity is equally significant. A perfect fit for a startup and its entrepreneurs.