WEBVTT - Helping Big Businesses Beat Startups

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<v Speaker 1>You're listening to Bloomberg Business Week with Carol Messer and

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<v Speaker 1>Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio. Coming up

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<v Speaker 1>next week, Tim and I are involved in a Bloomberg

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<v Speaker 1>Live Growth summit talking with leaders of all industries on

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<v Speaker 1>how they are finding growth, getting growth out of their

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<v Speaker 1>existing businesses and for more. You can head to Bloomberg

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<v Speaker 1>Live dot com to uh find out about the vendor

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<v Speaker 1>it maybe join us and keeping with that, our next

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<v Speaker 1>guest because Mark forty nine. It's an incubator working with

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<v Speaker 1>the likes of Goodyear, Hitachi, Intel, Jet, Blue Shellon Moore

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<v Speaker 1>and the founder and CEO is Linda Yates and she's

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<v Speaker 1>out with a new book. Yeah. The new book is

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<v Speaker 1>called The Unicorn Within How companies can create game changing

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<v Speaker 1>ventures at startups speed. Linda joins us via zoom from

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<v Speaker 1>the Bay Area right now, and if you're watching us

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<v Speaker 1>on YouTube or on Bloomberg Quick Take, you can see

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<v Speaker 1>that shot. Linda. Good to have you with us this afternoon.

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<v Speaker 1>How are you. It's great to be with you. Carol

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<v Speaker 1>and Tim, thank you so much, well, thanks so much

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<v Speaker 1>for joining us, and congratulations on the new book. You

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<v Speaker 1>know it's interesting that we use the term unicorn here.

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<v Speaker 1>Um as you write there are more than eight hundred

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<v Speaker 1>and forty unicorns. That means that companies that are valued

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<v Speaker 1>on the private markets over a billion dollars. That's equivalent

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<v Speaker 1>to two trillion dollars in market cap. The big question

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<v Speaker 1>is is how do you recreate what these disrupting startups

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<v Speaker 1>are doing and do that internally at a company that's

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<v Speaker 1>established to make sure that it's not being disrupted? What's

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<v Speaker 1>the best way to do that? So it's you know,

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<v Speaker 1>if you think about it, large companies absolutely have an

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<v Speaker 1>advantage over the startups. And I'm a Silicon Valley kid

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<v Speaker 1>right born bread there. But large companies have ideas, they

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<v Speaker 1>have talent, they have channel, they have brand, they have customers,

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<v Speaker 1>almost millions of them, So they basically have the opportunity

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<v Speaker 1>to beat the startups at their own game if they

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<v Speaker 1>can overcome the orthodoxes, the inertia, and the antibodies. So

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<v Speaker 1>where we like to start with our clients, as we say, listen,

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<v Speaker 1>there's no reason you cannot drive disruptive growth from within. Uh.

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<v Speaker 1>It's like a double helix. Though on the one strand

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<v Speaker 1>of the DNA you've got the venture investing in French

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<v Speaker 1>venture building. Both of those things kind of go together.

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<v Speaker 1>On the other strand of the DNA, it's how are

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<v Speaker 1>you going to basically seize the mothership advantage to help

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<v Speaker 1>the ventures that you're building or the ventures you're investing

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<v Speaker 1>basically reached escape velocity and thrive. So, Lindy, you're not

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<v Speaker 1>against entrepreneurship and startups right, r VC and that whole world,

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<v Speaker 1>but you're just saying that large companies should kind of

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<v Speaker 1>be doing more of it on their own internally. Absolutely,

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<v Speaker 1>if you think about it, there was a there was

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<v Speaker 1>a report that came out and if you think about

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<v Speaker 1>the Fortune five fifty years ago, the average life of

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<v Speaker 1>a company on the Fortune five D list was seventy

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<v Speaker 1>five years. Today it's fifteen years and declining. And if

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<v Speaker 1>you look at that list from fifty years ago, eighty

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<v Speaker 1>eight percent of the companies that were on the list

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<v Speaker 1>then are now out of business, off the list, or

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<v Speaker 1>completely irrelevant. Only twelve percent remain. And our whole thing

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<v Speaker 1>is listening. There's literally no reason that any of the

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<v Speaker 1>large hotel chains couldn't have created Airbnb. There's no reason

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<v Speaker 1>that Tesla could not come out of any of the

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<v Speaker 1>large uh motor companies. So you're saying, be comfortable to

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<v Speaker 1>disrupt your core business, which is so timely considering run

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<v Speaker 1>a day, we're Facebook now, Meta is looking to disrupt

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<v Speaker 1>what it's been doing, and it has churned out billions

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<v Speaker 1>of dollars trillions of I don't know, like if you

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<v Speaker 1>add it all up right over the years, But you're

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<v Speaker 1>just saying be comfortable with that, and for investors, be

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<v Speaker 1>comfortable when a company does that. Mary Barra has been

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<v Speaker 1>doing it pretty aggressively at General Motors. Absolutely, and in fact,

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<v Speaker 1>this is one of the things that that we talked

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<v Speaker 1>about all the time is listen. It's about understanding customer pain,

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<v Speaker 1>marrying that with the art of the possible, what's the

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<v Speaker 1>current technology and trends that you can bring to solve

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<v Speaker 1>that pain, and then placing a series of small bets.

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<v Speaker 1>The problem that large companies have is they often they

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<v Speaker 1>want to throw all this money into a single venture.

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<v Speaker 1>It doesn't work, and they say, oh, that didn't work, Okay,

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<v Speaker 1>we're not going to try that again. Right, So our

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<v Speaker 1>whole thing is how do you remove the greatest a

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<v Speaker 1>risk on the least amount of capital. One thing I

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<v Speaker 1>do want to say and having worked with Johnson and

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<v Speaker 1>Johnson a few years back and was out on the

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<v Speaker 1>West coast, out in San Diego, they did have essentially

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<v Speaker 1>an incubator lab on site, and they encouraged startup companies

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<v Speaker 1>to be in their facilities, top into their expensive machines

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<v Speaker 1>and expertise to do work on whatever they're working on,

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<v Speaker 1>with the idea that J and J could potentially get

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<v Speaker 1>involved invest or buy them out or not, but just

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<v Speaker 1>gave J and J kind of an inside look at

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<v Speaker 1>what entrepreneurs were working on that they could basically maybe

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<v Speaker 1>be involved into a hundred percent. And so what we

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<v Speaker 1>basically say is that what we're really helping companies do

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<v Speaker 1>is build their growth engine, not just do venture building.

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<v Speaker 1>In that growth engine, there are four arrows in that quiver.

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<v Speaker 1>It's venture building doing it organically, but it's also the

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<v Speaker 1>buy doing strategic and partnering and also so it's the

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<v Speaker 1>build by partner invest All of those are important and

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<v Speaker 1>that's exactly what is happening with Jay and J and

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<v Speaker 1>a lot of these other things. Uh, you know, three

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<v Speaker 1>M did that even in the very early days, right

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<v Speaker 1>of people's time could and should be spent on doing innovation.

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<v Speaker 1>So all four of those that that those arrows in

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<v Speaker 1>your growth engine quiver are important. So I'm wondering about

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<v Speaker 1>Linda the idea of big companies not being able to pivot,

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<v Speaker 1>and in some cases it seems like it's because they

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<v Speaker 1>want the smaller companies to fail because those ideas are expensive.

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<v Speaker 1>The idea that you know, the next pepsi or coke

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<v Speaker 1>or beverage, right, it could be developed outside of that

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<v Speaker 1>company and then it would get acquired because they kind

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<v Speaker 1>of do all the heavy lift venture capitalists and the

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<v Speaker 1>investor right exactly, private money. Let the private money do

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<v Speaker 1>that work. So how do you sell this to investors?

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<v Speaker 1>Because look at the difficulty that Meta Platforms is having

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<v Speaker 1>selling this to investors. Well so, and I actually think

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<v Speaker 1>that we are actually doing a piece of research right

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<v Speaker 1>now called you in the Unicorn within because if you

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<v Speaker 1>actually think about it, are large companies are in essence

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<v Speaker 1>held back by the financial markets right now? All of

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<v Speaker 1>the startups in Silicon Valley when they go public, they

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<v Speaker 1>get a hall pass for three or four or five years.

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<v Speaker 1>The markets know how to value them. They value them

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<v Speaker 1>on customer acquisition, they value them on revenue. But are

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<v Speaker 1>large companies don't get that same hall pass right, their

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<v Speaker 1>ventures get judged by the core and legacy metrics. And

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<v Speaker 1>so we're actually working with companies now to create whole

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<v Speaker 1>new growth divisions to overcome exactly what you're talking about,

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<v Speaker 1>which is to give them a chance to in essence,

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<v Speaker 1>even if it's a blended valuation, if you will, but

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<v Speaker 1>it give them that chance to give their internal ventures

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<v Speaker 1>the same types of valuations because they have the ability

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<v Speaker 1>to be much more successful because of what the core companies,

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<v Speaker 1>these assets and capabilities that the big companies can bring

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<v Speaker 1>to bear to help these ventures thrive in the open market.

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<v Speaker 1>And so separating those two is becoming a very important

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<v Speaker 1>strategy for a lot of our multipility into our multinational

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<v Speaker 1>public companies. Now it makes a lot of sense, certainly

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<v Speaker 1>in this environment. Hey, Linda, thank you so much. Linda Yates,

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<v Speaker 1>founder CEO at mackte her new book The Unicorn Within

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<v Speaker 1>How Companies can create game changing ventures at Startup Speeding,

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<v Speaker 1>as we said, really timely considering the pivot that Facebook

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<v Speaker 1>are formerly Facebook now Meta is doing as it steps

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<v Speaker 1>deeper into the metaver speaking of deeper, the stock shares

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<v Speaker 1>of Meta down more deeply, if you will, me afterwards,

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<v Speaker 1>it's done. Almost four here. Yeah, she's tumbling. As revenue

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<v Speaker 1>forecast MRS at the midpoint. The third quarter was the

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<v Speaker 1>second straight quarter of year on year revenue declines. Carol