5 Corporations Transformed by Startup Culture

Wall Street is losing MBA graduates to tech startups, who are 40% less likely to pursue a career in investment banking at JPMorgan and Goldman Sachs now than before the financial crisis. The largest firms are turning to their competitors to see how they attract potential employees. Startups have influenced big businesses to move towards alternative ways of raising funds and inspiring innovations, such as crowdfunding, idea auctions, and residencies for entrepreneurs. 

Staples

Staples (NASDAQ: SPLS), the biggest office supply retailer in the United States, is teaming up with the office-sharing startup Workbar, now offering communal work space in 3 Staples locations near Boston. Staples is taking advantage of the shifting work environment, where mobile professionals such as startup employees have a greater need for flexible and affordable office locations. The company's exploration into entrepreneurship with Workbar comes as a response to the needs of a younger generation of professional customers, such as accessible wi-fi and communal workspace. 

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Their partnership with the startup is an example of Staples' efforts to reorganize its company, another being a failed merger with Office Depot (ODP), the second biggest office supply retailer in the United States. On May 10th, a federal judge upheld the Federal Trade Commission's decision to block the merger initially valued at $6.3 billion because it would lower competition and raise prices. The judge's decision caused the stock to drop 18.3%, the largest drop in the public company's 27 years. Staples now faces a crisis of reorganization and is using its partnership Workbar as a way to keep the company relevant in the face of a need for technology-based startup office environments. 

Campbell

Campbell (NYSE: CPB) is launching a $125 million venture capital firm Acre Venture Partners devoted to investing in food startups, in a similar way to how General Mills (GIS) established the early-stage venture fund 301 INC. Campbell's CEO Denise Morrison is moving Campbell to participate in the "disruption" of the food trends in order to shape the industry: "We believe that defining the future of real food requires new approaches, new business models, smart external development and an ecosystem of innovative partners." 

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One such startup that Campbell has invested in (along with General Mills, Procter & Gamble, and Unilever) is Juicero, a $700 farm-to-table juice-maker that uses FedEx, QR codes, Wi-Fi, and high-tech packaging to deliver, process, and juice fruits and vegetables. Despite the high price of its product, what makes the startup so appealing is its disruptive transformation of the food market. Juicero CEO and founder Doug Evans as well as his investors have stated that the startup is a "platform" for an innovative shift in food delivery. Campbell and other large corporations' investment in Juicero demonstrates a shift in how big businesses are facing disruptive innovations in the form of startups. 

LG Electronics 

LG Electronics (KRX: 066570) used Kickstarter to raise funding for its spinoff startup incubated in the LG Silicon Valley Lab that sells Acanvas, a cordless digital frame that displays art in motion. The startup targets North America initially, but it has plans to reach other markets within the next year. The head of the LG Silicon Valley Lab Mohammed Ansari, who is also LG Electronics USA vice president, said, "These ventures are indicative of the kinds of innovations coming from our labs, and unleashing them as independent startups speaks volumes about LG's commitment to Open Innovation." 

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Another startup that came from within the company is the startup Infit & Company, which develops the Imaging Modular Diagnosis Machine that helps diagnose patients with rheumatoid arthritis and other conditions. The startup is valuable to LG because it offers a safe alternative to radiation in the form of a safe optical imaging system. LG encourages its employees to work on the two new companies by guaranteeing a job for them if they choose to return within three years. LG has also developed "Idea Power Plant" to fund employee-generated business ideas implementable within a five month period. Scott Ahn, LG's Executive Vice President, is encouraging the company's trend toward disruptive technologies because it frees employees from "the bureaucracies of a large organization."

Sony

Sony (NYSE: SNE) developed a New Business Creation department, where employees present new ideas in auditions held every three months. To help fund its efforts, the company has launched "First Flight", a seed acceleration and crowdfunding program dedicated to its own employee's business ideas. Sony has also recently invested in Cogitai, a startup less than a year old devoted to artificial intelligence (AI) technology. Cogitai brings an important addition to the industry, namely an AI technology that can learn from its past. Cogitari's Chief Scientist Dr. Satinder Singh explains, "Once a continual-learning system can begin to explore the world and build up knowledge on its own, it will discover, by itself, many of the same concepts and skills that we as humans have also learned. The potential for commercial application -- from games to robotics to space exploration -- is truly extraordinary." 

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Chief Executive Hiroaki Kitano at Sony Computer Science Laboratories said, "From an objective perspective, we are lagging behind". Google (NASDAQ: GOOG), Facebook (NASDAQ: FB), and other large technology companies are investing heavily on AI ventures. He stated that its partnership with Cogitai will result in a product or serivce in the next year. Sony has also invested in wearable devices and chip and sensor technology for the Internet of Things, a futuristic network of appliances that can be controlled, such as being able to turn on a light and close the garage door by any device connecting to services that have the power of cloud computing. Sony's drive to invest in disruptive technology shows the pervasive influence of startups, which have continually disrupted markets with innovative products. 

Dell

Dell, the top shipper of PC monitors in the world, established an Entrepreneur-in-Residence (EiR) program that helps the company come up with and develop ideas with the help of venture capital firms and investors. Dell has also invested in several programs to reach entrepreneurs from all over the world. Dell for Entrepreneurs also sponsors the Startup Competition 2016 in the Netherlands, giving thirty Dutch companies the opportunity to pitch their ideas to a jury and granting two companies the 2016 Dell Startup Award. In an effort to expand their outreach, the company has also established Dell Women's Entrepreneur Network, which hosts conferences and provides sources of capital and information about emerging technology such as the Internet of Things.

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Ingrid Vanderveldt, Dell's first EiR in 2011, says that the company's mission was to "intentionally leverage me and my role for outreach to into the [entrepreneurial] community." Last year Dell announced its partership with the Brooklyn startup Northside Media Group, which publishes magazines and organizes events. One such event is the 8-day annual summer Northside Festival, where art, food, and ideas are exchanged in meetups sponsered by Dell and Microsoft (NASDAQ: MSFT). The two companies power similar meetups in Miami, Chicago, and Los Angeles. 

The disruption startups continue to bring to technology markets force big businesses to adapt to practices of funding, innovation, and organization. Every company on the list has heavily invested in startups, whether incentivizing its own employees to propose new business ideas or teaming up with new and promising startups. Staples has physically transformed their stores into workspaces for tech startups, Campbell is investing in a disruptive food delivery platform, LG has created two spin-off tech startups, Sony is investing in AI technology developed by a year-old startup, and Dell is sponsoring a variety of entrepreneurial outreach programs and networks. The influence startups have on big businesses seems to only grow as shifting market demands require increasing flexibility and innovation.

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