How to Tap Into Innovative Startups

“So, you tap into someone that knows the start-up scene and you can instantly outsource some or all your innovation programme? Unfortunately, it’s not that easy…”

Innovation. It’s one of the most overused words in the marketeer’s lexicon. For most complex multinationals true, disruptive innovation is something they used to do whilst they were growing but the term is more probably applied to new ways of billing their clients rather than anything truly earth-shattering, writes Peter Glock, Managing Director, Glock Enteprises.

The giants of auto manufacturing, pharmaceuticals, process engineering, networking technology…basically every large company, tend to outsource development of new concepts and product lines to agile start-ups. Whether through contracting or taking an equity stake most large corporations have specific innovation programs to capture talent from outside their own business.

However, this is focused on innovation in the core business whatever that might be. If you’re Cisco, you’ll be acquiring networking, computing and IT security talent. For GSK it’s bioengineering and drug development. For Volkswagen Audi it’s battery tech…

What happens if you want to tap into innovative approaches in something that’s not your core business? Where you don’t have a good understanding of the value of a particular start-up?

Start-ups tend to cluster together around academic institutions and/or sources of funding. The most famous of these clusters is Silicon Valley. Here in the UK we have clusters around universities like Silicon Fen in Cambridge and close to the money-makers in the City around Silicon roundabout in London. I’ve also worked with talent from McGill University in Montreal and the university in Rennes, France where a lot of telecoms and IT engineers get their degrees.

In this connected, remote working, mobile world it’s still the case that start-ups rely on getting people and money together.

Let us look at a peculiar cluster of start-ups. The ex-8200s.

Israel has a great track record in fostering tech start-ups, especially in defence technology. This is no accident. Every citizen goes through national service with the Israeli Defence Force (IDF). When they come out, there’s an entire eco-system of angels, private equity, and venture capital firms waiting to help them turn what they learnt in the IDF into a commercial offering.

Over the years I’ve worked with Check Point, Fortinet, Cymmetria, Axonius, Mitiga, gytpol and had contact with countless others. If you look at the founders, you’ll see that they all went through IDF service and probably were members of the elite Unit 8200, the signals intelligence unit of Israeli military intelligence.

Unit 8200 is staffed primarily by 18–21-year-old conscripts. Selection and recruitment to the unit usually occurs at age 18 through the IDF screening process after high school. However, the unit also scouts potential younger recruits through after-school computer classes. These after-school computer classes, teaching 16–18-year olds computer coding and hacking skills, sometimes act as a feeder program for the unit. I’ve worked with winners of python competitions that were invited to join 8200 for their national service.

If you’re a large corporation you might open an office in Tel Aviv to be close to this cluster like the way some companies rent space in Sand Hill Road to be close to Silicon Valley.

But if you can’t afford an office or even regular flights there are other ways of tapping into the Israeli start-up scene. The secret is to be part of the informal infosec family.

If you’re fortunate to have the time, then join the infosec community organisations that are most of interest to you. Go to the conferences in Las Vegas/ SFO / wherever (once we get past the COVID-19 days). Contribute something. Once you can see past marketing hype, you’ll get to know about the hot topics and hot start-ups.

If you don’t have time or just want a short cut, then check out the distribution channels that have already done a lot of the legwork for you.

In each territory you’ll find several specialist resellers that have their own links to a cluster like ex-8200s. Sometimes it’s because they’ve lived there or have family there. Sometimes, like me, they’ve worked with one group of Israelis who have then made introductions to another group of Israelis.

This even works outside of the Israel cluster. When I needed to connect to an alternative cyber deception company the ex-CEO of Cymmetria put me in contact with the CEO of Smokescreen, an Indian start-up that does similar things. The two CEOs had shared speaking engagements together and had mutual respect.

So, you tap into someone that knows the start-up scene and you can instantly outsource some or all your innovation programme? Unfortunately, it’s not that easy. The vast majority of start-ups are out of business within 4 years.

If you were able to pick the winners, then you’d be working for a successful VC or PE firm rather than trying to get the best for your current organisation. As with many things the key to being resilient is diversification. By this I mean both having a number, at least two, of suppliers for each service/technology and choosing a mix of bleeding-edge start-up(s) and less innovative but more stable companies.

Note: you will probably need to adapt any existing vendor due diligence process as a lot of start-ups simply won’t be able to answer your questions.

Finally, I’d advise running an innovation program that chooses which areas to try out start-ups. It’s not sensible to base a business-critical process on a two-person company operating out of a shed.

So, why should you invest your time and money in start-ups that might be gone in a year or so?

What you’re really buying into is the risk-taking, agile approach to developing new technology and/or processes that you either haven’t thought about or know that you have no chance of developing in-house. For the ex-8200 teams, you’re also gaining real world experience from the battlefield.

My personal experience is that we caught threats that no-one else even knew existed (Patchwork) or known threat actors (APT3) who were dormant.

Get it right and you can radically transform your business using talent that’s desperate to work with you.

See also: How Can We Get UK Innovation Back on Track?