Building a Startup Within a Large Corporation

Problem

When I started a job at my current company, it was a startup of only a couple of people, and currently, we are totaling 1000 employees, out of which 400 to 500 engineers. In the early days, we were mostly focused on developing, and that required full-stack engineers.

Now, as a large corporation with notable achievements behind us, we are starting a small startup within our corporation to explore the possibilities of another product. We started it eight or nine months ago as a separate business unit, and since its inception, we were keen to adopt a startup mentality and its best practices.

Actions taken

The decision to set up a startup didn’t happen overnight and certainly not before we were well consolidated as a corporation. We identified two main sets of activities we needed to complete to set ourselves up for success: defining the most suitable business model and attracting the top talent.

Defining a business model

Cafe Bazaar had four main products and over 40 million users. The new product our startup is working on to develop is a video-conferencing application that resembles Zoom. It is still in the very early phases of development and has a modest number of users. It is our first exclusively B2B product, and we started developing it from scratch.

We were meticulously researching the market before taking any further actions. We also did a thorough analysis of our strengths and weaknesses as a company. Our first product was a marketplace for apps, followed by the second, which was a classified ads app. By doing so, we could transfer much of the technology and use our previous experience exploiting our strengths.

Considering the significant difference of our latest product, we started the whole undertaking from scratch. Though the product was new, we didn’t want it to dilute the focus of the company but secure its prospects by exploring new opportunities.

Attracting the top talent

As a large corporation, we already had a lot of people at our disposal, but we were looking for a specific profile. As the contours of the new product already started to appear, we knew better what profile of engineers we were looking for. We already had a pool of decent back-end engineers with knowledge of chat technologies, which made us consider video conferencing in the first place, not the other way around. Other companies may build teams around a product idea; for us, people are the greatest asset that determines our product’s direction.

Our comparative advantage was that we were hiring the best engineers from the best universities. I was also a high school teacher at school for exceptionally gifted students and knew some of them from their high school days. So, sourcing was never a problem, as I had an extensive network I could tap into. However, the problem with fresh grads is that they are less experienced and don’t have substantive knowledge of new technologies, and often lack experience working with product management. But we are staunch advocates of hiring talented people with little or no experience who we could teach and make great engineers in two to three years rather than hiring just for the experience.

Furthermore, I think that the company profoundly reflects the values of the founders. We wanted to have a fast-fail startup and we had to hire people with this mentality. Typically, people who were working in larger companies tend to be more cautious. Also, we didn’t need subject matter experts who would dig deeper and deeper into one topic; we needed people versed in multiple technologies who were willing to learn and try different things.

There is much less of a work-life balance in startups, and people are expected to be available most of the time. Many people from our large corporation were reluctant to move to a less stable environment. We needed people who were willing to take a risk and trade stability for new opportunities. Also, we needed people who were competent in managing people in a startup setting, without getting entangled in bureaucracy and without involving HR all the time.

Lessons learned

• Know your strengths! Make the most of your past experiences and accomplishments and embed them in your new business model. Your new product should come as a result of a natural progression that won’t dilute the essence of what your company is.
• Don’t just transfer your best people from the corporation to the emerging startup. Corporations and startups are entirely different types of companies, and there is no guarantee that these people would be the right fit for the startup. Find risk-takers, people who prefer experimenting with new technologies rather than being lulled in the stability that comes with a corporation.
• Fail fast. Nurture startup mentality, allow people to react fast, fail, and move on. That is the most significant advantage startups have, and you should use it to the fullest.