Teaching Old Dogs New Tricks: Driving Corporate Innovation Through Start-Ups, Spinoffs, and Venture Capital
Teaching Old Dogs New Tricks: Driving Corporate Innovation Through Start-Ups, Spinoffs, and Venture Capital
Teaching Old Dogs New Tricks: Driving Corporate Innovation Through Start-Ups, Spinoffs, and Venture Capital
Tom Waters
Teaching Old Dogs New Tricks:
Driving Corporate Innovation Through Start-ups, Spinoffs, and Venture Capital
10 9 8 7 6 5 4 3 2 1
This book is dedicated to Rachael, Sarah, and Julian.
Be there for each other.
You reflect all that was ever good in me.
Description
This book will appeal to the multitude of corporate managers responsi-
ble for “innovation” when they have no idea how to make that happen.
C-suite executives and boards of directors are increasingly looking for
companies to reinvent themselves or risk being left behind.
Almost every big company in the United States requires their employ-
ees to assign their intellectual property rights to the firm. Anything the
employee creates on company dime and time belongs to the employer.
The problem is most of these contracts are not worth the paper they
are printed on, because corporations rarely create anything from their
employees’ ideas.
It will allow companies to monetize employee’s ideas in a manner that
doesn’t cost a fortune or create conflicts of interest within the ranks. Not
every creative expression is going to result in tens of millions of dollars
in revenue—but many will create licensing opportunities that are, at the
very least, essentially free money for new product development.
Another cadre of readers will realize their innovation-rich futures
are languishing in corporate purgatory. Should they quit and pitch their
million dollar idea to another organization entirely (as outsiders), or can
they take this book to their leaders and drive change, one manager at
a time?
Keywords
3D print; 5G wireless; accelerator; Artificial Intelligence; autonomous;
cloud computing; corporate venture capital; data analytics; disruption;
dragonflies; drones; electric vehicles; incubator; joint research agreements;
megatrends; network effects; Peter Drucker, ransomware; recording
studio; sound city; start-up; strategy; supply chain; war
Contents
List of Figures����������������������������������������������������������������������������������������xi
Disclaimer������������������������������������������������������������������������������������������xiii
Foreword���������������������������������������������������������������������������������������������� xv
Introduction: Failure Is a Requirement, Not an Option������������������������� xvii
finger-pointing from this. So does that mean we should put early product
designs to our customers for them to decide? Maybe, but not so fast....
VivaTech is Europe’s largest conference for start-ups and innovation
technology. In 2021, they held their fifth conference as the Covid-19
pandemic was just starting to wane. Owing to the continued travel con-
straints from the virus, many of the speakers appeared by video link.
Among them was Apple CEO Tim Cook.
Apple is one of the most successful corporations on the planet by
any measure. Interviewed by film producer Guillaume Lacroix, Cook
touched on several topics of interest to start-up entrepreneurs, including
the importance of failure. He described his simple but insightful feelings
on it, telling Lacroix:
Failing is a part of life. And it’s a part whether you’re a new startup or
you’re a company that’s been around for a while. If you’re not failing,
you’re not trying enough different things.1
But let’s not kid ourselves, the place was a dump! Every artist, asked
about Sound City, would say how nasty and dark the joint was. But they
also noted it was not a place they went to for parties or hanging out—they
went there to have the brightest minds in the business help them with
their craft.
Many of today’s more well-known music producers got their start
at Sound City. You’ll find them listed in the liner notes of those iconic
albums. These people are brand names within the music industry. Names
such as Nick Raskulinecz, Keith Olsen, Rick Rubin, Jimmy Iovine, and
Butch Vig. (Ok, you might know Jimmy Iovine, but only because he and
Dr. Dre sold Beats Music to Apple in 2014 for $3B, then helped launch
Apple’s streaming music service.)2 But other than kudos on album sleeves,
most producers remain blissfully anonymous.
Keith Olsen was an engineer turned producer at Sound City who
passed away in early 2020. While an engineer’s role in recording music
is straightforward enough, a producer’s role in the process is a bit more
RECORDING STUDIO = INCUBATOR 3
nebulous. Few have ever been able to describe the job adequately until
Olsen put it simply as:
A producer’s job is to get the artist’s creativity into a form that is acces-
sible to your market.3
Olsen’s words are poetic in their simplicity and eloquence. I came into
working with start-ups from a career that began in the product develop-
ment lab of a large corporation and later moved into market intelligence.
We’ve always said that market intelligence was seeing through the cus-
tomer’s eyes—market strategy was knowing how to act on that under-
standing (Figure 1.2).
The downside is thinking “I can do this on my own.” Yes, you can, but
you’ll be a much happier person doing it with others.12
Prince Eddie Van Halen Harry Connick Jr. Michael Jackson Paula Abdul
“Keytar” “Music instrument support” “Coordinated music display” “Antigravity illusion” “Microphone stand”
D349,127 4,656,917 6,348,648 5,255,452 application 12/024,976
issued in 1994 issued in 1993 issued in 2002 issued in 1993 abandoned
famous work, including Heroes, The Man Who Sold the World, and the
iconic Ziggy Stardust.
The bonds had a face value of $1,000 at an 8 percent interest rate
maturing in 10 years. It was one of the earliest uses of IP as investment
collateral. It was also ideal for investors seeking a low-risk, steady-return
vehicle not subject to wide yield fluctuations.
Two decades later, more firms are offering similar “musical notes”
to underwrite investment products, including the performance rights
organization SESAC, which owns the music rights on albums by Adele,
Neil Diamond, and more.15 Other IP is being offered in this way as
well, from the wellness chain Massage Envy to the automotive firm
Driven Brands.16
I don’t know if it was Covid-19 keeping everyone at home listening to
music that sent the industry into overdrive, or if all the artists, (and a few
of their producers), suddenly saw the light of Bowie’s brilliance. But from
early 2020 to the present day, music-based IP portfolios have become very
hot. Bob Dylan, Shakira, and numerous other artists are licensing their
rights portfolios for big payoffs, many to multinational corporations able
to further monetize those properties.
Music’s IP value has an underlying importance every start-up CEO
should understand—he or she is replaceable. Thirty plus years after they
began Journey replaced Steve Perry with Arnel Pineda. Queen replaced
the late Freddy Mercury with Marc Martel and then Adam Lambert. Van
Halen replaced David Lee Roth with Sammy Hagar. Foreigner, YES, and
Motley Crue have embarked on very successful global tours with new lead
singers at center stage.
The music plays on because that IP typically belongs to an entity,
not an individual. Start-ups are very much the same. Like a lead singer,
a founding CEO may only be right for that initial creative stage. If Steve
Jobs can be fired from Apple,17 a new start-up CEO can be removed as
well, but “the band” will play on. With start-ups, it is not uncommon
for someone else to step in with the skills to scale globally. Other times,
companies acquire the IP and take it far beyond what the original artists
conceived, extending it past the creative’s lifetime.
Last year music publisher Primary Wave acquired an 80 percent inter-
est in Stevie Nick’s songwriting catalog, a property they valued at around
RECORDING STUDIO = INCUBATOR 9
$100M.18 The same firm acquired a controlling interest this year in the
estate of Prince, (his likeness, image, and music), valuing the overall IP
portfolio at between $100M and $300M.19
Monetizing IP is the future of business. If you’re not doing it now,
start-ups could easily be your ticket to long-term revenue streams like
these music catalogs.
Index