James Mawson: It gives me great pleasure to introduce Gerald Brady from Silicon Valley Bank, one of our sponsors, who will do a number of ‘War Stories’ with select corporate ventures and entrepreneurs to deal with how corporate venturers are perceived and how they perceive themselves.
Gerald Brady: Thank you, Jim. As Jim said, the idea behind the Panel here is to have some ‘War Stories’ but really ,that is about a dialogue between someone who is working from the corporate side with an early stage company. So I am delighted to introduce Martin Kelly and Vol, to start us off, if they would like to come up and join me.
If you were not around yesterday, you would not know the Martin was voted Corporate Personality of the Year – so many congratulations, Martin. [Applause] Martin tells me that his wife is very excited for his personality! Martin is a partner in IBM’s Venture Capital Group as well as spearheading IBM’s Smartcamp. I was privileged to be involved with Smartcamp in a little way last year and was present when Vol won the Smartcamp start-up of the year last year, with Profitero. With that, Martin, I will leave you to chat before we move on to take some questions.
Martin Kelly (seated right): Okay, super. Good afternoon, everybody.
Vol Pigrukh (on left): Hi, everyone.
Martin Kelly: Why don’t you kick off, Vol and introduce Profitero.
Vol Pigrukh: Certainly. We are Profitero. We are a Dublin based company in fact, based in Ireland but most of our employees are not Irish. It is interesting that we were started by former IBM and Google employees. We collect a lot of data on line and provide the pricing and stock availability data to retailers, which they can then use for planning and monitoring their marketing campaigns, negotiating prices with their suppliers as well as for day to day pricing management. Most of the promotions that you see on web sites or in Tesco stores, in ASDA or Sainsbury’s, therefore, are all based on the competitive situation in the market there. We collect the part which is on line, which is growing fast, and provide it to our clients.
Martin Kelly: Good. Let’s go back then about two years, because Gerald has asked me to share some war stories rather than just telling you how great IBM are and how great Profitero is.
When we first met, what I did was to ignore you guys and I did not take you that seriously and you were continually knocking on my door, which is possibly something that a lot of big companies do. At the beginning of a relationship with a start up, they tend to push them aside and ignore them. So tell me what kept you knocking on our door and then you have broken into some fairly big customers as a small company, so talk a bit about how you have gone about getting the attention of a large company.
Vol Pigrukh: That is quite a few questions in one go! The first thing, as a start up, especially as a small company, just set up, at first we had a free office and had very little traction. We needed to develop our product. We had met Martin a few times and one of our founders had worked at IBM so he knew him. But essentially, as Martin said, we were very much not welcomed and we did not participate in IBM Smartcamp. We saw the synergy with IBM from the outset but we decided that we were a small company and it was probably impossible for us to get to work with a large company such as IBM. So we decided to concentrate on our business and at that time, the business was providing data to small and medium retailers and building the product. Then, when we saw that the product could support large retailers, we went direct to retailers and started to talk to them.
Martin Kelly: But how did you get them to take you seriously? You go to Tesco; you are a four man operation; you get through the door and get to meet some senior people. How did you do that?
Vol Pigrukh: We were in fact a three man operation at that stage. It really helped to find some interesting ways, to find a hook that would make a large company like Tesco start talking to us. We were collecting quite a bit of data and we knew the products on which Tesco were more expensive than their competitors or places like Argos were more expensive.
What we did is probably not how it is written up in marketing books or anything like that. As the CEO of the company I just connected on LinkedIn with some senior level people at Tesco, Argos, Marks and Spencer, and sent them a little screenshots of their products being more expensive than their competitors. Typically, we would receive a mail back within a few days, signed by the senior person with their head of pricing data or head of marketing copied in, with a request for them to ‘meet with these guys and find out what they are all about’. So it helped us to knock on doors and get them opened, after which it was up to us.
Martin Kelly: Then I think what happened was that, certainly with IBM, we started to take notice. This is something that a lot of big companies seem to do. They go from ignoring start ups to virtually hugging them to death! Everyone wants to meet you, they hear that you are doing something exciting, they hear they are in Tesco, that you have won one of our events and after that, you get a lot of people knocking on your door.
Vol Pigrukh: Yes. And that happens very fast. Essentially, we concentrated on the business and once we got some traction and received a lot of attention – not just from IBM but from other, quite large companies. Quite a few were market research companies, so people working in retail and we did not have synergy with all of them, or felt able to work together. First, we were rather swamped by all the attention and we tried to meet with everybody. Then we had to revisit the situation and realise that we could meet with certain people but what was the potential for us to do business together, was there any synergy between us? This is why we kept talking to IBM actually, because we saw the synergy in IBM’s smarter commerce and we continued talking with Martin and with other people, perhaps without a lot of progress but nevertheless, we carried on knocking at the doors. Then knocking continuously on the right doors helps, and this is how Martin invited us to IBM Smartcamp and now we are starting to work on partnering relationships with IBM and on bringing the product together to retailers.
Martin Kelly: I want to open for question in a minute but I want to ask just one final question. You have gone from an environment where after a lot of conversations and discussions we have started to build a proper business relationship. How do you then keep that momentum and manage the other things? The world is a complicated place so there are lots of different partners that you need to work with. How do you keep that momentum and ensure that the relationship progresses to the next level?
Vol Pigrukh: With IBM and no doubt with any large company – definitely in our experience with other companies as well – it is really important to find the right stakeholders and it takes quite a bit of trouble within a large company to locate those. For a small start up, those could potentially be the most important things. We see when we have the right people in the company that the relationship really blossoms into business and, as a start up we are still a commercial entity. Our investors want to see growth, they want to develop this business, so the commercial sense is really the bottom line from which we measure everything. If we see that we have a good relationship with somebody but we cannot develop business together, we can’t carry on because we cannot have that business relationship. Everything that we do has to be measured by the revenue we make or plan to receive over the next quarter or year at maximum
Martin Kelly: So we can open it up for questions now, if anyone wants to ask Vol about his experiences or how corporates might need to think about working with smaller start ups.
Gerald Brady: I will ask a leading question: how long was the process with IBM from start to finish to get that relationship going in the first instance?
Vol Pigrukh: I would say that we started talking business with IBM in November, when we won the IBM Smartcamp UK/Ireland so the Smartcamp was a great way to get introduced to business people at IBM and now we are at the end of May so we are just about at a point where we have located all the main stakeholders and we can start now to work on something together. So it takes quite a while but we think that once we are located with people, things will progress much more quickly and we will be able to achieve something together.
Martin Kelly: There was a period before that as well, where we were talking to you but it wasn’t ready yet to be brought into the corporation so there had been a number of conversations –
Vol Pigrukh: To be fair to Martin though, it is not right to say that Martin did not pay any attention to us. Martin introduced us to our seed investors and to our institutional investors, so we got a lot of help from him in fact.
Martin Kelly: But it does take time, right?
Vol Pigrukh: Yes, with large companies it takes time and as a start up we are quite well aware of this but sometimes this can be such a long time that a start up can die before they achieve anything with these large companies.
Gerald Brady: Thank you very much, Martin and Vol. [Applause]