Supply Chain Startup: What does it take to work with startups?

This past January, I attended a small supply chain event comprised of solution providers and supply chain executives. One of the executives from a mid-size big box retailer posed a question to the group: “What does it take to work with startups?” He went on to say that his company wanted to access the innovation coming out of the startup community but struggled to integrate startups into their overall processes. Based on the responses from the other people around the table, he wasn't alone. So, what does it take to work with startups? That a question I posed to Chris Sultmeier. Now an operating partner with the venture firm NewRoad Capital Partners, Sultmeier spent 28 years at Walmart, where he retired as executive vice president of logistics for Walmart Stores, Inc. Prior to that, he was the president and CEO of Walmart Transportation LLC.

Part of his charge at Walmart was to become more innovative. To that end, Sultmeier's team developed the Walmart Advanced Vehicle Experience truck, or WAVE, in conjunction with Peterbilt and Great Dane Trailers. Dubbed the “big rig of the future,” by Car and Driver, the concept truck was designed to be green, efficient and well, innovative.

Sultmeier says that while he though he understood innovation, his view changed in 2016, his last year at Walmart, when he was invited to visit Plug and Play, a startup accelerator in Sunnyvale, California, that connects startups with major corporations. He spent a day there along, with representatives from a number of other large corporations, watching as about 15 startups pitched their technologies.

“It was unlike anything I'd experienced,” he remembers. “The energy in the building was incredible. It was total chaos. The presentations were unpolished, unscripted and authentic. There was no sense of politeness: People would make statements like, ‘I don't know why you're doing this, it's a stupid idea,' but it didn't seem to phase them. They took the feedback and went back to work. And it was fast, popping from one presentation to the next. What I realized is that if we wanted to innovate, we had to move faster. We had to shift from second to fifth gear.”

When Sultmeier got back to Arkansas, he put the wheels in motion to bring a Plug and Play incubator to Northwest Arkansas, and enlisted Walmart partners in the effort, including Tyson Foods, J.B. Hunt and Georgia Pacific. Once it was up and running, the incubator was able to bring about a dozen startups a year that were beginning to scale their companies and technologies. “Every one of those 12 was able to deploy in a Walmart DC, or one of our other partners, like a Georgia Pacific or Hunt operation. We could validate their solutions to see if they delivered savings to one or more of us.”

From that experience, Sultmeier came away with several takeaways about working with startups.

Widen the lens with an accelerator: “Most companies see a handful of startups a year, while Plug and Play was looking at about 10,000 companies a year,” Sultmeier says. “They will widen your lens.” Remember: Startups are the core competency of accelerators and incubators.

Size matters: If you're a major corporation, and you don't have an innovation cell whose mission it is to do proof of concepts, early stage startups are not for you. “If you're a major company looking for value, you need to talk to an A Stage company that already has customers and is moving into a growth area,” Sultmeier advises. He adds that big suppliers struggle with innovation, just like big companies – another reason innovation is coming out of startups.

Don't let internal teams be the barrier: A second reason for large companies to work with more established startups is that large companies have shorter attention spans – it's one of the byproducts of the complexity of a large organization. “If you're trying to launch something new, it has to deliver value quickly, or the organization will move on,” Sultmeier says. He adds that figuring out how to partner with IT is critical if you're going to bring any new technology into your organization.

Get an executive sponsor: Before launching in Northwest Arkansas, Plug and Play's director asked to meet with the CEOs of the original four sponsoring companies. Those companies appointed executive sponsors who can help overcome those internal barriers. Sultmeier notes that the venture firm where he is working with now is partnering with a major conglomerate. “At that firm, the next CEO is leading the innovation effort,” he says. A high-level executive sponsor sends the message that innovation matters.

Make sure the team includes people comfortable with technology: Sultmeier remembers being part of early discussions about Walmart's buy online/pickup in store initiative – one that has grown to a major source of revenue for the nation's largest brick and mortar retailer. “To be honest, I thought it was crazy,” he says. “Luckily, there were other people in the room who understood the convenience of ordering on their mobile device.” He adds that “you have a bunch of people like me running companies, who aren't as tuned into to what young people are doing today.”

Click here (https://www.scmr.com/article/supply_chain_startup_what_startups_say_about_working_with_startups) to read what startups have to say about working with startups.

SCMR’s Supply Chain Startup Blog is published every Friday. If you’re a startup, a venture capitalist or a supply chain practitioner working with startups, and want to share your story, or have startup news to share, email me at [email protected]. Remember that the purpose is not to promote any one firm – and a blog shouldn't be interpreted as an endorsement of a firm or its technology. Rather it's to start the dialogue between me, my readers and the people creating the NextGen Technologies that will power tomorrow's supply chains.

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