Working with a tech startup: the anatomy of an enterprise partnership

Enterprises are increasingly looking for innovative technology, which is often developed by new tech vendors. But working with a startup requires a different mindset and approach than does engaging with a large technology provider. Chris Mozolewski is the CFO for the integrated digital marketer Kirshenbaum Bond Senecal and Partners (KBS), a company that is not afraid to partner with IT startups. He believes there is a natural niche for startups to serve in the enterprise IT ecosystem.

I spoke recently with him and Kerry Fitzmaurice, the CMO for KBS, about their approach to working with startups. Mozolewski used the example of the KBS partnership with CreativeWorx, a startup with a time-tracking application, to illustrate how a young company can be positively engaged to develop and deploy an IT solution that improves business operations.

KBS is one of the major agencies within the billion-dollar-plus MDC Partners advertising and marketing holding company. Advertising is a service business that is based on creative talent, and as MDC has grown through over 50 acquisitions, the holding company has worked to keep its acquired talent by maintaining a culture of innovation in its agencies. (E.g., MDC emphasizes its ‘partnership’ relationship with its acquired agencies, whereby the principals have often maintained an equity position.)

As Mozolewski puts it, “invention is in our DNA”. Three years ago KBS also established KBS Ventures in order to invest, for both strategic and financial reasons, in startups with new advertising and marketing technology.

A niche for startups

As CFO, Mozolewski is always looking to resolve pain-points in the organization and to help operations to run more smoothly. This is where he believes startups have an opportunity to pitch in. If they can help some process or work flow to be done more easily, quicker, or better, then they can offer legitimate value to an enterprise. This can involve streamlining or otherwise simplifying a process, and in his mind it always includes having an intuitive and easy-to-use interface. He says his mantra to the KBS IT group, which reports to him, is simply to “make things easier”.

The CreativeWorx time-tracking application fits this criterion by addressing one of the traditional banes of service company employees—maintaining timesheets for time spent on a job. Mozolewski feels that he’s not only seen many time tracking applications over the years, but that he’s also pretty current on the state of the market. What sets the CreativeWorx product apart is that it automatically captures how people work and integrates directly with the Adobe Creative Suite, Microsoft Office, and Microsoft Exchange. Therefore, as long as users are logged in, the product automatically keeps a running tally of how much time has been spent working on each client project. (If they’ve tagged the files or folders to a project up front, the application automatically tallies the time, but if they haven’t users can still look up the past time spent on each project document. Either way, users don’t end up instead having to fill out time sheets from memory at some later time, with lesser accuracy.)

Mozolewski points to another startup, Namely, which KBS had worked with early on with their initial cloud-based HR database and talent-tracking product, that provided the same ease-of-use benefit. The same ease-of-use principle can also be applied to internal development. Fitzmaurice offers a recent example of a small-scale improvement that the KBS team rolled out this past week as part of a new KBS website launch. The Filter Book, an iPad-based product, allows new employees to take pictures of themselves and have them automatically uploaded to the staff section of the site. It is a small innovation, but as Fitzmaurice points out, she has been the CMO of KBS for six months—and she had yet to get her own photo uploaded to the company site. She adds that in considering a new solution it is important to keep in mind the larger mission of the enterprise and to not go down a ‘rabbit hole’ in chasing a technology that pulls away from that. Simplicity is often key.

It starts with an introduction

Neither Mozolewski nor Fitzmaurice would be interested in hearing a pitch from a startup that had approached them cold, without a referral or introduction. An introduction can come from someone in the investor community who has a contact with the enterprise, or, as Fitzmaurice suggests, simply from a “connector” within the industry of the enterprise—an old hand in the business who “knows everybody”.

Mozolewski was introduced to CreativeWorx by David Doft, the CFO of MDC, who had asked Mozolewski whether he would be interested in taking a look at the technology. Doft has long been active in the New York City angel investors community and therefore knew investors in CreativeWorx. Once Mozolewski saw the technology, he was immediately interested in its potential, although it was still quite early in the product’s development. Similarly, he had been introduced to Namely by the then-head of KBS Ventures, who had thought he might be interested in that product. Mozolewski says he sometimes pulls together a team within KBS to get feedback on a potential new application. He has also spoken with some of his colleagues at other MDC agencies who are watching the CreativeWorx project: they may be interested in adopting it if it proves successful.

Initial market segmentation and pitch are important

As Fitzmaurice points out, once a startup has identified a “pain point” it can solve, it needs to smartly segment its targeted industry and customer type. She has met with startups that haven’t gone through this process or tightly crafted their message, and it is inappropriate when she ends up having to use her CMO skills in a sales meeting to help a startup to position and present itself.

As Mozolewski notes, a simple solution that initially works just within one specific industry is often a good beginning for a tech startup. Namely first developed a narrow HR application for the advertising industry. After its initial success, the company broadened both its HR product and the industries it targeted. As a CMO, Kerry notes even more finely that for early reference customers, a tech startup should target influential firms within its initial industry segment early on in order to gain influential reference accounts.

Broadening use

Over time, a successful startup can branch to grow its business, just as Namely has done. Even with an initially narrow application, a startup can also broaden its applicability from more narrow to broader users.

When CreativeWorx first started to work with KBS last year, it only operated within the Adobe Creative Suite—and thus was only relevant to the creative employees within the firm. But by extending its functionality to cover the Microsoft Office and Exchange products, CreativeWorx has made its solution practical for account executives and all other staff in the firm as well. Creative workers were thus the early beta users on the CreativeWorx product last year, but KBS has since decided to roll it out to all employees. The company has been extending it to groups of about 30 employees at a time and is trying to make each group representative of all functional areas across the firm.

Further, CreativeWorx is now both engaged with a few other firms in the advertising sector, and in contact with some other agencies within MDC. Beyond the startup’s initial advertising niche, Mozolewski sees the product as most applicable to other service industries with billable professionals, such as consulting or law firms. He notes that it is not the utility of the application for billing as much as it is its utility in tracking internal resources and efficiency, including the live-tracking of client projects in process that is most important to KBS. For KBS, he sees improved ease of use, better timesheet compliance and accuracy, a better real-time understanding of how resources are being spent, and improved reporting to clients as the key benefits of the system.

Open technical specifications

CreativeWorx has open APIs that will help to assure its interoperability with more systems in the future. The more that KBS moves to cloud-based, the more important APIs become for integration. Also, CreativeWorx is in discussion with multiple ERP vendors about an integration with their product, and has already completed the integration MediaOcean, the provider of KBS’s current ERP implementation.

The development process

Mozolewski chose to work with CreativeWorx because the startup’s management demonstrated a keen ability to listen to its customer needs and develop the product accordingly. He holds a meeting every Friday morning among the following:

  • Himself, the KBS CFO,
  • Tim Beck, CTO for KBS
  • Eugene Iserovich, an IT manager at KBS,
  • Mark Hirsch, the CEO of CreativeWorx, and
  • David Torres, the CTO at CreativeWorx.

From time to time, Mozolewski also brings in and consults other managers within KBS. Both the company-wide rollout and development process are ongoing. CreativeWorx is now tackling the project-by-project tracking of time spent working within web browsers.

Although KBS has also worked with some of the KBS Ventures portfolio companies (and introduced some of them to its clients), the firm has not been an investor in either CreativeWorx or Namely. Being an early and engaged customer with a startup that otherwise has access to funding can, however, be as valuable as a cash investment. And, the current partnership that KBS has forged with CreativeWorx is an example of how valuable such a partnership can be for both entities.

Recommendations for the enterprise

Other enterprises looking to work with tech startups can thus take the following suggestions from the KBS experience (many of which apply to tech projects from any vendor):

  • Look for a startup that is targeting a real ‘pain point’.
  • Expect the startup to be a good listener.
  • Keep an open mind about new processes and ideas that can be learned from the startup.
  • Look for an easy-to-use, intuitive solution.
  • Only take on a project that is of a contained and manageable initial scale.
  • Be careful to bear in mind the larger picture of the enterprise needs and mission, rather than pursuing technical capability for the technology’s sake.
  • Require open systems and APIs where possible to limit product and vendor lock-in.
  • Maximize integration with other relevant enterprise systems.
  • Understand that the startup’s product development should be focused on a replicable solution that will be relevant to other customers.
  • Expect that the startup may be focused on the enterprise’s industry as an initial market.
  • Get internal feedback on the product early in the process and on an ongoing basis.
  • Schedule regular communication and coordination with the startup.
  • Expect to serve as a reference account for a successful implementation and to be vested in seeing the startup’s continuing success.