Working with Adopters
At Sentinel, we pride ourselves as the bridge for builders and adopters. The most innovative emerging tech startups and the most established traditional institutions often have a challenging time discerning each other’s capabilities, creating clear expectations, executing on mutually beneficial timeframes, and accepting two drastically different corporate cultures. What sets the Sentinel team apart is our long tenure as both executives in massive institutions and our embedded presence in startup ecosystems.
I’m happy to be Exhibit A in this regard. In my whole working life, I’ve spent exactly half of that time at Goldman Sachs and the CME Group, and the other half in startups and venture capital firms, like Outlier Ventures and Digital Currency Group, supporting wildly creative technologies.
Here’s one sacrilegious takeaway I’ve come to realize through this experience. Large established companies are not completely different from startups when it comes to innovation and ambition. I reject the myth that all corporate dinosaurs will be blown away by a meteor of cool new companies.
What I’m going to attempt to convey in this blog are three main points:
The mistaken assumptions that startups have of institutions
The real bottlenecks holding back corporate adoption of new technologies
How builders should approach institutions when seeking commercial relationships
Mistaken Assumptions about Adopters
Back when I was running the venture arm of the CME Group, I would come across startups that assumed we desperately needed their help. Instead, what I realized is that they weren’t aware of the innovations that were happening behind our doors. I understand it can be challenging for a startup to know this - corporations usually don’t publicly disclose their POCs and technological achievements. Big firms don’t need the press recognition and brand awareness that a startup might.
So here’s my attempt to shed some light on the assumptions a builder should NOT make about an adopter. I talked about this in an interview with the Chicago Tribune almost nine years ago, and these three points are still worth iterating.
Enterprises need you to solve their problem - WRONG! Many times, what you think could be their problem simply isn’t. Or they solved it internally and just haven’t announced it. The key takeaway is to confirm ahead of time that they have Problem Z but don’t have the internal capacity to address it yet.
Corporations don’t innovate - WRONG! Check the age of most traditional institutions. I mentioned the CME Group, which has been around since 1848 through the Chicago Board of Trade. That’s 176 years. Do you know how much innovation it takes to keep growing for 176 years? Where will your startup be in 176 years?
They don’t have the technology talent - WRONG! Fun fact: 25% of Goldman Sachs’s workforce are developers. That’s 10,000 people all around the world. Given as well that the acceptance rate of getting a job at GS is roughly 4%, one would have to humbly consider that those developers could be really good.
So What Does Hold Institutions Back?
I’m not trying to pretend that corporations don’t have real challenges with evolution. In the Dow Jones Index‘s lifetime, there have been 58 changes to the 30 companies. Citigroup, Hewlett Packard, AIG, General Electric, and other firms that were behemoths in my early working career have all gone DJIA bye-bye and I know I’m old, but not that old.
So what are the bottlenecks that make it hard for corporations to adopt new technologies? Here’s a highlight reel.
Budgets: These are often set well in advance of any first meeting a startup will have with a corporation. If your project is not budgeted for, it will be tremendously difficult to implement
Internal Prioritization: Google famously had a 70/20/10 rule where 70% of an employee’s time was focused on core business, 20% on core-adjacent projects, and 10% on unrelated projects. And that’s Google! Many more traditional firms don’t even have that generous of an allocation. Anyways, for most innovative tech startups, you will fall into that 10% category. And note that when business conditions get tough, 70/20/10 becomes 98/2/0.
Regulations: it’s both a question about the regulatory clarity around a new technology industry (you) and the existing regulatory restrictions for large institutions (them).
Security: New technologies can introduce new security risks, which institutions will deliberate over and over and over again.
Safety in Stability: “Nobody gets fired for buying IBM” goes the old expression. It takes a very charismatic, skilled and experienced founder to persuade an executive to take a chance on something quite new.
Legacy Systems: They’re like your family at Thanksgiving. You deal with them, you love them in your weird way, you want to fix them but not totally change them. Similarly, corporations are not going to quickly discard their legacy systems without trying to work within their constraints first.
Internal Politics: you can call this corporate bureaucracy too. Either way, expect it. Heavily.
What do all seven bullet points have in common? They all lead to a seemingly long amount of time to execute on new innovations.
But I used the word “seemingly.” Bill Gates once famously said, "Most people overestimate what they can do in one year and underestimate what they can do in ten years.” And I will again draw from my own experience. Ten years ago, there were only three people out of 2,640 employees at the CME Group who even remotely thought about Bitcoin on a semi-regular basis. I was one of them. Now, the CME has nearly doubled its average daily Bitcoin trading volume, from $1.6 billion a day in 2023 to over $3 billion of daily trading volume in 2024.
Knowing All This, Let’s Get to Work
So with some of the assumptions dispelled and the bottlenecks clarified, how do startups go about approaching and working with enterprises? Here are a few recommendations.
Research their real problems that they can’t solve, especially because of a lack of prioritization, time, and resources - not necessarily a lack of technology expertise.
Understand their corporate structure and governance, especially the key decision-makers and budgeting process.
Respect their innovation, ambition, and legacy. Survival is hard and they’ve achieved it.
Expect to work within their existing tech infrastructure. Build your tolerance.
Have every question around regulation, privacy, safety, security, auditability, accountability, funding, and customer service capabilities ready to be answered.
Be honest about your internal financial health. Working with large enterprises can take a lot of time, always far longer than a startup wants, and the mismatch between getting a revenue-generating project approved by a corporation and a startup running out of runway is very real. Adjust your expectations and if you don’t have the luxury to eat the elephant one bite at a time, don’t eat the elephant.
This is all my honest advice based on many years in the market. Yet I’m always willing to be educated and hear your experiences too. Feel free to connect with me on LinkedIn or reach out to us at hello@sentinelglobal.xyz