What are the best ways for a startup to partner with a big corporation?
Beth Kearns from Touchdown Ventures tells about different partnership models, best practices and pitfalls to avoid.
Beth Kearns joins me today from Touchdown Ventures. Touchdown helps corporations run professional venture capital programs. Prior to Touchdown, Beth was an Executive Vice President at 20th Century Fox, overseeing investments, partnerships, and operational transformation across film, TV, and digital.
So Beth, I feel like if people want the whole backstory of Touchdown, then they can go listen to the episode with Scott Lenet, your partner. But with you, I'd love to start with how you got into tech and became an entertainment executive at a major studio.
Sure. I mean, it's funny. I'm not an engineer. I didn't study any type of technology in college, but I just got really curious about these new technologies and what they meant for how people accessed information and I was also the kid where they're like, “oh, you know, you just graduated college so you'll be the one who can access the Internet. You'll figure it out. I had the one AOL account in the whole company.
So, um, that definitely dates me to back in the early days of the internet, but it ties into this story because I went to 20th century Fox, not thinking that I was going to be an entertainment executive, because I think if I had wanted to work at a film studio, when I was in business school, I would not have been able to do it. Like, I didn't know how to get myself in there.
I wasn't. The creative person. ,so I got in through the business development group at 20th century Fox,
So I was really interested in how technology was going to potentially change. The business of film . And then entertainment more broadly. And so I was able to worm myself through the entire organization on the film side, on the TV side, digital, you know, I, I worked in our mobile company. I did direct to digital productions.
I was able to kind of keep worming my way through, always focused on. Emerging technologies. I sat at the table when we were first talking about doing the deals with Netflix and when Hulu was being created, as a joint venture.
let's pause there because I'd love to hear some of what it was like being in the room when 20th century Fox. Talking about how do we work with Netflix and then subsequently with, Hulu.
Yeah. I mean, it was, such, an interesting conversation because I came at it, being. More junior person. And also, you know, a little bit younger where I was looking at these technologies as all opportunity, and when I first got to 20th century Fox, those new technologies were terrifying to the senior executives where, it was like an existential threat. , that was looming over. And so what we focused on was content protection, which is of course, very important. And everybody still does it today. Like you need to protect your content from being pirated and, but that was, the extent of it.
When I first got there where it was like, no, look at what's happening with Napster. Like we, we can't let that happen to our catalog and what we're doing. And so how do we stop? And then slowly, the wheels started turning towards, okay, now what can we do with it? if more people are using these platforms, if broadband is becoming ubiquitous, how is this consumer behavior gonna continue to evolve?
that was really the, impetus, I think, for Hulu in particular, where it was like, okay, Let's, be sure that we have, our own strategy, you know and that it's not just happening to us, but we're, developing, , our own platform. , You know, I remember one. When, um, one of my colleagues went in with a phone and there was a movie that, you know, it was like, okay, look, you can watch it, you know, movie on your phone.
And he was like, who ever wanna do this? and I think. it wasn't until Netflix had really, really taken off that. I think everybody got, shaken more to the core of like, oh, okay.
We have to rethink this a little bit.
What do you think now is sort of the attitude from studios towards streaming and where do you think streaming is? Kind of gonna settle out.
I mean, it's, so interesting because I think the pandemic just accelerated. , you know, what was already in process because the theaters were already having a hard time, as were the networks with ad revenue, , you know, cuz it's just declining viewership. And then I think they're having to really rethink, like, what is the business model and it's like, almost like everything old is new again, because now ad supported is back again.
You know, Netflix now is looking at the ad supported piece of it. and then movie pass coming back and, trying to figure out what those business models are.
So as I understand your purview, um, you were also looking at things like operational transformation, what is operational transformation mean in the context of film or in TV, or how similar are they?
well, you know, I think, uh, what's also interesting is that operational transformation or digital transformation or whatever you wanna call it is really so similar across multiple industries. I mean, there were specifics to. The film industry because especially with CGI, you just have so many assets that you're creating and having to approve, throughout the process. And so, you know, that's specific to a production company, but, , Operational transformation also is just down to the nitty gritty of , legal tech even, you know, so it's, it was everything that needed to happen to make things run more smoothly.
That was kind of , what I would be looking at and at emerging technologies. That we could potentially invest in, or just do partnerships with, Do you have advice for a startup that wants to work with 20 Century Fox, or just like any startup approaching a huge corporation? I think the piece of advice that I could give is really clear about what it is you want from the corporation or how you would envision partnering with the corporation because.
Someone can figure out who the right person is to talk to. I think oftentimes with a large corporation and a startup, it's kind of a general conversation and the corporation is hearing the pitch and it sounds exciting and isn't that great, but that requires a lot of imagination , on really both sides, you know, but, if it's not the person's day to day, it's hard to.
Then be a helpful navigator to the startup,
Sure. And I imagine that's true in a variety of different industries. And as you said, you've moved on from entertainment
let's move on. Talk about setting up a new fun touchdown and what you're doing now with ag tech.
Yeah, so I joined touchdown about three years ago. I had worked with them when I was at 20th century Fox. you know, the idea of. Connecting corporations with startups and figuring out mutually beneficial partnerships. You know, that really what I think is special when you decide to hire touchdown, , like, how much can you tell me about that process of like, what does that structure actually look like? Between touchdown and the corporate.
Yeah. So it was interesting because there were different ways to approach it. It's like there were moments where it was like, oh, we need to have an accelerator, like Disney, , cuz Techstar was, really, um, a big name and they were working with Disney at the time. So we thought, okay, well maybe we need to do something like that. Or should we be incubating ideas internally , and, you know, doing our own businesses and then spinning them out which is like something that, Lionsgate has done, like other companies approach it in various ways.
And so we, put together idea. Related to kind of each of those, like what the pros and cons were how we thought we should approach it. And then when you zero in on a venture fund specifically, then you start asking yourself, well, do we have the resources to do it? It's like, yes, my colleagues and I, we had finance backgrounds. We, we understood the company inside and out, you know, , we could do deals like that.
Wasn't the problem. But the challenge was, were we gonna see the best deals because we weren't necessarily seeing all of the deals , Cuz like touchdown has now over 50 people, you know, we work across all different types of industries. So, any of our corporate partners is tapping into that.
one question specific question I had was when you set up a fund, how many of the companies in a portfolio are you thinking about, or actually gonna partner with the parent corporation?
That's a really good question. I mean, I think it, it comes down to the fund itself and the corporate, like what their strategic priorities are like, which horizon are they looking at?
You know, if they're more interested in the horizon three that's completely disruptive, it's gonna be harder to do. Commercial deals with them, you know, versus horizon one where it's like that's day to day, that's easy horizon. Two might be a little bit harder but still doable. So it kind of depends on how the corporate is. leveraging , the fund, like what type of innovations are they looking for and how disruptive do they want it to be? But I'd say like a good rule of thumb is probably about 50%, you know, of the portfolio to have some type of engagement. Yeah, and I read something, I think it was on your LinkedIn, a post about how D. Structures of different deals. And you know, to me, I tend to think of a deal where it's like, I'm selling you something .
Um, but I think your point was that there's all sorts of different structures.
Yeah, there are. And so with business development deal, we created a framework with, basically five different categories but this is also where it ties into coming to the table with some idea of what it is that you want from a partnership with a corporate There's licensing, , and that can go both ways where the corporate can be licensing IP from the startup and the startup can be licensing IP from the, corporate, so there's licensing, that's the first one distribution is your traditional reselling. And that can again go both ways where the corporate clearly has multiple channels to sell solutions and probably likely much bigger scale.
So you could potentially plug in. Products and services into that distribution channel. But again, it can go the other way where the, startup is actually distributing for the corporate. And that's especially the case. I think when you're talking about direct to consumer startups So it's distribution, that's two . Uh, Third one could be marketing. where you know, you've seen it at any one of the CES floors where Microsoft or Intel, they've got a, portion of their, of their installation.
That's just for their startup partner. and then we move on to supply chain, So supply chain is really taking advantage of , the scale of the C. So that can be anything from logistics, but also ingredients or, you know, other parts that they might be able to get at scale at better economics than a startup could.
So how does this all translate when you're now setting up a new fund, specifically? I know you're leading a new ag tech fund that I wanna make sure we talk about. Yeah. I mean, so we're working with both CHS and Growmark, which are two of the largest farming cooperatives in north America. You know, they, cover millions of acres of, farmland. And so you can break it down into different buckets. You can look at Crop production, which underneath that you're gonna have all the nutrients and, all the inputs that go onto the field.
And then also precision ag, which is all about like that, OT of farming, which is really, really fascinating. And, thinking about how to create digital twins of farmland, and then be able to leverage that data to make more efficient decisions related to the inputs you're putting on the field, And then that blends into. Sustainability, because if you're putting less chemical onto the fields, then you know, that's a more sustainable way of farming. And so sustainability is a really important pillar for the fund. And then supply chain, because you know, that last mile supply chain really, really critical to moving all of these, products around,
Can you go deeper on supply chain and what happening right now? And like, you know, are we gonna become more, I guess, de globalized in the future? is that something you guys are discussing?
No, we definitely discussed that. And just overall. The potential rising costs related to labor and freight,
But you know, they're also just kind of looking at it more specifically around north America and even within north America, it gets harder and harder to even find people to work on, you know, the different pieces of the supply.
Yeah. I mean, what has sort of happened the past couple years from the point of view of grow mark and CHS, like in terms of just how they've been affected it has been interesting cuz I think labor is such a key piece of it and even just the cost of fuel, cuz you're moving things around, which is why thinking about automation. different ways to increase margins while, making the whole supply chain more efficient.
I mean, do you have to answer the question of like, are you automating away all the jobs in the us or is that, are we over that.
I mean, personally, I'm not imagining a world where people aren't needed I see data and AI and ML as an opportunity to enhance the process, to make it more efficient, but also create another data point when you are trying to make decisions.
So , when I had Scott, your partner, Scott, on the show, he said something like a, corporate will come and say to touchdown, we wanna set up a CBC. And that's what they say, he said, but what they really want is access to innovation. How do you, when, partnering with one of these organizations, how do you give them access to innovation?
So you'll laugh at the name of our class at UCLA. It's called corporate entrepreneurship and innovation. People often think that that's a complete oxymoron. It's like corporates don't have entrepreneurship and they don't have innovation. And it's like, no, no. We can actually come up with a number of examples of how this has worked, And so the way we think about it in our class and, how I'll talk about it here is like there are four different building blocks of corporate innovation. And so you have R and D.
we're all familiar with R and D you know, , that's a, relatively big investment that you're doing internally and with a very long timeframe for any sort of payoff. And then you have. Business development, which is a lot of what we've been talking about because you can do deals with all different types of companies.
There's minority investing, which is all of your VC listeners will be very familiar with. And then when you combine like that minority investing and the business development, that's really where we see the power of corporate venture capital. And then lastly there's M and a. So you have those four D.
Building blocksBut by, working with the corporates on corporate venture capital in particular, the way that you bring other forms of innovation is because you've got this very.
Deal flow. Right? And so as these companies are coming in through your venture deal flow, you're able then to also say, you know, well, maybe this isn't a minority investment. Maybe this is just a business development deal, or maybe this is an opportunity to partner and do like co-development in an R and D project, or maybe it's even an opportunity to.
And you know, I think that's probably what, Scott was talking about in that regard that sometimes our corporates, they.
They say that they want venture capital, but it's kind of like, they want pieces of a lot of that, of those four building blocks, because they wanna be able to, try and see where, the ball's going. And that's hard to do when you're doing your day to day job. And you have deadlines and quarterly reports and, and things like that. Um, you had two other things noted. It's executive decision making and persuasive communication. I
can you teach us, can you give us the crib notes on how to, you know, be more persuasive communicators?
You know that might be also a, a point to giggle about as I sit here and try and articulate myself on all these different questions. No, I mean, It ties a lot to what we were just talking about related to automation and potentially like putting people out of jobs that there is an emotional intelligence that's really important around innovation because oftentimes, the things that you, as someone within a corporation who's focused.
Different ways to transform the organization. What you're working on could potentially be threatening to others, you know, or feel threatening And so what I experienced at Fox and what we definitely try to do with, all of our corporate partners is very, open and bringing people into the conversation that it's not a skunkworks project.
and so building the relationships and figuring out who the subject matter experts are sharing insights. So whether that's quarterly or, you know, twice a year where you're bringing to the table, , the work that you're doing and what you're seeing in the marketplace.
That's a really key element of , the persuasive communication because you have to build trust and you also really have to understand on the corporate side, what it is that you're disrupting. Because I know that that's often a challenge with any corporate executive when a startup comes to pitch.
If they're too aggressive and they're saying like, we're basically gonna blow up your business. You know, that obviously creates some, potential friction right off the bat.
growing rapidly. Yes.
growing extremely rapidly at touchdown. You're setting up lots of new funds. , um, do you have a playbook for how to set up , a fund? Do you have anything. Non obvious or things that you'd call out that people screw up. Yeah. I mean, The way I would answer that is that in terms of setting up a VC, it's really, having a clear strategy, having a clear roadmap for the types of investments that you are.
Looking to make you know, in terms of like, What stage makes sense because maybe for a corporate seed stage doesn't make sense because it's far too risky, , or geography?
Do they have to be near the corporation? and then really clear area? Sector focus.
. Um, let me shift to the personal side of things a little bit. my first question is how do you think about your own career and successlooking back on that, what do you credit that success to?
And maybe that will bleed into my next question about sort of advice you might give to someone early in their career.
Right. You know, I think the, thread that, goes throughout my career is really curiosity, , that I always. Have been interested in learning new things, you know, as you can see from the fact that now I'm doing ag tech And, , admitting you know, that I don't know everything, but you know, that there's a skill set that I can bring to different industries, that keeps me.
Hmm, I would love to dive in and just learn about ag tech right now. I think it's such a fascinating area. Um,
Has anything in particular surprised you about ag tech as you've doven in?
I mean, I I'm, thrilled that are. Farmers and co-ops, that are excited about how technology can help them. Like, it's just, it's really exciting that, the industry is at that inflection point. let's go back even further. Where are you from? Uh, what were you like in high school?
What was I like in high school? , so I'm actually, I'm from Los Angeles Like I've never lived outside of California.
Where'd you go to high school?
, I went to Marymount high school here in Los Angeles. what was I like in high school? I mean, I think it's funny. Cause I was just talking about this with someone it's like yeah, probably a little intense at times very focused, very focused. I was a dancer, most of my adolescents and even into college. So, , very focused, driven, , Yeah. I've always loved the arts , as well as all this other stuff that I'm doing.
What's the mental game of a dancer. Like , what is in your head when you're I guess.
so I was a ballet dancer, which probably takes it even to kind of at the next level of intensity, but, , you have just like incredible focus. Like I look back on my, time as a dancer and that it really taught me that like being able to set goals, go after them achieve them because, you know, I was constantly pushing myself physically to try and achieve new.
Yeah. And you learn, that ability whether it's get up at 4:00 AM or whatever it is. I think it's very transferable skills. Um, How would
your friends describe you
Yeah, focus. I mean like I'm, you know, even amongst my business school friends, I'm still, probably nerdiest of them.
You know, I love star wars. I love comic books. I love sci-fi. So that definitely, uh, puts me into that category.
I love that. Um, well, really fun to get to know you.and congratulations on the new fund.
Thank you so much.
This was so much fun.
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