Few inside big corporations have played the start-up game. One client, a huge bank not known as a magnet for entrepreneurial talent, took a novel tack with six top business school students. It gave them summer internships during which they drafted new-venture plans that they got to present to the chief executive. Three plans got financed, and five of the students work for the bank. Corporations need to swallow their pride and find a healthy mix of outsiders to serve as investors, directors, and advisers to the internal venture.
Corporations typically run on annual budget cycles, but new ventures can t.
Those commitments should come only after the venture has reached clearly defined milestones. Poker players will tell you that, in seven-card stud, most of the money is lost on the fourth and fifth cards, as players indulge the unreasonable hope that an uninspiring hand might turn into something good. This is tough for big companies, where egos and longstanding corporate practices get in the way. Senior executives resent having to give the managers of start-up ventures enough equity in them that the managers could become wealthy. But top talent demands equity.