Can Telcos Work With Entrepreneurs?
Author: Liz Kerton, Managing Director of Kerton Group & President of Telecom Council of Silicon Valley, https://www.linkedin.com/in/lizkerton
Some say telcos and startups are like oil and water. Telecom carriers don’t have a history of being the fastest moving enterprises in the economy, and that reputation was earned. Entrepreneurs never had the luxury of moving so slowly. Small businesses are nimble and fast-acting by necessity. Flexible people gravitate to startups, and the smaller size means the ship can turn quickly. With that speed mismatch, it would be safe to say that entrepreneurs should avoid these dinosaurs and carry on getting their innovative products and services to market. But safe never was the goal of the entrepreneur – we rather gravitate to smart, meaningful, and profitable.
And therein lays the allure of working with telecom operators. As the collection point for billions of telephone bills each month, much of that money gets spent up the supply chain to vendors that provide the carriers with technology, equipment, and solutions. The annual global aggregate Telecom spend is $5.6 Trillion. Yes, trillion with a “T”.
And while telcos are probably the original home of NIH thinking, the last 15 years have seen a radical change in their willingness to work with smaller partners. New competitors, wireless competition, IP packetization, Wi-Fi, VoIP, and pressure from Over-The-Top (OTT) competitors has lit a fire under the telecom industry, and moving slowly is no longer an option.
That’s good news for startups, developers, and entrepreneurs. Striking a carrier partnership is easier than ever. Not only have carriers learned a lot about working with smaller partners in the past 15 years, but they are also upgrading their networks to specifically to enable greater flexibility, more agility, and a better ability to integrate best-of-breed solutions from partners small and large.
Modern telcos want to be able to work with more partners in a modular fashion, and avoid the vendor lock-in telecom historically endured. Carriers have seen first-hand how platforms like Android and iOS empowered the independent software community to deliver incredible apps, and they want that kind of platform versatility working for them inside the network, too. Specific tools they are using to get there are NFV (Network Functions Virtualization) and SDN (Software Defined Networks).
These virtualization technologies take a page from Enterprise IT, where virtualization has reduced the dependence on cumbersome, dedicated hardware boxes, and moved their functions to virtual machines running in datacenters. The virtualization means flexibility to spin up Virtual Machines and trial new ideas without having to truck in new hardware. This agility means less risk in trying new ideas, and means telcos can work with more partners, and smaller ones. Consequently, you’ve probably noticed the growth in the past 15 years of telco incubators, Venture groups, and innovation outreach offices like those in Silicon Valley. Carriers are making deals that in prior years would never have been considered.
So, how do entrepreneurs, developers, and startups find and engage with a carrier? What’s the first step? The Telecom Council of Silicon Valley goes directly to carriers, who represent 2.5 Billion cellular subscriber accounts worldwide and turns the usual Dog and Pony Show upside-down, by putting the carriers on the Hot Seat, and ask their answer to these three questions:
- Why should entrepreneurs choose to work with you, as opposed to another carrier or OTT?
- How does an entrepreneur engage you? Specifics, please.
- What are your main areas of interest for the next 12 months of innovation partnering?
Cynics may not agree that deals are happening, and I must concede it’s not easy to strike one. It’s like the VC deal funnel: Each carrier will look at hundreds of potential partnerships each year, will meet with dozens, will NDA and trial some, but will partner with just a handful. But multiply that across the dozens of global carriers with offices in Silicon Valley, and quite a few deals get made. At the annual TC3 Summit, at least 12 different carrier presentations will feature case studies of a successful startup partnership. The startup will join the carrier on stage, and discuss how the relationship was built – useful information for entrepreneurs hoping to reach a similar deal.
The future is bright. Carrier networks make it possible for countless entrepreneurs to reach new customers around the world. And that’s true whether you choose to go OTT (and treat the carriers like a dumb pipe), or whether you choose to work with a carrier for distribution, optimization, capitalization, or direct solutions sales. The opportunities keep growing.