Companies Make Mad Dash to Partner With Startups

The trickle of such companies has become a torrent lately as CEOs and business owners attempt to fight stagnation, maturation, wider competition and dwindling growth prospects. When they’re not trying to find the next big thing in their vertical, they’re working with startups in the burgeoning social-media field and other digital venues in the hopes of discovering and developing apps and other new tools that will give them a competitive edge.

“By sitting out this phenomenon, CEOs risk being the last horse out of the barn.”

CEOs for companies such as Chobani, Diageo and Nike are heading into such deals by shooting from the hip, with no proven ROI or other considerations they might normally have when making a capital expenditure or more traditional investment. Yet, there’s more competition than ever to find these diamond-in-the-rough startups that are truly worthy of their attention and funding; like the risk of any new endeavor, most won’t pan out even after selected.

But the rewards of a few successes can be significant even for a big company, and by sitting out this phenomenon, CEOs risk being the last horse out of the barn. Consider Chobani, for example.

The Greek-style yogurt maker is just the latest company to move in this direction. Founder and CEO Hamdi Ulukaya took a chance as an entrepreneur several years ago in launching his firm. With Chobani having grabbed an estimated 36% of the U.S. yogurt market in just a decade, he wants to give a hand up to other entrepreneurs who might have a similarly winning idea.

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Dale Buss
Dale Buss is a long-time contributor to Chief Executive, Forbes, The Wall Street Journal and other top-flight business publications. He lives in Michigan.

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