William Leonard
Welcome back to the latest episode of the Atlanta Startup Podcast. I’m your host, William Leonard. And today we’re diving into an extraordinary session from the 2023 Valor VC Day. In this episode, we bring you the panel on How Strategics Invest in AI, and we’ve got a stellar lineup of brilliant corporate innovation minds. So you’ll hear from Angie Brown of Home Depot, Leigh Gaffney of Assurant Ventures, Michelle Mason of Exxon Mobil, Mike Mahan of Stanley Black and Decker, and I moderate the panel. So together we’ll explore the intricate processes of how corporates make investment decisions around new technologies. Let’s jump right in. I would like to just have our panel introduce themselves down the line briefly.
Michelle Mason
So I’m Michele Mason, I work at Exxon Mobil, and I’m senior leader for marketing and sales, execution as well as sales development. So I need to talk to the gentleman who does talk to before because I’d like to learn more. But that’s what I do. I’ve been with Exxon for six years, but have probably about 30 years of both marketing, communications and business development experience work for mostly fortune 500 company. So if you want to ask me additional questions, I’m here to be the guinea pig to help solve and answer any questions you have.
Angie Brown
Mine, my name is Angie Brown, and I’m a Senior Vice President of Technology with the Home Depot. So I couldn’t help but think when the last conversation was going on the Taylor Swift line of I’m the problem it’s me. You know, Home Depot’s fortune 20 and I am in tech, I run about half or a little bit more so of all of our software, both on the customer side and our relationship with our third parties. And as you know, we also have a Home Depot ventures team as well that I work with quite often.
Leigh Gaffney
Hey, everyone, my name is Leigh Gaffney, I’m part of Assurant ventures. Most people actually haven’t heard of Assurant, even though we’re also a fortune 500 company. So I like to give a quick background. We do mobile device protection, renter’s insurance, auto warranties, the random benefits you don’t realize you have on your credit card. That’s us on the back end. So we’re a b2b sub theta b2c company. And I’m specifically on the ventures team. So I invest in seed stage to Series B companies, purely off Assurant balance sheet, we’re international so can make investments internationally as well. And our cheque size ranges on the low end 250k to the high end, at least initially, two to 3 million, but we’ve invested up to 20 million in a portfolio company.
Mike Mahan
Hi, I’m Mike Mahan Managing Director at Stanley ventures CVC, of Stanley Black and Decker. So part of the founding team since 2016, you know, looking for really strategic partnerships with startups that can help us grow our top line that we can partner with to bring innovative products to market. So that could be interesting technologies, we can integrate, you know, new markets, we want to enter anything that can solve some of our customer problems, put about 100 million to work for roughly 45 companies in the last eight years. And we own the iconic brands like DeWalt and craftsman and plenty of which you can find at Home Depot and places like that. So awesome.
William Leonard
And, of course, we’re going to start off with a question about AI. So obviously, AI is, you know, the been the target of town for the last two years or so. And it’s fundamentally changing how companies like yourselves and startups and enterprises are operating as a whole. I’m curious to hear how you all are either strategically thinking about investing in AI, in AI startups or implementing AI, within the business units that you all operate at your respective firms. So maybe, Mike, I’ll start with you and get your thoughts.
Mike Mahan
So yeah, for being a hardware company. I deal with engineers a lot that are very skeptical of things like AI. I think the first question really is like, what is AI? I don’t know if you can really put a box around it. Frankly. I think it shows up in all different kinds of forms. We look at it I think, really in two ways, frankly, the first being how can it help us internally, like maybe in our manufacturing, Facilities and Operations? Again, going back to like giving us time back to do value added tasks? So that’s one way that we look at that the other lens would be how can how can we help our customers and maybe not like putting a on a power drill or something like that, but but more so you know, how can we do things on a job site with something new, like maybe a robot that can do tasks that today you have workers that maybe aren’t as accurate as they could be that a robot could be way more accurate or things like that. So we kind of look at it through productivity either on the job site or internally in our facilities.
Leigh Gaffney
So I’d say there’s the business side, and then there’s the venture side, which I’m on at a show and on the business side. We’ve been using AI for years, actually. But over the last year especially, there’s been a lot more excitement around it. So especially with our call center employees, we have about 2000 or so call center employees around the world, figuring out ways to potentially leverage AI To streamline those operations on the venture side, really interested in any and everything around AI, but I would say definitely cautiously optimistic, you know, there’s new things popping up, I feel like the landscapes changing monthly. So really being thoughtful around, okay, how am I making sure not to just put money in a company because it has.ai At the end, that being really thoughtful around that. So I would say really excited about it, but also being, you know, cautiously optimistic and doing our homework still.
Angie Brown
So from Home Depot’s perspective, I wouldn’t describe us as the first to the market, it scale in on these topics. But we’re really pretty quick to try test. And so I could go back a couple of years, and we’ve been working with a variety of different third parties on really small specific tests. To try to prove this out. For us, it’s going to come to where is the ROI. And as we find the ROI on these than we are going big. We’ve recently been talking a lot publicly about an application that we rolled out to all of our stores. And if you don’t shop in our stores, now each one of our Associates has a handheld device built by zebra and then a lot of apps that we built on top of it. And the problem for us to solve that we were always trying to work on in this AI space is where’s the inventory in the store, if it’s up in a rack, it doesn’t do us any good, the customer is going to get frustrated, etc. And a lot of times in our stores it is high. And we’ve got to replenish it that act of finding the inventory very difficult and why we planogram lower space, we don’t planogram high space. And so this was an area we started multiple years ago actually with a robot going up and down the aisle trying to image etc. Well, now we’ve rolled it out at scale. And we’ve changed the stack underneath it a variety of different times in this space to meet the demand and get to something that is you know, valuable for us. And so we now within that app, if you look up a SKU, I’ll show you the picture, I’ll show you the box, I’ll show you know I’ve got a red line drawn around it. So you can go exactly to the product and help bring it down. So, you know, we we test quickly. But we are pretty judicious, you know between that and go in full scale.
Michelle Mason
And I would say at Exxon, we see it as a valuable tool. But we’re taking a very slow approach because we’re concerned or concerned about reputation. We’re concerned about data privacy and data breaching. But where I see that it’s going to be really, really important places in our in our Upstream where we’re doing exploration, and trying to find the next spot to find oil. There’s a lot of geologists doing a lot of models and data mining to try to figure out where is the next spot to find oil. So I see that as a bigger play for the upstream. Downstream is all about the customer. We’re all thinking about how can we leverage AI for the customer. But secondarily, we’re taking a very slow approach, we’re not coming in and saying we’re going to by bit by kind of solutions, we’re saying we want something enterprise, so it can fit our common processes, it can fit. So it’s going to take a little longer time for us to adopt. So folks that are that’s one of the things that I would say folks that are trying to talk to large corporations, you’ve got different speeds of adoption, we are very, very slow, very risk averse. And so they’re going to triple integrate it before they adopt it. So just recognize that as you’re approaching big companies about how the speed in which they will adopt solutions, because it’s not the same with all Fortune five hundreds.
William Leonard
That’s a really good point. And Michelle, I’ll kind of come back to you on that and go down the line as well. And one of the frustrations that founders and investors have is the speed at which corporates move. How can they circumnavigate your slowness to really get a client get a contract? Because you know, if a sales cycle is 1215 months, and they’re only targeting enterprise, you have to get customers in before you die. So how can an early stage founder really go about navigating that?
Michelle Mason
So I’d say the critical thing is analyzing the company and understanding some of these issues before you walk into the door. Secondly, I would say also one of the key aspects that I’ve even tried to bring technology into Exxon, and it took almost a year. And I would say that with our slowness to adopt, it causes problems. But I would also say, before you bring your team in, make sure you have hunters, because they’re not hunters, and they’re farmers. They’re just there to kind of nurture the relationship. You’re not gonna go anywhere you need some people Will that have out of bots thinking, don’t want always say when someone says no, you figure out another way. And you figure out who are the allies in which to really help you be your advocate internally. And then nurturing those contexts is really, really important, even though you find that, oh, that’s not the right person, you better nurture them, because it can be your ally to help you figure out who in the organization should go to. And then the last thing is, when you’re coming in, you better have a very good case. And don’t bring me case with suitcases or whatever else bring me case is more in line with what we do in our market. Maybe it’s from a manufacturing standpoint, maybe it’s from a customer service standpoint, but the base case and they see the offer that you bring, please have it tight. And make sure you understand what are some of the pain points that we have within the organization, you get that through annual reports, get that through some of your allies that you meet. So those are some of the things that I would encourage you to think about. And the key one is having the right people that have the willingness to think outside the box, don’t want to hear no. And also have the ability to to push the envelope in a diplomatic way.
William Leonard
Lee, I’ll come to you just kind of off of what Michelle said there, and what she’s looking for. When engaging startups or smaller companies. What are you all at Assurant looking for? I think you’re writing 250 to about $3 million checks. What what is the criteria that says that gets you excited? To take it to your investment committee?
Leigh Gaffney
Yeah, I’d say for Series A, especially we’re looking for, you know, you’re achieving product market fit, especially now do at least you know, a couple of million of of revenue that we can point to to say, hey, these guys are working, you know, they’re early, but they are working in similar that point are their customers that, you know, typically we’re not the one calling the customers because we don’t typically lead rounds. But are there customer references or feedback that we can leverage? You know, have you had any churn? That’s obviously very important for us as well, if you have why, and if not even better? So I’d say those are a few of the things. And then the last point, too is, why does your company have the right to win in the market versus someone else? And why are you as the founder as the CEO, the right person to take it there? Because at the end of the day, I think the team is one of the strongest things.
William Leonard
Mike, I’ll come to you next. How should founders at the early stage be approaching? And in? What should they know about how strategics think, and how you all invest versus a traditional fund model? Like valor would invest?
Mike Mahan
Yeah, so I think the first, the most important thing is understanding like, the mandate of the ventures group, like mine, for example, is like top line growth, right? We need to find a way to bring something innovative to market by partnering with you as a startup. So do you see a pattern? Does it make sense, right for us to partner together? And I think, you know, working with large companies, it’s super important to have something that I think is fully baked, or that you can demonstrate something that’s better than what they have today. Like, we’ve got plenty of startups that come to us and like, you know, we can we can do what you guys do today, we do it differently. And like, that’s great. But why would we spend the time and money to change to something that’s not going to truly benefit our teams in a statistically significant kind of way. So I would say one of the biggest things you could do as a startup is frankly, under promise and over deliver, because it goes the other way, far too often. And it like, results in ghosting most of the time. So I think that’s kind of the biggest thing is, you know, you got to know what you can do and make sure that you understand what your potential partner is already capable of doing. Because you got to do way better than that.
William Leonard
Angie, I’ll come to you next, you gave an example earlier about some of the technology that you all tested out, and then eventually rolled out into your stores. From your experience as a VP of technology. What What mistakes have you seen early stage companies make when they are either pitching you all on a technology or they’ve pitched you? And now there’s a relationship established. But you know, they did this that maybe gives you a little pause? What mistakes have you all seen?
Angie Brown
You know, it’s interesting, it ties into a couple of different comments that you’ve already heard. One one for us is that when it comes to our funding cycle, we’re funded for the problems we want to solve. So it starts with knowing first and foremost, what are the things that are important for us to solve right now. And it’s in the language of customer problems and associate problems like what’s the experience that we’re trying to develop? And if You’ve got a product that plays in the space of a problem that we haven’t solved yet, things can move a lot faster. But they also move a lot faster, when they’re smaller in nature, we’re probably a little bit anti the enterprise direction, you know, on this topic, so for us, you know, in to kind of your comment, you know, again, I’ve got the funding for the problems I haven’t solved, it’s gonna be really hard for me to get to, you know, to find something that just advances something we’re already doing a little bit that’s going to, you know, I’d rather use my money elsewhere for a higher ROI, of course. And so if we can be kind of surgical, and how to insert something and how to try and how to mature together, you know, I think that’s, that’s excellent. What we see happen is falling in love with the tech instead of the problem, trying to go too big instead of, you know, starting too small, and things of that nature. And so the more you can kind of avoid those pitfalls, the better.
William Leonard
I appreciate that. And as we wrap up the panel, I want to go down the line and just get one piece of advice for some of the founders and investors in the room, when it comes to working with you all are how they can best succeed or approach you all.
Michelle Mason
Ask, that’s the only thing you got to ask. If you want to know, that’s the only way you’re gonna learn. And we’re here as another resource for all of you guys. They’re trying to start your companies and I’m all about it. So if there’s anything I can do to help get you to people within Exxon, I will do it. I’ve done it before had a few roadblocks. But I’m just a pit bull. So you got the right person if you’re trying to come into Exxon?
Angie Brown
You want me to take that one next? Yes. I think the what could we do doors doors open as well. But I would say you know, the more we can speak in that that problem language about how you can help us on that front, then that tends to tends to like I said, progress things? Yeah, yeah,
Leigh Gaffney
I’d say for us to like showing that ROI. If we’re using your technology, how is it going to make us that much better. And likewise, since I’m on the ventures team, my job is investing but also working with all the different business units. So now I have connections with all within every business unit Assurant. So it’s helpful for startups, if you come through the ventures team, then we can usually point you to the right person, because a lot of the times these enterprises are so large, finding the right person to even sell your solution to is half the battle. So finding that champion within the organization is what I’d say.
Mike Mahan
Yeah, so I agree with all those things. And I would say more in a tactical sense, like, I would really try to understand the organization’s processes, because like, our ventures process is probably different than yours. And your you know, intake procurement process may be different than yours. And the timing is all different, and who you need buy buy in from is all very different, and what are the, you know, key metrics that you need to meet, to consider being a quality, you know, addition to the suite, you know, that’s going to be different for all of our businesses. So the ventures process, but also like the internal processes, like it takes us three years to launch a product. So if it’s going to take you two years to deliver something, that’s actually something we can finally use will add three on to that, you know, so you really need to understand like how the companies you’re trying to work with operate, and how they bring product to market, how they reach their customers, and how they make decisions internally. And like, that’ll help you understand if you want to work with them, or if you don’t, or if the opportunity is big enough to go after like, and it’s worth the time and investment and, but also how to position, your conversations and your interactions with that enterprise to have a successful outcome.
Michelle Mason
And I’ll just add, because I think Nick hit a big point about the it roadblock, and then the AI, roadblock, those are critical things. And so when you’re coming in, please, you need to have, you know, a good understanding of how you overcome those because they will put the roadblocks up pretty quickly. Because again, if your data is king, you’re going to be very concerned about how you’re going to interface with their data. So that may be a one on one class that you need to share, Nick is how do you do that because that’s that’s where I ran into trouble bring in a valor venture firm to Exxon was they didn’t have the the IT infrastructure and understanding all the landmines that they were going to walk into with it with our IT team, senior leaders, and I just couldn’t make it happen. So that’s I would say that’s another thing that’s really paramount is to better understand how we treasure data and how we protect data.
William Leonard
Awesome! This was a great panel. I really appreciate all of your insights let’s give them a hand
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