Seen&Heard at Vivatech 2017: the Accor way of working with start-ups.

The second Vivatech edition took place in Paris last week, and was a smashing success. There was a great blend of large corporates and start-ups, conferences and demos, networking opportunities and even some chill-out spaces. Vivatech has quickly become a "must" for anyone interested in tech innovation. 

I was very curious to hear how large groups approach the external acquisition of innovation, i.e. partnership with, or acquisition of, start-ups. Most academic research of this field is focused on the acquisition of patents or key engineers. And yet, this innovation cycle is somewhat different: many acquirers seem to believe that just having start-uppers on site will help them magically transform their businesses. 

My experience as an investor, as well as advisor to both large groups and start-ups, is that a heavy dose of trust, expertise and luck is necessary to make the most of a start-up partnership / acquisition. 

During one of the Vivatech sessions, Accor CEO (and former Colony Capital chief) Sébastien Bazin told us that the France-based hotel group recognised it had missed the Booking and Airbnb revolutions. Accor now wants to partner with start-ups where it can, offering them money and visibility. But make no mistake: they clearly are on the lookout for acquisitions. In Bazin's words: "I don't want [the start-up we partner with] to grow at my expense. If it's growing, I want more of it". 

Having a clear ownership strategy is, in my view, the first step. Too many large groups embark in start-up deals without really knowing why they do it. Sometimes, they don't communicate to founders that the end game is a total acquisition. This usually backfires some time down the line. 

The second step is to clearly define the boundaries between the core business and the start-up, in cases other than full integration. 

Concierge service John Paul's CEO David Amsellem is testimony to it. John Paul got acquired last year by Accor, which is trying to diversify revenue and tap into fast growth. John Paul remains distinct from Accor, thus allowing it to keep its agility. The key word is "autonomy", not integration or independence. 

Interestingly enough, David Amsellem made the case that in becoming an SME (according to press releases, his company had reached the €50M mark when Accor acquired it), John Paul was gradually losing its flexibility. I guess it is still deemed very entrepreneurial by Accor executives. 

Other positive points I see in Accor's start-up strategy are: 

• Recognising that entrepreneurship is usually linked to share ownership (David Amsellem apparently kept 20% of his company's capital, at least for now)
• Setting up a separate team to evaluate start-ups, which provides a clear point of contact within such a large group
• Emphasising internally that external ideas need to be heeded and respected. The NIH (Not Invented Here) syndrome must be put to an end
• Being aware that they need to put in place different incentive schemes for the start-uppers who join the group. This has not yet been cracked by Accor, however