Investment of a credible company on a startup in the value chain domain is one of the best investment models. Because the current resources of the company and the startup capacities in the future provide the basis for the growth of both entities. Neglecting this interactive approach in the country's entrepreneurship ecosystem led us to explore the experiences of this area. So far, we have reviewed some successful foreign and domestic examples, and this time we are going to share the experiences of a manufacturing company with you. We are talking about this with Amir Banayinejad, the executive director.
What is the area activity of CAN? What is the background?
“CAN” was founded 36 years ago by my father and his partner, Mr. Qurani. These two are literally two entrepreneurs who start up without prior experience and without great capital and with relying on their insight and interest and, most importantly, they experience a variety of things with perseverance and effort. Gathering different experiences together and sparking the possibility of producing hoods in Iran have changed the lives of these two entrepreneurs forever. At that time, the hood was not manufactured in Iran and naturally was not available to the general public. There wasn’t even a good understanding of it. Hood production starts with one or two a day until we currently produce more than 2000 different products daily. CAN’s basket of products has grown steadily bigger and more complete over the past 36 years, and we now produce, in addition to the hood, stove, oven and kitchen sink.
What structure do you have for innovation? Have you used open innovation capacities?
Due to good consultants like Dr. Kamran Bagheri who we have been honored to work with for a long time, these issues have become a priority for the collection. We have a small engineering team with a large proportion of our organization and have tried to solve our problems in different ways by connecting with experts and bring out external solutions to the company. Some of these ideas have made it possible to produce new in-house products for CAN, and in some cases we even started a new company to produce another product. We've worked with other methods of Crowdsourcing and the Boomerang innovation service network, but so far we haven't had the desired results that probably the definition of our problem was wrong. However, we want to try these ways again and certainly will have a better result next time.
Why did you decide to invest in a startup? Why Hoom start up?
Given that we are a well-known brand in the domestic products market and have a good market share, we decided to enter the new and emerging fields according to the mission of the organization. Because both the business model has changed and we can have more of an impact with our good manufacturing experience. So we look for new ideas and seek to cover each other's strengths and weaknesses so that we can add more value.
The CAN team is a great team and this size has made us a bit sluggish and has made it difficult for us to be able to quickly identify opportunities like startups. Therefore, we decided to take advantage of an agile starter team alongside ourselves, and at the same time be alongside it and help in the production, engineering, supply chain and sales. Given the fact that we are producing our core capability (although we have experience in sales, supply, and the rest of the value chain, but because providing the production facilities is highly capital-intensive) So we looked for startups that had a major need for "production".
Eventually, participating in an event that was in Dmond's accelerator and about the Internet of Things, made us familiar with Hoom team. There were two other startups from Hard-tech accelerator, that Hoom was one of them. A friendship took place at the ceremony. We got to know each other and eventually led to investment and we are so happy about it.
What challenges did you have in interacting with startups?
There are so many challenges, but perhaps one of the main challenges is that startups need to wait and that the investor are not usually patient. Our shareholders and experienced entrepreneurs usually evaluate startups with an early look, and this usually questions their justification of profitability. We are trying to introduce shareholders to a new perspective that does not consider profitability as a top priority, but also an image of how startups are impacting uneconomical areas. Our priority is to build a future in which CAN can play a key role.
Another challenge is the presence of the startup team at the company's premises. Indeed, the challenge is the difference between our organizational culture and the startup team’s culture. The meaning of the cultural difference is the difference in age, in interests, even the working time, which we had tried to justify both parties in these matters. However, of course, both sides understand each other and come up together. The good thing about Hoom was that we had a team from an accelerator, which meant that it was much better than a junior startup team. Many of the things that were at the beginning of investing or talking to a young startup team were resolved at this point. For example, the investor team asks for a start-up financial statement, business plan, and so on. Startup does not care much about it, but it does not come up with it, but the presence in the accelerator has led the teams to prepare them, and facilitated our cooperation.
An important challenge is the value debate that makes the process of negotiation and investment harder. This is a two-way issue, considering that the start-up team values its own ideas very much and on the other hand, the company's investment team has a high value for the experience and facilities that is given to the startup team.
What are the positive points of this interaction?
One of the positive points is the transfer of their working culture. For example, our system does not value excessive work until late, and employees are not encouraged for this, but the start-up system assumes that since it is your own business, it is worth the effort of up to 12 at midnight, and we hope that this culture of “Belonging the work to ourselves” is also transferred to our organization's employees.
The next thing we hope to find useful is that other by-products that come from the startup team's work may be useful to us. However, the Internet of Things is the future of home facilities, and we hope to be able to use guys' knowledge about this, and that is to say, their science overflow will make a difference to our products.
Would you like to invite another large company to invest in this field?
It's really too early to suggest, because our experience has not yet been completed. So far based on my experience, I can suggest avoid investing in this area if short-term profit is expected. But if they think of it as a medium to long term investment, the answer is yes. Of course, one of the reasons for our investment is the interest. We love to build .So far, it was a kind of home appliance, but maybe this is the kind of team building and future. This is what makes us interested in working in this field. We are very pleased to be able to provide a place for people who can grow. It is inspiring to help a few people to build something together that none of us could do alone.
What is your next step in interacting with Hoom? Do you have a plan of joint venture with other companies?
Deciding to do this is not by us alone, and the team members themselves must take part in making decisions. However, the next step is to interact with a foreign investor bringing not only capital but also the global sales network. In other words, the first phase of the challenge of the team is the production and launch of the business and the next phase is sales, because we really do not look to sell in Iran. Of course, our first goal is to sell in Iran, but domestic sales are not convincing for us at all. We believe that our products in the world can sell well, so we would like to cooperate with an investor who brings his sales network with him.