Editor’s note: Investor and entrepreneur David Gardner is founder of Cofounders Capital in Cary and is a regular contributor to WRAL TechWire. 

CARY – I’ve been meeting with a lot of local corporations this year to discuss ways they can be more involved in local startup innovation.  Frankly, I have not received the level of interest I anticipated.

Although they all say they are interested, no real concrete action items materialized – there has been limited direct investing in early stage companies; very little investing in local or regional venture funds; and not a lot of time or dollar commitments to incubators or accelerators.

This leads me to conclude that this is just not a high priority for most local corporations.

The Blockbuster lesson

I think it is time to put our local corporations on notice that no industry or company is immune to the inevitable disruption that technology and innovation will eventually rain down on it.  One day I’d like to compile a book of the shortsighted statements uttered by CEO’s such as the CEO of Blockbuster, who bragged to shareholders in 2008 that “Netflix was not even on his radar screen.”  Obviously, if it had been, then we’d all probably be watching Blockbuster Streaming Services tonight.

David Gardner, General Partner, Cofounderes Capital. Cofounders photo.

It was laughable to think that a little online book seller like Amazon would put thousands of retailers and malls out of business.  Who would have thought that AirBnB would disrupt the hospitality business or that Uber would derail the taxi industry?

I can tell you who.  Anyone involved with those startups could have.

Anyone who was aware of the technologies being built, the vision, the passion and the traction would have known, but most corporations today continue to think they can operate without having to be involved in any way with the entrepreneurial community.

The lesson is simple – ignore early stage innovation at your peril.

This may be why over half of the S&P 500 companies have disappeared in the last 15 years.     The disruptive wheels of innovation eventually come for all of us and a corporation is either riding those wheels or being run over by them.

How is it that corporations lose their ability to innovate?   I read an interesting book last month called The Founder’s Dilemma.  It took me a while to get past the first line of this book. I just kept reading it over and over.

It stated, “Success leads to complexity and complexity leads to failure.”

What’s the mission?

Large companies generate complexity quickly with tons of procedures, reporting structures and processes that can make internal disruption extremely difficult.  Before long everyone gets so focused on the inner workings of the machine that they lose sight of the fundamental purpose for which the machine was built in the first place.   When the machine becomes the mission rather than what the machine was invented to do, disruption is not far behind.

Startups have no sacred cows or fiefdoms to navigate.   They can think about the core problem without all of the complex trappings.

Amazon realized that consumers wanted stuff not stores.

Uber saw that customers didn’t care about the uniformity of their rides.   They just wanted to get from point A to B quickly and cost effectively.

In other words, startups still have the clarity to see that people don’t care about the drill…they just want the holes.

When I speak to students of entrepreneurship I am often asked where did I get the ideas for my seven startups.   I tell them to find something stupid and fix it.   Make it better, faster, easier or cheaper.  I go on to say that if you can’t find anything stupid to fix just go work for a big corporation because you are sure to find something there.

Atlanta’s example

I’ve traveled to Atlanta several times to learn about a coalition of corporations there called Engage.   It is made up of some of the most respected companies in the area such as Coca-Cola, Delta, Home Depot, Investco and Chick-fil-a.   These companies all invest in the Engage local accelerator and early stage venture fund.

These corporate leaders have regular meetings with the startup teams and pilot the technologies coming through the program.   These are companies that will continue to be around for a long time.  They will be the disruption rather than the disrupted.

I’ve had many discussions here in NC with those who lead economic development, venture funds, city chambers and entrepreneurship organizations as to why most of our corporate citizens don’t value engagement with the startup community here like those headquartered in Atlanta.

No one reason prevails but the fact is undeniable, we just don’t value early stage innovation here the way they do in places like Silicon Valley, Austin or Atlanta.

Head’s up, Triangle

I’m putting our Triangle corporations on notice.

I work with over 40 local startups every week and I can tell you that they are coming for you.   They are smart, coachable, tenacious, efficient and full of ideas.   They have a perspective on your industry that your management team probably lost the ability to see a long time ago.

Entrepreneurship is the fastest growing degree program now at most of our universities and these kids don’t want to be a cog in your machine.  They want to create the machine that will eat your machine.   They often already are the new paradigm.  I see amazing business plans and concepts every day.   Technology can do so much so quickly these days that no industry is immune.  It is just a matter of time.  The only question is…will you see it coming.

The rule of business is that whatever made you successful in the past is almost certainly not going to be the thing that will make you successful in the future.   Entrepreneurs and local investment groups desperately want the support of our local corporations.  But, if our local corporations don’t want to support local accelerators, invest in local seed funds or agree to be beta customers to explore new technologies, it’s their choice.

But keep in mind that there are other corporations outside of the Triangle that will.  We will just have to continue to scratch our heads and wonder why so many of our best and brightest entrepreneurs move their startups to other states.