If acquiring a startup is like marriage, then what Siemens has achieved with its Frontier Partner Program is more like speed dating. When the $86 billion German engineering giant launched the Frontier Partner Program two years ago, it hoped to lower the barriers that kept startups from easily working with Siemens.
Through Frontier, startups enter a low-commitment relationship in exchange for free Siemens software and mentorship. While the program is still in its infancy, Siemens seems pleased with the preliminary results of these relationships, and other companies are starting to take notice.
We recently spoke with two Siemens execs who’ve been instrumental in getting Frontier off the ground: Mohsen Rezayat, a founding business leader of Frontier and Chief Solutions Architect of Siemens PLM (product lifecycle management) business, based in Cincinnati, and Chenyang Xu, General Manager of Siemens Technology-to-Business Center based in Berkeley, Calif. (The Siemens PLM and Siemens TTB organizations jointly run the Frontier program.)
Collaborating with startups isn’t new for Siemens, explains Xu, explaining that its strategy has encompassed partnerships and equity investments. But these were typically one-on-one relationships that involved detailed contracts; there were about 20 new ones established each year.
With Frontier, Siemens is trying to dial up the pace, asking, in Xu’s words, “how do we drive partnership at scale? Because we’ve proven it’s valuable, it benefits both parties, but how do we go forward faster?” Frontier exposes Siemens to more companies at a faster rate, and also gives more startups access to Siemens’ resources, Xu explains.
“Being able to encourage cost-effective experimentation in new markets is really important,” adds Rezayat. “That’s why the program came about.”
Here’s how the Frontier Partner Program operates.
The Two-Page Click-Through Contract
Rezayat says before it could even launch the program, it needed to simplify the process for working with Siemens. “Typically, we’re used to partnering with much larger corporations,” he says. “It took us about six months to get it to the point where we felt comfortable that they wouldn’t go under a tremendous burden to join the program, and to make it as easy as possible.”
Siemens boiled down a licensing agreement for the program to a generic two-page click through application. “We have a multitude of products, and each of these products has its own licensing agreement,” Rezayat says. “Some of them are in the order of 37-38 pages.” Turning it into a two-page agreement “was a major undertaking.”
Siemens rolled out Frontier in October 2014 at the Inside 3D Printing trade show, with the first theme being additive manufacturing, the broader category that encompasses 3D printing. “A lot of the startups came to the [Siemens] booth and applied to the program right there and then,” he says, adding that of the 60 companies that applied, only 16 made the cut.
Since then, Siemens has introduced an open call for startups in advanced robotics, and most recently this year, industrial augmented and virtual reality. Eight companies were admitted to the Advanced Robotics program. “We’re very selective,” he says. “We interview every single company, and it’s often multiple interviews, to make sure they’re a good match for what we’re trying to do.”
Companies that meet Siemens qualifications and pass a series of interviews are granted a one-year developer license to Siemens PLM software. Siemens also mentors these startups and shows them off to many of the company’s business partners. The free software would cost thousands of dollars if the startups had to purchase it off the shelf, Rezayat says. But perhaps just as valuable is free Siemens training and support through its online Learning Advantage program.
In exchange, the startups are required to:
- Provide quarterly reports to Siemens. “These reports are basically about how they’re utilizing our software,” Rezayat says. “If they have any questions or challenges, [they let us know,] and if they have any results they want to share with us.”
- If the startups are invited to present their work for Siemens partners at a conference such as PLM World or Siemens PLM Connection, they are obliged to attend.
“Of course, they’re very much willing to sign up for that requirement, because they want to showcase their products in front of a large group of potential customers,” Rezayat says. “It’s a win-win situation for both parties. We get early insights and viability checks on not only the companies, but also the technologies. The Frontier Partners startups get added credibility because they’re in front of investors and customers. They have the channel to customers, and they have a path to revenue growth.”
A Platform to Streamline the Selection Process and Communication
One tool that Siemens uses to run Frontier is Spigit’s innovation management software. In 2013, Siemens began using Spigit’s technology for internal challenges and cross-platform programs, eventually using it as the global platform for the Frontier Program. Spigit allows the Frontier selection team to easily review, filter, and rank hundreds of startup applications, and then group the candidates with the best ideas and businesses. It’s enables us to “manage the full application cycle and website application dues and communication to startups,” Xu says.
No Strings Attached
The relationship between Frontier companies and Siemens is pretty laid back, Rezayat says, “because we want them to be free to do innovation in any direction they feel comfortable. We don’t even sign an NDA with these startups, because we just don’t want them to feel pressured in any way.”
On the flip side, Frontier companies do reach out to Siemens for help. “We’ve actually brought companies on site and had our people working with them for several days,” Rezayat says. “So, when they need us, we’re there for them, and when they get closer to the graduation, we have many more conversations as far as how they’re doing. What would they need to do to go to the next phase? Can they do a demonstration of what they’ve developed?”
What Happens after a Year…
After the one-year period is over, Siemens and the startup can decide to continue in the Frontier program, form a closer, or even quit the relationship altogether. Siemens might also opt to invest in the startup or license its technology.
“We have examples of several startups that started in 2014 [that developed technology that has] found its way into our products,” says Rezayat.
For instance, Siemens is using technology from startup Identify 3D, which provides security to prevent CAD files from being printed if they fall into the wrong hands. Meanwhile, it’s assisting nTopology, another Frontier company that has built software for building 3D lattice structures using Siemens’ software, to take its product to market, tapping into Siemens’ network of resellers. The next step for nTopology is a collaboration with Siemens and then stepping up into the Solution Partner Program, a more structured partnership mechanism, and then to continue to go to market together.
In a third case, Siemens invested in Frontier company Frustum, which creates a platform for additive manufacturing design and topology optimization.
Just How Portable is the Frontier Model?
While Frontier might work great for an engineering software company, could it work with other industries? Xu says he’s spoken with executives from several large manufacturing firms who are very interested in the Frontier model, but he allows that working with startups isn’t easy. “It’s hard to innovate very fast when we have customers globally who require high quality and high performance.”
He believes the model can be transferred to other industries, with a couple caveats:
- Be prepared to do extensive homework before launching. Siemens spent hours interviewing people outside the company, trying to create a workable program for startups. That research informed and gave rise to the two-page, greatly simplified contract. “It’s not something that we dreamed up in a closed room of Siemens people. It’s with many real-world interviews with startup partners we already work with, so we can really customize our approach in a way that’s really attractive to startups. I think that’s key.”
- Another critical element is having people at the company that have experience with partnerships and start-ups. “This is a must,” Xu says. The startup and partnership experience ensures that expectations are appropriate and attainable, Xu says. “As we begin to graduate them, it’ll attract even more [startups]. It’s very important to have experience in dealing with entrepreneurs, understanding their pain points and technology — this is a key foundation for moving this forward,” he says.