In their respective industries, General Motors and CNN are those types of legacy companies that don’t need an explanation. But their respective industries–automotive and media–are among the two that are most ripe for what the tech world loves to call disruption.
Companies like Uber and Car2Go have sprung up in recent years to send car-ownership numbers on a downhill slope, and more people are getting their news from Facebook and Twitter, rather than tuning into traditional outlets.
GM and CNN, though, know that they are not immune to these forces. So rather than try to fight the startup-ization of their industries, they’re joining in. During a panel at the Fast Company Innovation Festival at the end of October, Julia Steyn, GM’s vice president of urban mobility, and Andrew Morse, executive vice president of CNN U.S., explained how and why they launched startup-like ventures within the walls of their companies.
At GM, Steyn heads up Maven, a car-sharing startup that allows people who own GM cars to rent them out–either by the hour or the day–for a 60% cut of the total cost of the rental. The model, which roughly mimics the “Airbnb for cars” idea also used by companies like Turo, could enable members to pull in hundreds (or sometimes thousands) of dollars a year. It could also solve one of the chief problems people have with owning a car, says Steyn: Its lack of value when you’re not actually driving it.
“People live differently now,” she says. “They want to eliminate waste out of their life.” Why should a car sit idle in a garage, when instead, someone else could be using it? “The trend is to have access, not ownership.” GM had seen this coming for a while. They knew that declining interest in ownership would damage their chief revenue stream–people buying cars–so they, through Maven, got out in front and added another layer of utility (and revenue for GM) onto their vehicles. It seems to be working: Maven is now operating in 10 cities, with plans to expand to more.
CNN’s approach, necessarily, looks different, but was similarly developed in response to changing industry tides. The news outlet knew that it did one thing very well, and that was straight news. But at the same time, outlets like BuzzFeed and Vice were eating up views and clicks with a different type of video, one that might be tied to news and current events, but based more around narrative and storytelling–and consequently, more shareable. “We felt there was a need for something else,” Morse says.
CNN experimented with the format and realized that while it fell flat for people who regularly checked its website, once they uploaded the videos to Facebook, they found an audience. So in 2015, the media company decided to run with an idea that Morse had: Develop a separate media venture, focused on video storytelling, that would be owned by CNN but at the same time, totally separate. “We didn’t want to bend the CNN brand into something it wasn’t,” Morse says. Great Big Story, as its new venture was called, allows CNN to reach the same millennial audience that Buzzfeed and Vice were reaching, while continuing to do what it did well before.
A common statistic people love to toss around when talking about tech is that 90% of startups fail. This is very true, but startups that grow within big companies like GM and CNN do not face the same vulnerabilities that their free-range competitors do. For one thing, Morse says, “We’ve been able to lean on the mothership for legal support,” and critically, funding.
Some of that funding famously went into into CNN’s acquisition of Beme, the app and video started by online video star Casey Neistat. The $25 million investment—aimed at building an independently operated online news show and a core part of the network for a younger demographic—didn’t pan out as hoped: 14 months later, CNN shuttered the company. In an interview with Buzzfeed News, Neistat cited creative differences and a sluggish process.
Morse told the Innovation Festival audience said the costly misstep was the result of the lack of a clear mission, a reflection, perhaps, of the difficulties of acquiring a fully formed company versus building one up in-house.
Companies like GM and CNN are profitable enough to be able to launch and support independent ventures, and doing so, Steyn and Morse believe, will ultimately benefit them. “If you’re standing still right now, you’re going to die,” Morse says.
Steyn agrees. “Every company and every industry will have to evolve,” she says. By making space within the organizations for smaller, startup-like ventures to grow, CNN and GM are essentially trying to future-proof themselves. There’s no reason, Steyn and Morse feel, for other large legacy companies not to take a similar approach and create something new.