Flight or faceplant? Why American Airlines is trying to win over early stage founders

By Carmel DeAmicis , written on May 14, 2014

From The News Desk

It’s a little disconcerting to see a big, stodgy, nearly-hundred-year-old airline that's not exactly famous for innovation lurking on the fringes of a small startup industry event in San Francisco. But that's exactly what greeted the attendees of VentureScape 2014.

Proudly rocking blue tea cozies and pens, American Airlines was one of only a few sponsor tables for the attending founders and VCs. Although AA wouldn't be out of place at, say, SXSW, VentureScape 2014 is a far more insider-y tech event, without the chance for a business to imprint its brand on thousands of passersby.

So why the hell was AA there?

The airline flew in 80 entrepreneurs from around the country for investor office hours at the National Venture Capital Association’s annual meeting, VentureScape 2014. The founders came from Houston, Pittsburgh, Long Island, and everywhere in between, enjoying the free startup travel grant from AA.

It’s part of American Airlines’ larger efforts to seed loyalty with its brand in early stage startups. According to AA analyst Hunter Johnson, AA launched these efforts — called “Innovators Initiative” — a year and a half ago with a three-pronged effort. Startups can apply to get free full-page advertising in AA’s in-flight magazine, AA sponsors travel grants to specific industry events like the VentureScape 2014, and AA will consider testing or purchasing airline specific products from B2B companies.

Although corporations like GE and Cisco are known to do exactly that -- trying to ingratiate themselves with entrepreneurs at early stages in the process -- an old airline attempting the same is a little unusual.

But AA, like many other institutions across the country, has seen the rumblings of activity and the flush of cash flooding the startup sector. And, like many other businesses, it’s wondering how it can get its hands on some. For American Airlines specifically, it’s hoping it can win over potentially huge business customers when they’re still itty-bitty startups. Feed candy to babies, in the hopes that when they grow up they like AA more than its rivals.

It’s one more example of big corporate behemoths sitting up and taking notice of Silicon Valley. As we’ve written about, there’s a shift of power from traditional financial and governmental institutions, many of them located on the East Coast, out to the tech world. In turn, tech groups are trying to impact other realms, whether it’s through well-funded immigration lobbying efforts or buying up old, prestigious journalism publications. It’s not a one way shift either. Anyone not in tech wants a piece of the action and potential profits too. From corporations like Pearson and McGraw-Hill running accelerators for startups to to the White House sponsoring a hackathon.

AA isn’t alone in this regard, it’s just perhaps one of the stodgier entrants to the market.

The airline might want to think through its strategy on this one though. Offering up a free coach ride to an event isn’t the same as wooing the hearts and minds of startup founders.

I spoke with several entrepreneurs who were less-than-pleased with their free AA experience. A few had their flights cancelled at the last minute due to weather. They said they knew it wasn’t AA’s fault, but it didn’t particularly endear them to the company either.

Another felt a little more positively, saying his experience was a “try before you buy” scheme. He would never have considered American Airlines prior to the experience because of how terrible and old the planes are, but since he got this free ride he saw that they’ve upgraded some of their planes to much cushier, lush amenities.

Most importantly, all the early-stage founders I spoke with that AA flew out said if their company succeeded and scaled, they wouldn’t automatically choose AA because of the prior free perks. “I’m not stupid,” one told me. “I’d compare all the airline packages and pick the best deal.”

Of course it’s hardly a financial burden for American Airlines to stick entrepreneurs in unfilled seats from time to time and give them free advertising in AA magazine. For them, it’s a tiny investment in the off chance they wind up winning over the next Elon Musk.

[Photo by Jose Carlos Medau]