Amir Ben-Efraim's cybersecurity startup Menlo Security was only a year old when he reached out to JPMorgan Chase, telling it how the 30-employee Menlo could help it deal with malware and phishing attacks.
Within a couple of weeks, Menlo was in discussions with the heads of cyberengineering at JPMorgan, talking about what types of controls and other specifications would need to be in place before the megabank could test Menlo's technology.
Such rapid response from a big company is rare, said Ben-Efraim, a 20-year veteran of the cybersecurity industry.
"Sometimes the process of just getting to the right person can take several months," Ben-Efraim said in a recent interview. "Someone who can help cut through the clutter and navigate you to the right person or persons who have the problem you're trying to solve is difficult to find."
That's where Larry Feinsmith, the head of global technology strategy, innovation and partnerships for JPMorgan comes in. Part gatekeeper, part sherpa, it is Feinsmith's job to connect the company with emerging technology firms as part of CEO Jamie Dimon's vision to make JPMorgan more innovative.
Feinsmith and his colleagues spend their days talking with founders of startups, investigating new companies, consulting with tech leaders across JPMorgan, meeting with larger tech providers and checking on the progress of various projects.
JPMorgan has long been a leader in deploying new technology, Feinsmith said, but his job, which he started in 2008, is part of larger push to encourage collaboration among far-flung parts of the company.
"We've evolved our engagement model to be more horizontal, enabling us to be more innovative. We are engaging with Silicon Valley in a more structured fashion," Feinsmith said. "We also realize that it can be difficult to navigate a large organization, and so [this strategy] should make us feel more efficient, nimble and accessible."
Besides the daily interactions, Feinsmith and his team have created two major networking events. In mid-September it held its eighth annual technology symposium at the Rosewood Hotel in Menlo Park, Calif. The companion event is its innovation forum, held each November in New York.
The symposium is JPM's chance to talk to high-tech officials. A crowd of representatives from startups and venture capital firms hear what the company wants from people like Dana Deasy, JPMorgan's chief information officer, as well as the other global tech leaders from the various parts of the company. Feinsmith serves as master of ceremonies.
"Get to know these people on a first-name basis," he said to the crowd, referring to his tech colleagues.
At the event, the executives laid out the firmwide priorities for the coming year and beyond, including its goals to lead in payments technology, continue to invest in data and analytics, strengthen security and streamline itself.
The event is an example of how JPMorgan has built a relationship with Silicon Valley officials, said Tom Reilly, the CEO of
"I love that summit because they are not saying what they need today, but two to three years from now," Reilly said. "You have probably 100 venture-backed firms listening to the requirements and with [JPMorgan's] $9 billion budget on IT, that's the target market you want to satisfy."
The event also includes the bank's hall of innovation awards; Cloudera was inducted in 2010, while Menlo entered it this year.
Meanwhile, the innovation forum gives two dozen startups the opportunity to pitch ideas to JPMorgan. Observers say that the company's effort to make it easier for startups to work with it is a good idea given the traditional constraints at banks.
"No big bank is going to be able to go at it alone, given all the regulatory and legal requirements they have to meet. Those things slow the process and potential to innovate," said Jacob Jegher, senior vice president of banking at Javelin Strategy & Research. "So, they all have to consider, 'How can I leapfrog this through an acquisition or partner? What technology or solutions will get me closer to the finish line?' "
Jegher added that banks are attacking the problem in different ways – they are partnering, creating venture arms and building innovation labs. All are good as a strategy, but none is enough on its own.
"Ultimately for them to be successful they'll need multiple models," Jegher said.
Of course, there is a natural gap between startups and a company with nearly 250,000 employees, including 40,000 who focus on technology, such as programmers, systems engineers and application designers and analysts.
Startup executives say working with a company like JPMorgan is essentially a high-stakes gamble. Engaging with JPMorgan is going to take up a lot of their limited resources, but landing a marquee client can make their business.
"They are a demanding customer; you have to work very hard to satisfy their requirements, but if you can satisfy their requirements you can work with anyone – [telephone companies], the largest retailers," Reilly at Cloudera said. "They push you hard, but that is helping you build a complete product."
Ben-Efraim echoed Reilly's comments. When the company laid out everything Menlo Security would need to do in order to proceed with the technology, he had to consider his options. This would be "mountain of work" for a young company, and there was no guarantee JPMorgan would use it, Ben-Afraim said.
"We would be spending a lot of time fine-tuning without any definitive end in mind," Ben-Afraim said. "So I reached back out and asked, 'If we are going to do this, will you use it?' and I got a strong commitment. … I highlight that because that's not the way it works elsewhere. You don't get that level of dialogue normally."
During the symposium in September, Feinsmith warned the audience of the rigor that would be involved in partnerships.
"Especially in a regulated environment, engaging with emerging tech companies is a more thoughtful process where we can educate them about the required types of controls as well as critical enterprise features like ability to scale, security, resiliency – the types of things you have to satisfy in order to work with us," he said in an interview.
Jeffrey Reitman, a principal at Nyca Partners, one of the most active venture firms in the financial services space, said banks in general have to learn to work with emerging companies, too.
"For instance, banks can drag you through 50 meetings before doing anything. For a startup, it could deplete all of its capital during that time," Reitman said. "Interacting with startups is different; maybe all you need are three very focused meetings."
While much of Feinsmith's work revolves around enterprise technology, fintech is also part of his job as it becomes a bigger part of JPMorgan's approach. For instance, this year the company has
"We are enamored with the pace [fintech companies] can innovate, and they are enamored with our huge customer base and significant regulatory awareness," Feinsmith said. "There is a large role for us to play in the fintech space. Many of these fintechs have valuable assets. We are open to partnering or even investing in some cases."
The partnership with TrueCar, whose app helps car shoppers compare prices, is particularly interesting because JPMorgan is essentially disrupting itself by funneling possible direct loan customers to dealerships.
JPMorgan "is really taking an innovative approach to lending with this partnership. They wanted to rethink the customer experience," said Bernie Brenner, TrueCar's chief strategy officer.
Brenner said the companies had had casual conversations about a partnership for a few years, but those talks accelerated in the last year and a half as JPMorgan decided to rethink its approach.
"When you're dealing with a company as large as [JPMorgan], the question is always, 'What's your priority?' … So you have conversations. You can't force it; it is not a sales effort," Brenner said.
