Three Jobs of the Innovation Colony 1. Generate Innovation Flow 2. Spin-Out Promising Ideas 3. Spin-In Proven Businesses
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Three Jobs of the Innovation Colony
1. Generate Innovation Flow
2. Spin-Out Promising Ideas
3. Spin-In Proven Businesses
1. INNOVATION FLOW
FACT #1 1 in 10 Venture Capital investments pays for
the other 9
FACT #2 1 in 1000 YCombinator
investments is worth more than all others combined
Success requires a huge sample size of ideas
to choose from
Enterprises have the people
They need the entrepreneurial energy
This is how Intuit fosters innovation flow…
#1 Education
Employees need training to deal with uncertainty and
use Lean methods
#1 Education
Not just a few, a critical mass (30%), so the culture
will change
#1 Education
Intuit runs regular bootcamps to teach Lean
and brainstorming
#1 Education
In 8 months, 100 teams participated & generated
$20M in new revenue
#1 Education
#2 Opportunity
Unstructured Time shields employees to think
outside the box
#2 Opportunity
Innovation Challenges engage the whole company & make disruption a sport
#2 Opportunity
#3 Rewards
Innovation Vacation rewards employees for
testing new ideas
#3 Rewards
The Founder’s Award is for employees who create new (significant) business lines
#3 Rewards
It’s a 7-figure package, so they don’t have to leave to
have an “exit strategy”
#3 Rewards
2. SPIN-OUT
Once we have enough ideas
Spin-out most promising teams
Shield them from corporate anti-bodies
Bring in outside talent and expertise (if needed)
Maintain ownership & control w/ preferred shares & board seats
Most will fail
But a few will mature into incredible opportunities
3. SPIN-IN
After they prove the product and have customers
When most of the uncertainty is gone
We acquire the remaining shares in the business
1. P/M Fit!
2. Corp Dev
Corp. Dev. does this all the time
Big win for the innovators!
Even bigger win for us.
Let’s put it in perspective
According to YCombinator, all disruptive innovations
follow this pattern
The Startup Curve
BeforeStartup
Source: Paul Graham; avc.com
Time
Hap
pine
ss
The Startup Curve
BeforeStartup
Source: Paul Graham; avc.com
Time
Hap
pine
ssThe Startup Curve
InitialEnthusiasm
BeforeStartup
Source: Paul Graham; avc.com
Time
Hap
pine
ss
The Startup Curve
BeforeStartup
Source: Paul Graham; avc.com
Time
Hap
pine
ssThe Startup Curve
InitialEnthusiasm
BeforeStartup
Source: Paul Graham; avc.com
Time
Hap
pine
ssThe Startup Curve
InitialEnthusiasm
Reality Sets In
BeforeStartup
Source: Paul Graham; avc.com
Time
Hap
pine
ssThe Startup Curve
InitialEnthusiasm
Reality Sets In
BeforeStartup
Source: Paul Graham; avc.com
Time
Hap
pine
ss
The Startup Curve
BeforeStartup
Source: Paul Graham; avc.com
Time
Hap
pine
ssThe Startup Curve
InitialEnthusiasm
BeforeStartup
Source: Paul Graham; avc.com
Time
Hap
pine
ssThe Startup Curve
InitialEnthusiasm
Reality Sets In
BeforeStartup
Source: Paul Graham; avc.com
Time
Hap
pine
ssThe Startup Curve
InitialEnthusiasm
Reality Sets In
TROUGH OF SORROW
BeforeStartup
Experimenting & Pivoting
Source: Paul Graham; avc.com
Time
Hap
pine
ss
The Startup Curve
BeforeStartup
Source: Paul Graham; avc.com
Time
Hap
pine
ssThe Startup Curve
InitialEnthusiasm
BeforeStartup
Source: Paul Graham; avc.com
Time
Hap
pine
ssThe Startup Curve
InitialEnthusiasm
Reality Sets In
BeforeStartup
Source: Paul Graham; avc.com
Time
Hap
pine
ssThe Startup Curve
InitialEnthusiasm
Reality Sets In
TROUGH OF SORROW
BeforeStartup
Experimenting & Pivoting
Source: Paul Graham; avc.com
Time
Hap
pine
ssThe Startup Curve
InitialEnthusiasm
Reality Sets In
TROUGH OF SORROW
BeforeStartup
Starts Working
Experimenting & Pivoting
Source: Paul Graham; avc.com
Time
Hap
pine
ss
The Startup Curve
BeforeStartup
Source: Paul Graham; avc.com
Time
Hap
pine
ssThe Startup Curve
InitialEnthusiasm
BeforeStartup
Source: Paul Graham; avc.com
Time
Hap
pine
ssThe Startup Curve
InitialEnthusiasm
Reality Sets In
BeforeStartup
Source: Paul Graham; avc.com
Time
Hap
pine
ssThe Startup Curve
InitialEnthusiasm
Reality Sets In
TROUGH OF SORROW
BeforeStartup
Experimenting & Pivoting
Source: Paul Graham; avc.com
Time
Hap
pine
ssThe Startup Curve
InitialEnthusiasm
Reality Sets In
TROUGH OF SORROW
BeforeStartup
Starts Working
Experimenting & Pivoting
Source: Paul Graham; avc.com
Time
Hap
pine
ssThe Startup Curve
InitialEnthusiasm
Reality Sets In
TROUGH OF SORROW
BeforeStartup
Product/Market Fit!
Starts Working
Experimenting & Pivoting
Source: Paul Graham; avc.com
Time
Hap
pine
ssThe Startup Curve
InitialEnthusiasm
Reality Sets In
TROUGH OF SORROW
BeforeStartup
Product/Market Fit!
Scale
Starts Working
Experimenting & Pivoting
Source: Paul Graham; avc.com
Time
Hap
pine
ss
The Trough of Sorrow is the hardest part
Most startups fail here because they can’t find
customers
Corporate bureaucracy kills the agility startups need
to pivot and survive
Without bureaucracy, less than 5% make it to
Product / Market Fit
But a single win creates enormous wealth
How the Innovation Colony maps to this process
The Startup Curve
BeforeStartup
Source: Paul Graham; avc.com
Time
Hap
pine
ssThe Startup Curve
InitialEnthusiasm
BeforeStartup
Source: Paul Graham; avc.com
Time
Hap
pine
ssInnovation ColonyInnovation Colony
The Startup Curve
BeforeStartup
Source: Paul Graham; avc.com
Time
Hap
pine
ssThe Startup Curve
InitialEnthusiasm
BeforeStartup
Source: Paul Graham; avc.com
Time
Hap
pine
ssInnovation ColonyInnovation Colony
Generate Innovation Flow
Education, Opportunity, and Rewards
To get a big sample size
The Startup Curve
BeforeStartup
Source: Paul Graham; avc.com
Time
Hap
pine
ssThe Startup Curve
InitialEnthusiasm
BeforeStartup
Source: Paul Graham; avc.com
Time
Hap
pine
ssThe Startup Curve
InitialEnthusiasm
Reality Sets In
BeforeStartup
Source: Paul Graham; avc.com
Time
Hap
pine
ssThe Startup Curve
InitialEnthusiasm
Reality Sets In
TROUGH OF SORROW
BeforeStartup
Experimenting & Pivoting
Source: Paul Graham; avc.com
Time
Hap
pine
ssThe Startup Curve
InitialEnthusiasm
Reality Sets In
TROUGH OF SORROW
BeforeStartup
Starts Working
Experimenting & Pivoting
Source: Paul Graham; avc.com
Time
Hap
pine
ssInnovation ColonyInnovation Colony
In. Flow
The Startup Curve
BeforeStartup
Source: Paul Graham; avc.com
Time
Hap
pine
ssThe Startup Curve
InitialEnthusiasm
BeforeStartup
Source: Paul Graham; avc.com
Time
Hap
pine
ssThe Startup Curve
InitialEnthusiasm
Reality Sets In
BeforeStartup
Source: Paul Graham; avc.com
Time
Hap
pine
ssThe Startup Curve
InitialEnthusiasm
Reality Sets In
TROUGH OF SORROW
BeforeStartup
Experimenting & Pivoting
Source: Paul Graham; avc.com
Time
Hap
pine
ssThe Startup Curve
InitialEnthusiasm
Reality Sets In
TROUGH OF SORROW
BeforeStartup
Starts Working
Experimenting & Pivoting
Source: Paul Graham; avc.com
Time
Hap
pine
ssInnovation ColonyInnovation Colony
In. Flow Spin-Out
Let innovators take the risk
Independence = Agility to Survive
The Startup Curve
BeforeStartup
Source: Paul Graham; avc.com
Time
Hap
pine
ssThe Startup Curve
InitialEnthusiasm
BeforeStartup
Source: Paul Graham; avc.com
Time
Hap
pine
ssThe Startup Curve
InitialEnthusiasm
Reality Sets In
BeforeStartup
Source: Paul Graham; avc.com
Time
Hap
pine
ssThe Startup Curve
InitialEnthusiasm
Reality Sets In
TROUGH OF SORROW
BeforeStartup
Experimenting & Pivoting
Source: Paul Graham; avc.com
Time
Hap
pine
ssThe Startup Curve
InitialEnthusiasm
Reality Sets In
TROUGH OF SORROW
BeforeStartup
Starts Working
Experimenting & Pivoting
Source: Paul Graham; avc.com
Time
Hap
pine
ssThe Startup Curve
InitialEnthusiasm
Reality Sets In
TROUGH OF SORROW
BeforeStartup
Product/Market Fit!
Starts Working
Experimenting & Pivoting
Source: Paul Graham; avc.com
Time
Hap
pine
ss
InitialEnthusiasm
Reality Sets In
TROUGH OF SORROW
BeforeStartup
Product/Market Fit!
Scale
Starts Working
Experimenting & Pivoting
Source: Paul Graham; avc.com
Time
Innovation ColonyInnovation Colony
In. Flow Spin-Out
The Startup Curve
BeforeStartup
Source: Paul Graham; avc.com
Time
Hap
pine
ssThe Startup Curve
InitialEnthusiasm
BeforeStartup
Source: Paul Graham; avc.com
Time
Hap
pine
ssThe Startup Curve
InitialEnthusiasm
Reality Sets In
BeforeStartup
Source: Paul Graham; avc.com
Time
Hap
pine
ssThe Startup Curve
InitialEnthusiasm
Reality Sets In
TROUGH OF SORROW
BeforeStartup
Experimenting & Pivoting
Source: Paul Graham; avc.com
Time
Hap
pine
ssThe Startup Curve
InitialEnthusiasm
Reality Sets In
TROUGH OF SORROW
BeforeStartup
Starts Working
Experimenting & Pivoting
Source: Paul Graham; avc.com
Time
Hap
pine
ssThe Startup Curve
InitialEnthusiasm
Reality Sets In
TROUGH OF SORROW
BeforeStartup
Product/Market Fit!
Starts Working
Experimenting & Pivoting
Source: Paul Graham; avc.com
Time
Hap
pine
ss
InitialEnthusiasm
Reality Sets In
TROUGH OF SORROW
BeforeStartup
Product/Market Fit!
Scale
Starts Working
Experimenting & Pivoting
Source: Paul Graham; avc.com
Time
Innovation Colony
In. Flow Spin-Out Spin-In
Bring them back in for the good part
When our resources can be used to scale the business
When the product is proven
The Startup Curve
BeforeStartup
Source: Paul Graham; avc.com
Time
Hap
pine
ssThe Startup Curve
InitialEnthusiasm
BeforeStartup
Source: Paul Graham; avc.com
Time
Hap
pine
ssThe Startup Curve
InitialEnthusiasm
Reality Sets In
BeforeStartup
Source: Paul Graham; avc.com
Time
Hap
pine
ssThe Startup Curve
InitialEnthusiasm
Reality Sets In
TROUGH OF SORROW
BeforeStartup
Experimenting & Pivoting
Source: Paul Graham; avc.com
Time
Hap
pine
ssThe Startup Curve
InitialEnthusiasm
Reality Sets In
TROUGH OF SORROW
BeforeStartup
Starts Working
Experimenting & Pivoting
Source: Paul Graham; avc.com
Time
Hap
pine
ssThe Startup Curve
InitialEnthusiasm
Reality Sets In
TROUGH OF SORROW
BeforeStartup
Product/Market Fit!
Starts Working
Experimenting & Pivoting
Source: Paul Graham; avc.com
Time
Hap
pine
ss
InitialEnthusiasm
Reality Sets In
TROUGH OF SORROW
BeforeStartup
Product/Market Fit!
Scale
Starts Working
Experimenting & Pivoting
Source: Paul Graham; avc.com
Time
Innovation Colony
In. Flow Spin-Out Spin-In
“Actionable insights that will allow any successful enterprise to continue to innovate in today’s fast-
changing environment.”
Brad Smith, CEO of Intuit
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