Sarah Guo’s Post

Companies can avoid retention traps by recognizing that internal startups within large organizations don't equate to actual startups. These setups often serve more as a means to retain talent rather than fostering genuine innovation or entrepreneurial success. It's crucial for companies to create environments that genuinely support innovation and entrepreneurial spirit, rather than merely mimicking the startup model.

I've heard this a ton of times at Inception Studio. I ask people if they have any startup experience and they say, "Well, I worked on this project at (Amazon/Meta/Google/etc.) and they ran it internally like a startup..." No. Not the same. Not remotely the same. Not to say that the experience is not valuable, but it is very naive to assert that working on one of these "internal startups" has anything to do with the experience of an actual startup founder.

I think Walmart’s Store8 startups would disagree. And they are wildly successful at creating solutions for Walmart that are markedly better than those from “startups” on the outside (hence why Walmart started the program).

I’ve said it before: if you have job stability for more than 6 months, you’re probably not a startup. Obviously needs a grain of salt. But the startup life has existential risk. Tiger teams inside bigco don’t.

Ahhh, so much to unpack in those simple words 😀 1. What do we mean by startup? Is it incubating brand new products or new products that are adjacent/complementary to the parent company's products? Because that could work and that does work. The main issue is how do you fold the new products back into the mainstream company and how do you incent the sales team to actually sell the new products. That's where most "incubated" products fail. 2. Are the "startup" employees compensated as employees of the parent co. or are they incented with options, etc, like a startup. Double-edged sword if the latter. If you want all the benefits of a startup inside the parent co, you have to accept the risk/reward equation: if the "startup" fails, you're out of a job 😮 . I've had that exact conversation with people. 3. What is the arrangement in case the "startup" is successful? Spin-off, "acquisition"? Other? I'll stop here. This feels like a separate article in the making 😁

“Intraprenueur” is one of my generalized disqualification criteria

Have to slightly disagree with you on this one. I was the first GM at Palo Alto Networks and launched Prisma (SASE+CNAPP) and we ran it exactly like a startup within the big company. Nikesh created what he called “speedboats” to unleash the power of fast moving, high growth businesses and it worked extremely well. I had full autonomy, my own P&L, execs, engineering and dev etc. the only shared service we used was IT and CorpDev. I would agree with you that the high majority of startups within a big company do not work for a myriad of different reasons but in Palo’s case with both Prisma and Cortex, it worked extremely well. But I will also tell you it takes a tremendous amount of work and there are so many issues and details that have to be nailed down successfully to make it work. One big one is you need a CEO that knows what they are doing in this area and is completely bought into it. Guess we were the outlier.

My perspective, working for both start-ups and corporate start-ups, is that it is not the same. It is very different, but there are similarities. The main differences I have seen are incentive alignment, the pace of tech development and iteration, the ability to attract talent from the outside, and the risks involved.  A corporate start-up is a project within a company, often based on a need they have identified in their day-to-day operations, and then they want to build technology to solve for this problem. Failure here does not equal death, nor is there a financial upside that can change your life forever. Typically, it attracts a different type of professional. Despite these differences, certain foundational tasks are universal. Building a new product, trying to find product market fit, figuring out CAC and LTV, and convincing new customers to try something new - These activities are the same, in my experience. I would also say that a corporate start-up is something in between corporate and a real start-up, so it can be a proving ground for some to see if they really like to build and get their hands dirty.  I personally found both experiences incredibly valuable but I would never say they are the same

I agree - there's nothing more motivating to solve hard problems than having no backup plan