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#55: What is the insurance against Innovation Dilemma?

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In this episode Nataraj spoke to Taylor Black who co-founded Fizzy Inc. Post Fizzy Taylor worked at Innovation Science Fund & currently works as a Principal Product Manager at the Office of the CTO Incubator at Microsoft.

Full Transcript:

[00:00:00] Nataraj: To me it always made sense for large

companies to have some kind of incubator or accelerator model because one of

the reasons I think we are seeing in this bear cycle, sort of like when the

wave sort of, you know, falls down, you see who’s naked scenario.

[00:00:17] Nataraj: Um, I think any company which

survives multi decades has to have multiple large businesses. Mm-hmm. . I think

in a lot of ways, I mean, looking back, a lot of companies didn’t, uh, look for

long-term opportunities as much as they should. Like we can talk about like,

uh, Amazon, you know, putting billion dollars into their phone, but I would

argue the potential on the upside of suckers was so high they should have put

in, you know, one more billion and tried the next version.

[00:00:50] Nataraj: Mm-hmm. . Mm-hmm. , uh, and I. , like

argue the same with Facebook in a sense. Like now they’re doing this metaverse

thing. [00:01:00] Um, and sort of again

retreating that back now. But I feel like even Facebook with all its cash flow,

uh, didn’t really think, um, because they always self constrained themselves to

be a social company.

[00:01:14] Nataraj: Um, like I think that’s sort of like

a self-imposed mental model on themselves. Mm-hmm. , like, uh, I would not

impose themselves like a social company. Yeah. You work good at Facebook and

WhatsApp, but I mean, look at how many great technologies that came out from

Facebook, open source community and like putting that social as a blanket on

your company.

[00:01:34] Nataraj: I think. Set a backstage for all

these technologies, which could be, you know, productionized and, you know,

capitalized. Mm-hmm. . Right. Uh, that’s, I feel like a lot of companies,

especially the large companies, are with very good cash flow sort of mixed out

on business opportunities because of that reason.

[00:01:50] Nataraj: That’s my personal view on like, , a

lot of companies could have it if it is well run. Mm-hmm. . Um, and should have

it because of this reason. Right? Mm-hmm. , it’s sort of [00:02:00] like you are the innovation dilemma that

you’ll encounter at some point as a large company, and you have to have a sort

of a backup backstopping mechanism to that innovation dilemma, which every

company will eventually face.

[00:02:12] Nataraj: Mm-hmm. , um, So I feel like the

innovation, uh, accelerator or the incubator would sort of act as that, uh, you

know, that part of small investment, it’s sort of like an insurance to the, uh,

to innovation dyna that you would eventually encounter anyways, uh,

[00:02:28] Taylor: , I think you’re right.

[00:02:28] Taylor: There’s a, there’s an inherent problem

there too, though, is that, um, uh, innovation is inherently a yo low yield. .

Um, and so within, and it’s my kind of rule of thumb, that within two or three

years of any program like ours existence, um, finance is gonna come and say,

where’s the revenue? Where’s the roi? And if you don’t have a data driven way

of showing your, your anticipated revenue, your anticipated ROI on the basis of

your activities, then uh, [00:03:00] it’s entirely

legitimate that you get.

[00:03:02] Taylor: There’s a, there’s a, there’s data

driven ways of showing that the whole venture ecosystem depends on the fact

that you’re able to show future revenue on the basis of what you’re doing now.

Uh, that’s how you raise funds, right? Um, and so every, uh, innovation program

inside an enterprise has to have that same data-driven hygiene.

For full conversation check out Episode 53.

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