Transcript: Taylor Black - Innovation Science Fund & Microsoft Incubator

Host: Hey Taylor, welcome to the show.

Guest: Hey, it's good to be here Naravaas.

Host: Uh so, we met uh, you know, because you're working at Microsoft incubator uh and you're doing a bunch of interesting things there. Um but before you know talking about that, I want to start with, you know, what was your early career like, you know, what was your education um and sort of your journey into tech uh so that you know, the audience knows where you're coming from.

Guest: Yeah, certainly. So I my journey into tech uh uh was a little bit non-traditional, I think. I never studied uh much in terms of tech.

My my academic background I I majored in um uh philosophy and history and biochem at uh undergrad with a business Honors degree. Um then I went on and got a masters in cognition theory and then went to law school.

What my LinkedIn doesn't say is that I had been a full stack programmer on the web stack uh since about high school. I was self-taught, I I've kind of wrote the building websites um when when the internet was coming out sort of thing.

Um and uh freelance programmed through all of my academic career which paid for my uh my school bills. Um and also kind of led to the inception of my first tech company uh while I was in law school, uh Fiy Fiy Media.

Um But yeah, so so I I that's kind of how I got into tech. I've always been a bit of a programmer um and uh made money doing so.

Host: Oh. So did you pass your bar and became a lawyer or are No, actually. that angle?

Guest: I did not. I uh so I did graduate um had a blast at Boston College law. Um but Fiy Media was doing well by the time I graduated. So rather than um rather than uh going the lawyer route, I continued growing Fiy.

Um, we started out as a kind of a full stack web dev agency and built websites and web apps and mobile apps for fortune everything from Fortune 500 companies all the way to small kind of Mom and Pop shops.

But as part of uh building out that agency, we got really good at um learning management systems. And so we built our own learning management system and sold that as a product um uh for a while as well.

Host: What is a learning management system?

Guest: Uh learning management, you could think of it as the back end of Cora.

Um back when we did this of course though the Cora was uh was uh not around and so the the unique piece of our learning management system was that we could instantiate each of our uh instances of our product on your own server so that you didn't have to pay licensing or recurring fee necessarily as part of that.

Um uh we we did two different models there. That lighter version was for kind of the the solopreneurs who wanted to be able to teach and uh offer and and have complete ownership of all of their curriculum.

Um who and whose margins really didn't uh allow for a whole lot of subscription fees.

And then we'd also do uh and our our bigger clients we did have subscription fees in terms of building out pieces of the platform, making it a little bit more unique for each of their use cases.

Um and uh and really the B2B side of our business is where most of our revenue came from.

Host: Oh what did you start out thinking of it as an agency or were you just, you know, picking up freelancing projects just, you know, pay college puts like you said, like uh was the plan to make it an agency?

Guest: Yeah, so we started it as an agency because we were poor students, right? So we needed uh cash flow for for food and that sort of thing.

Um, and what really turned it into an agency is that I bumped into some like-minded grad students who also had some chops in the design uh space. I I'm a back end guy. Give me a give me a command line, please. I I don't want to move pixels.

Um so when the two of us came together and had a lot of uh synergies and overlap we like, oh yeah, we should instantiate this. So we we did. We grew it to about um grew to about 15 people uh as as an agency.

Um uh all bootstrapped and it was out of that that our kind of product line came as we had a saw that we were able to do similar things for a broad swath of our clients.

Perhaps because all of us were a bit academic, we the learning management system kind of came naturally to us because we we all taught. uh we were around a lot of teachers, we worked for a lot of different academic institutions um and really understood their needs well.

Um but uh but yeah, it didn't it started as a way of like how how do we pay the bills?

Um and then we realized we actually had a product company, a nascent product company hiding inside our agency that allowed us to uh uh make money while we slept rather than uh charging just for services.

Host: Yeah. Uh so at some point you uh sold Fiy, right?

Guest: Mhm. Yep, sold it in 2014.

Host: So how many years did you run the agency?

Guest: Oh, that's a good question. I think it was about eight. And it was an interesting sale. So we we weren't venture funded, right? We bootstrapped it all the way. Yeah. Uh when we sold it in 2014, the sale was primarily a sale of assets.

So we sold off all of our client base. We sold off all of our uh intellectual property and learning management system um to two different agencies uh that that continued forward and we still have clients on our stack out there today.

Um I did keep a few around and we kept the name of the company. Uh and it's been kind of an umbrella for myself and my original founding partner to run a bunch of um uh experiments.

We've been experimenting with a with a couple of different uh small businesses. There's also it also has a fairly robust passive income stream because of a couple of the uh a couple of the things that we kept around as part of the the build.

Um But yeah, the intent was to be entirely passive because uh my my founding partner is now a professor of philosophy at Villanova and of course, I'm I'm a FTE at Microsoft. So.

Host: What was the passive stream? Like is it a product uh that you still kept or uh is a service? I'm I'm I'm assuming it's a product, right? If you're not actively running.

Guest: Yeah, actually, so what it is is it's a gigantic WordPress server farm. Um that's uh managed entirely by um uh Bash grips that we built in order to keep everything running at with a very low um low overhead and low margin.

So, uh it's it it's a funny sort of thing um because it's so low touch.

But we have we have hundreds of uh WordPress sites on there that uh we guarantee um uh really best in class sort of uptime, best in class performance and uh a really strong um uh security guarantee.

Um, and uh it ends up being very low touch because we automate all of the uh processes for managing all of that and we also are very opinionated as to what you're able to use in your WordPress site.

And uh we send out benchmarks every month for how your site's performing and they're consistently fantastic. And uh uh yeah, so it ends up being a nice sort of automated.

Host: So you are hosting product for WordPress sites?

Guest: Mhm.

Host: Is that right?

Guest: Mhm.

Host: Interesting. Uh and I can go out on today and now host my WordPress site on your uh service slash product.

Guest: We aren't taking new customers at the moment um because the onboarding takes me like three hours. Uh and that's not something I want to do at the moment. Um but it but we could open up the the floodgates again.

Right now we're just we're just using it with hundreds. I I think we have about 375 uh customers at the moment.

Um and and that's a nice number and it's a little lifestyle passive income stream and and uh it's something we could grow at some point in time, but it's not interesting enough for us to do at that at the moment.

Host: Yeah. So where do you host um these servers?

Guest: Yeah, we host it on top of a custom GCP instance.

Host: Interesting. Because WordPress is such an interesting thing in itself, right? Because It is. like I I don't know like then number of websites on the internet that run on WordPress are still about like 40% or like something crazy like that.

It is. Uh in spite of like so many no code, low code tools that come every day with unicorn valuations. I still use WordPress for all my websites because like why not?

Like I don't see any like Webflow or all these guys coming up with new stuff like I don't see any reason why to use those like when you once get into WordPress, right? Yeah. Yeah.

What do you think like why does WordPress is still sticky and it's still being used so much?

Guest: Uh it did a really good job of building a strong community around it. Um, there's a huge community of WordPress folks.

And I think uh having the the open source version of it where it was really simple to build on along with the premium side of things it just served everybody's needs and um and a lot of people could build on it.

So um I think I think those are the primary reasons. I mean it's why we got into it originally too. as a nice simple framework for that ended up being very extensible uh in a variety of ways as well.

Um are there are there better platforms out there for unique cases? Of course. But but WordPress ends up being extensible enough that you can you can do mostly whatever you need on it.

Particularly now that that uh it's uh really become a robust headless platform. So you're able to you're able to plug it into all kinds of different things in in a variety of different ways.

And the the LMS's uh has been iterated over I sorry, not the LMS, the CMS has been iterated over so many different users over, you know, decades now.

Um that that they have a they have a leg up in terms of uh the um user experience. they just know how it works because they've had 20 years of or whatever you have uh users telling them what works and what doesn't.

Host: I I have my own theory of why WordPress works so well. I think part of it is community, but part of it is with the abstraction layer at which uh it's built.

Like it's it's at the right abstraction level uh where you can deploy it on in your own server, they will give you a deployment option. Um, you can build plugins on top of it.

Um and so the abstraction level it's built on is basically allowing uh because if you remove like go up in the abstraction level a little bit or go down uh I think it wouldn't work. And that's one of the reasons why even like Shopify works.

It's basically WordPress in every sense, but just optimize it for e-commerce. Mhm. Right? Like and it's at the same real abstraction level and uh you basically abstract away the complicated parts and you give the extensible parts are right there.

And that's why I feel like Shopify works as well because it's exactly like WordPress but optimized for e-commerce. Yeah. Yeah. Um Yeah, so I I feel like the abstraction level was perfect. Like I feel the same with air table.

I don't know if you have used air table. Like that was also like a right abstraction level at which a public B2C database has to be built at. Yeah. No, that's insightful. I concur. Yeah.

Um but uh so after you sold Fiy, then uh you started working on Invention Science Fund.

Guest: Yeah, well actually there's there's a brief uh in between where I um I uh was a business intelligence consultant for you know, for a hot minute. Uh one of my clients ended up being intellectual ventures.

Um and when I rolled off of that client and moved to T-Mobile, one of the VPs of intellectual ventures came and sought me down on the basis of some of my work and he said, hey, I'm uh moving to the Invention Science Fund, which is one of the three funds of intellectual ventures and we are shifting it from a license primarily a licensing-based fund to a um uh to a venture studio.

Uh I want you to come and run operations as we build this uh thing out. Uh so I joined joined and um we uh came in, kind of uh really leaned out the their whole framework, their whole model.

Um uh went from 86 people down to 12 people um over the course of about two years as we as we built the groundwork for it. Raised a $50 million fund um and uh yeah started pushing out deep tech companies.

Um had a lot of great learnings and success there, kind of iterating through that model, um building the playbook, building the the pipeline. Um super, super interesting time.

Uh particularly at a deep tech fund, you know, about half of our staff had PhDs in in physics and we had a gigantic lab over in Bellevue uh where we were building among other things a nuclear reactor.

Um and uh uh being able to work in a venture studio with deep deep tech companies was a really powerful uh career experience for me. particularly working with the the rest of the team there.

Um just really insightful, driven uh people that that uh thrived in the the entrepreneurial mindset um with a with a strong kind of operations backbone there. So, yeah.

Host: I mean how what did you learn there or like tell me about the process of because I looked at the portfolio there and it's completely deep tech uh and sort of like invention-based uh ideas. Uh so what was the process of like capturing an invention and taking and productizing it and you know making a return out of it? Like what was the thinking process there?

Guest: Yeah. So the uh and you can read Malcolm Gladwell's take on this in a in an article where he described our invention sessions.

Um and the invention sessions are a bit of a riff on like an innovation session or an envisioning session or things along those lines where you you come up with wild ideas within a particular problem space um in a very unfettered sort of way.

Um, and the whole goal of the session is to generate as many ideas as possible. That's the sole ROI you're looking for in those sessions. Um, but there's certain conditions you set for success in those sessions.

And so the way that we ran those sessions and and I I ran uh a number of them um is that we would prepare for months ahead of time in gathering all of the materials that related to the problem space.

And by materials I mean the scientific research in a particular problem space, the uh market uh and startup landscapes of that particular problem space.

Um uh things that people had written about it, books, articles, um, you know, YouTube videos, everything uh along those lines and the goal was to um inform kind of the fermentation moment of when you're thinking about a problem.

All of these things wouldn't themselves um be a solution necessarily, but they're all the things that someone who wanted to be completely informed or as as informed impossible as possible about a set of problems, um had all of the raw material there.

We'd also do customer discovery, we'd do customer interviews to understand those pain points.

We'd bring people in um and run sessions with them where they would, you know, get deep into their own um the problems they were encountering so that everybody who is and everybody who is part of those sessions had to understand those materials uh deeply.

We'd even quiz them on occasion.

Um, it also helped that uh Bill Gates um whatever he came to those sessions, he would have all of those materials like completely grocked and so you you know you didn't needed to have them grocked too so that you didn't, you know, uh lose face in front of Bill, but um uh but a key so we we'd get everybody all of those materials and have them go through them uh a good month or so before the actual sessions happened.

Um, that gave everybody an even playing field in terms of, you know, I may be a physicist, I may be a Bizdev person, I may be um an attorney, I may be uh you know, a program manager, but I have all of the same raw material and my own perspective on it that I can bring to these sessions.

The sessions themselves then, um were set around particular problem spaces and we'd start we'd start each um session and and there's a variety of different kinds of sessions that we ran um uh with a lot of provocations, a lot of conversation, a lot of like wild thinking and posted notes and whiteboards of just dumping ideas out uh that had occurred to people or occurred in conversation or happened in the in the hallway outside.

Um and we get all those ideas down, documenting everything. If it wasn't documented, it didn't happen, right? Um and then everybody would go away.

Uh sometimes we'd run those innovation sessions, you know, three days in a row and sometimes they'd be long, you know, 9-hour days, sometimes they'd be, you know, short hour and a half or three-hour sessions it depended on the context.

Um but we'd have a number of people who who were observers of the sessions who didn't uh participate in the sessions themselves who would take everything down. We'd record everything.

We would uh take um pictures or copies of of any notes that people wrote down as part of that and really gather all the possible material and ideas that we could out of all of those sessions.

Um not only for patent reasons, the attorneys some of the people gathering all these notes were attorneys in the room who were there in order to ensure that we had, you know the necessary information if a patent was to come out of those sessions.

Um But also for being able to triage. So we take all of that, uh turn each of those little ideas into an object in our database uh that I built out of Salesforce. Um and we'd run those ideas through our triage mechanisms.

Our triage mechanisms came out it from three different uh perspectives.

One was the uh pure science perspective of uh you know, is are there uh things that um are there is this technically feasible uh and and what would be the experiments that we'd run against that to determine whether it is.

Um there was kind of of the customer business side of things where is sure we might be able to make a self-drying t-shirt, but is the market worth, you know, large enough there? Do the customers really want that?

Um which is another layer of set of experiments that we'd be running against these ideas to move them forward uh to to potential prototypes. Um And then the third was uh uh kind of ensuring that it was within our um uh our funds mandate.

You know, we we have a thesis at that fund that we we are inventing technologies that were, you know, intended to dent the world. Um that was the goal of this particular uh accelerator.

And so we we came across a lot of great ideas that probably could have been, you know, great $10 million companies, but they wouldn't have served the thesis of our particular um endeavor.

And so that was our triage process and everything moved forward on the basis of experiments.

Host: You mentioned Bill Gates in the meeting who I mean, I love the idea that you can have some crazy people in one room just grocking out of ideas and see what comes and that to like and with an intention of being prepared.

Um uh but you mentioned Bill Gates was there in that meeting. Who else was there in that meeting?

And uh I presume because usually an accelerator program there's a set of criteria you bring in people and they're sort of working on ideas and making progress. Uh so you seem to have a different approach here. Like who were all in that meeting?

Like Guest: Yeah, the the who was in the room varied. Uh there was always outside people, people who weren't part of the fund. But there were also some of the core uh team members from the from the fund.

Um but the list was very curated on what we were hoping to get out of that particular session.

Um it was vital that everybody came prepared with all of the materials, but also it was vital that they had some sort of perspective on the customer problems to be covered.

Um and so we'd invite, you know, we'd invite Nobel laureates, uh we'd invite scientists from universities. We'd invite um uh you know, business people who had worked in that particular space.

We'd invite um occasionally, you know, we'd even invite uh kind of uh graduate students who were you know, approaching the problem from a different way. Um, who came to the sessions it varied quite a bit.

Now, uh Bill G and Nathan Myrvold and a couple of our other kind of really prolific inventors, um who would come uh they would come Bill G was the primary investor in uh in intellectual ventures uh because of his great relationship with Nathan Myrvold, of course.

Um, and he'd come to some of these too because they're a lot of fun.

He's a really brilliant guy and uh he would often set up some of the sets of problems that he wanted covered and and we would uh you know, in some ways were we're an R&D extension of uh Bill Melinda Gates Foundation.

Um Uh, so yeah, I I uh he he particularly participated early on in the fund in funds one and funds two in particular and some of the ideas we're we're still driving forward in fund three from those uh fund fund sessions as well.

Um Uh and the later the later invention sessions that we ran uh tended to bounce around to different specific places around the world uh where they had a particular expertise in, you know, in like architect materials or or something along those lines.

Um But yeah, the the whoever was in the uh the meeting uh it depended on on the things that we were hoping to invent.

Host: So was uh meeting structured around a particular topic? Like, you know, we have and you mentioned like building a nuclear reactor, like so uh you're bringing along people who are all doing research in that one particular topic, students, academicians, you know, anyone.

Guest: Yeah, although the problems Yes, although the problems sets ended up generally being framed from a problem sets sort of perspective. So, you know, our initial sessions would be something along lines of um uh energy. Energy is a problem.

What are our ways of solving energy in a in a in a climate friendly way? Uh, you know, in a globe friendly way.

Um and it kind of we'd start at those higher white space levels and get to like, well, here we've done the burn down on all of these different possibilities. Um what things need to be true for some of these things to happen.

And so those those high level uh would start at started at that level and then we'd triage down to, it's looking like nuclear is something that we need to solve.

Um adjacent to that actually was we in those energy sessions in particular, we realized that we needed to solve the United States grid.

Even if you had all of the power that you needed right now, the United States grid wouldn't be able to transport it in ways that it need that it needs to be able to uh for that to happen.

Um and so a lot of different kinds of well framed problems would come out of the white space and you continuing narrowing down until you were able to solution against a set of problems in a helpful way.

Um and uh that was part of the that's part of the the the iteration of it. Um But we didn't want to constrain things to begin with and say like, oh, nuclear power is a way to go.

Um we had to come to that through the idea the ideation session so that we could we could approach things from the customer problem standpoint.

Host: So the idea is in the session you're looking at alternatives for whether it's nuclear that works as a solution solar or something else that works as a solution and pros and cons, you're debating that and you're coming to a conclusion like, hey, this is looking more reasonable from different angles and then let's do research more on this and see if we can make something work.

Guest: Exactly. Exactly. Um so what are some of the successful sort of ideas, companies, projects that came out of you know this process.

Guest: Mhm. Yeah, we had a we had a fundamental technology breakthrough in um the meta material space. Um Meta materials are materials that can be architected to have properties not found in nature.

Um and so out of our fundamental Meta materials breakthrough came a number of different companies. Um and they're entertainingly, they're more or less broken up by where they fall on the um on the uh radio frequency spectrum.

Um so you could have a company per uh bandwidth. Um and they would all be doing different things. So, we had a company that uh uh is able to beam power. Um we had a company that's able to beam uh cell signal.

We have a company that's able to beam um you know when you walk go to the airport and you walk through the scanning machine.

Host: Yeah.

Guest: It's able to do that scan uh at scale. In fact, the last dream force I went to in 2019, uh big Salesforce conference that takes over all of San Francisco, they were using uh our scanner technology uh for all of the sessions there.

It's it's uh uh it's incredibly fast and and very efficient. Um My favorite company in that space actually is one called Mangata Networks. Mangata Networks is a competitor to Starlink. Um and they have both a terrestrial and a satellite constellation.

Um really in in my mind is two separate unicorns as part of the same company. Um and they're utilizing this beaming technology to reduce the infrastructure cost of having a terrestrial and satellite network.

Um as a really interesting competition move to Starlink. They're able to because of where they're able to place their satellites in orbit.

Um they need a dramatically fewer number of them uh utilizing this beaming technology which gives them uh better performance than satellites that that are closer um to earth that you actually need more of.

Um Yeah, so there's there's there's a number of technologies in that space. The nuclear one, uh just last year raised a $750 million round and they are uh nearing uh some really interesting tests with the state of Wyoming.

Um the the nuclear reactor one that they've just what they the way they approach that is that they they started by building a supercomputer that could model every electron within uh a variety of different existing nuclear reactors.

Uh nuclear reactor technology. On the basis of that, they were able to invent a new way of doing nuclear uh reactors um called the traveling wave reactor. Um The uh nuclear reactors default state is solid. So there's never any meltdown concerns.

It's an incredibly safe way of doing uh nuclear reacting. Additionally, it doesn't require enriched fuel to do the kind of nuclear reacting that it does.

Host: Power?

Guest: Yeah, this is Terra power, yep. Um it's a really interesting model there.

Um Yeah, yeah, and there's a couple others that we uh uh that would have potentially made good companies uh but we didn't end up launching them or we wound them down uh shortly after launch.

Um uh for portfolio reasons, which is an interesting perspective, you know, like uh part of you as an entrepreneur wants all of the ideas to go thrive. Um and sometimes that means killing ones that could have been uh good companies.

Um but didn't uh necessarily fit the the uh the way the portfolio was shaping up or how how much runway was left in the fund or a variety of different factors there that all end up being, you know, very human uh human factors, but um but those technologies can still be licensed from intellectual ventures if they if you needed to take that forward as a a way of, you know, uh helping human flourishing.

Um but uh yeah, yeah, that was kind of.

Host: So you if if there was a technology breakthrough uh is the intellectual property belonging intellectual ventures or the fund or what was the combination there?

Guest: Yeah. Um everything's owned by the fund until it spins out as a series A. At the series A mark that's that's when we launched our um our incubations. Um Uh and then it was uh generally owned, sometimes licensed.

Um in the case of the Meta materials technology, for example, uh the Mothership owned all of the patents and licensed out different uh pieces of the spectrum to all of the different startups so that they didn't have to uh negotiate that amongst themselves, you know.

Um But uh yeah, that's that's generally how it worked.

Host: So, I mean, this sounds to be one of the most interesting jobs you can do in the world. Uh and then you decided not to do it and move to Microsoft. Uh how did that happen and uh what was the decision there?

Guest: Yeah, well, uh part of the decision was made for me. We opted not to raise a fourth fund. There were and there's two reasons for that.

One is um uh raising for a deep tech fund during the pandemic ended up being very complicated and difficult. Um deep tech funds uh are hard to raise for in the first place. Yeah.

And when you're not able to do that in person, um that raises the bar in terms of difficulty.

Um and so we were we were about ready to really go on the road show for raising, you know, 150 million, $250 million fund on the basis of the success of the small $50 million fund that we did as fund three. Um and the pandemic hit right at that point.

So we had a little bit of capital left in the $50 million fund, but not enough to hold our breath for two years.

Additionally, um there were because the fund had originated as more of a licensing-based endeavor, there were some structural fundamental structural things that made it uh that gave us kind of an administrative tax for launching companies outside of the fund.

And so between those two things, we and the fund leadership opted not to raise a fourth fund.

Um and uh my last 6 to 9 months at at the invention science fund were primarily packaging up all of the remaining uh proper intellectual property and and potential startups, um and preparing the whole fund to go into carry mode. Um go ahead.

Host: I thought you moved away not being a lawyer and you ended up doing This is this is a thing actually the the law degree ends up being a little superpower I have in my back pocket. Yeah.

Uh because the in startup work, whether it's licensing, whether it's cutting deals, whether it's formation, whether it's equity grants, there's a whole lot of legal work that goes into a lot of that. So, um yeah.

Yeah, so and then uh so I started looking for a new gig. Um while I was still at the fund and wrapping things up, um I met my now boss Andrea Harrison. Turns out that they were trying to build a venture studio in the office of the CTO.

Um, they had just gotten permission in December. I met her in January or February. Um and came on in April. Um uh about three days after I left uh intellectual ventures. Um Yeah, intellectual ventures that fund uh went on to wrap up.

Um there's it's now in full carry mode. There's nobody who's actually an employee of that fund right now. Um and uh and they're all off uh doing doing other things.

Most of them actually went with some of the startups that we were launching at that point in time. So.

Host: So um describe you know what you're doing right now uh with Microsoft incubator and what is it? And like how do you look at like what is the goal uh you know when you're building inside, you know, a company like Microsoft.

Guest: Yeah, so I I yeah, I'll I'll describe this. also as part of my description, I'm going to articulate some of the reasons why I believe this is the case. They aren't necessarily the reasons that all of my uh program believes are the case.

Um uh but I I also don't think that the many of my teammates would disagree with these pieces. But um so we we're building a venture studio here in the office of the CTO. And what that means is that uh it does two different things.

First is a zero to one motion, which is where we take ideas and um uh lots of ideas, thousands of ideas. Um run it through a triage process, similar to the one that I uh articulated earlier, although shaped for the Microsoft context and culture.

Um uh those ideas that move forward on the basis of, you know, working through our our our customer conversations on the basis of uh ascertaining technical feasibility. Um we prototype out.

Those prototypes uh, you know, out of the thousands of ideas, we come up with hundreds of prototypes. Again, we drive those through customer validation. Um and the ones that uh are interesting enough uh we pitch to our investment committee.

Um Now, we don't do all of that ideation, we don't do all of that prototyping. that's often done by teams across Microsoft who have a great idea. Um maybe they're even doing it as part of their day job for for their business unit.

Um but for whatever reason, uh the business unit isn't interested in funding it. Maybe it's not uh something that actually fits on their roadmap.

Um and so they come to us because what our uh what the incubation studio does is that we um uh find help grow and incubate new big businesses for Microsoft.

The intent is that anything coming through our program is something that isn't being done currently across the company and that it will generate a new business unit once it launches from our program. So, so all these ideas come to us.

You uh we work with you in order to kind of get it to the seed stage pitch level where we bring it in front of our investment committee.

That usually involves a, you know, a robust pitch deck, about six months worth of work in building out what that whole business uh rationale, product rationale, customer rationale looks like.

Um and developing all of the usual collateral that you would see uh as part of a series seed um deck.

The investment committee says yay or nay and uh it uh uh if they say yes, then uh that project gets funded in dollars and head count and given a certain amount of runway and certain milestones they need to meet in order for their next uh funding rounds.

Um that's the second half of the incubator.

Uh that's the accelerator motion whereas we have we have enough there that there's a seed of an idea and now we're taking and it probably hasn't found product market fit yet, but there's a we can smell product market fit.

Um and that's the one to 100 motion. Now that there's enough of there there we're going to pour some resources on it and and grow it in a fast, lean startup uh model way. Um to be a new big business for Microsoft.

Now, why did we start this inside of Microsoft? This is I think there's three reasons. One is uh it's great to have big new businesses.

You know, Microsoft is a fantastic company and does fantastic work on all of its different uh product lines and different uh you know, businesses and it's an incredibly diversified company.

Um but if you're, you know, going to make a company resilient for the longer term, it's important to be thinking uh out five, seven years as to what what should exist. what where is there a uh where is there going to be a market that Microsoft should play in at some point in time.

And so it ends up being kind of a a bit of a moonshot factory on that score. Um Second, it's to build out a sustainable model for doing this inside the enterprise.

Um there are a lot of different organizations across Microsoft who do this in in uh uh important um more Horizon 1 and Horizon 2 focused ways.

Um but there's something that shifts when you go to Horizon 3 where you have to think about the holistic business model as well. That's not necessarily the case when you're working at an incubator inside of um uh inside of an existing product

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