Lessons From Incubators

Marty Cagan examines what business incubators, from independent startup accelerators to corporate labs like HP Labs and Yahoo's Brickhouse, teach about turning product ideas into successful companies or products. He explains that incubators both choose where to invest and support the product discovery process, which makes their lessons relevant to product portfolio planning. The core message is that incubators work best when they make discovery fast and cheap, expect pivots, keep the founding team intact through productization, and avoid excess funding. Cagan argues incubators deserve serious consideration, and suggests larger companies make incubator-style support available to teams inside their business units rather than spinning off separate entities.

01Key takeaways

• Design incubation support around making product discovery as fast and effective as possible for small teams.
• Expect your initial product idea to change and treat pivots as useful learning rather than failure.
• Keep the team that discovers an idea involved in building it, since separating innovation from productization usually fails.
• Avoid over-funding early teams; limited resources create urgency and build good habits.
• Use experienced mentors or advisors to access expertise a young team would not otherwise have.
• In larger companies, offer incubator-style services to teams inside business units instead of creating separate entities.

02Key sections

How incubators work

Incubators trade a stake in a startup for facilities, modest funding, and access to experienced people across product, design, engineering, and business functions. The spectrum runs from independent incubators to VC entrepreneur-in-residence programs and corporate innovation labs.

Cagan's own experience with corporate labs

Cagan describes his early career at HP Labs, which incubated ideas and transferred the best ones to product divisions, and notes that some everyday products came from such labs.

Making discovery efficient

Small teams get access to designers, prototypers, real users, and mentors so they can learn quickly. Incubators treat discovery as the central activity they are there to improve.

Embracing pivots and avoiding excess money

Initial ideas are expected to change, so fast experiments and pivots are welcomed. Too much money or time is seen as harmful, since frugality creates urgency and healthy habits.

Continuity and advisors

The founding team should stay together to productize the idea, since splitting innovation and productization often fails. Incubator leaders also act as valuable advisors.

03From the post

“A partnership dedicated to teaching best practices to product teams and product leaders”

04Frameworks mentioned

Summary and takeaways written by PM Atlas; quotes are short excerpts. © the original author.