Tech Startups: Anatomy of a good idea


Starting out as a tech startup founder or an internal innovator is an exciting time. Optimism—and lots of it—is required and can be one of your greatest allies and a key ingredient for building build momentum, however, blind optimism can also be your downfall if your idea is flawed, to begin with. The best founders are skeptical optimists, they see future success but know that they need to mitigate a number of potential reasons for failure, reasons that they have yet to uncover.

The best founders do not want to spend weeks, months, and even years of their life before failing due to a fundamental flaw with their idea.


Given the high failure rate of new tech startups, founders should spend some time evaluating their idea and understanding what it takes to develop it, and then refine it into a great idea.

The purpose of this post if to help you do just that.

Let’s get started,

My definition of an “idea” encompasses the following things:

Is it people centric and easy to explain?

Explaining your idea in terms of people is fundamental yet often difficult for founders, especially technical founders. You need to be able to explain your idea to a non-technical person AND have them understand it. Try it with you Mom or your son or daughter or another non-work related acquaintance. Success here does not mean they love or even like your idea, it’s that they understand it without you having to keep explaining it to them. Try using this framework below.


Is there a big business opportunity if you are successful?

If you are successful do you have an idea of how many people will want your product?  How much will they be willing to pay for it?, and how easy or hard will it be for you to find them?

Check out this awesome framework below created by Christof Janz to understand the different ways to build a $100M business.

The y-axis shows the average revenue per account (ARPA) per year. In the x-axis you can see how many customers you need, for a given ARPA, to get to $100 million in annual revenues. Both axes use a logarithmic scale.

Is the business defensible

Most startups think about first mover advantage but the smart ones think about last mover advantage: how are you going to hold on to your customers over time? As Peter Thiel outlines in his talk Competition is for losers, at Stanford in 2015. There are four different ways that you can create long-term differentiation, to be successful you need to differentiate in at least one way.

  1. Propriety technology
  2. Network effects
  3. Economies of scale
  4. Brand

In the past few years in the world of B2B SaaS, we have reached a tipping point. The landscape is severely crowded. So crowded, in fact, that In every category imaginable there are hundreds — if not thousands — of companies competing for the attention of the same audience. In this post you’ll learn why brand is so critical in B2B SaaS, alongside how you can build a brand that will stand the test of time.

Do you have a good answer on timing i.e. why now not two years ago and not two years from now?

Timing is often said to be the most critical aspect to your success or failure as a technology startup founder, if you are skeptical about this claim be sure to check out this video from Bill Gross.  To mitigate against this risk you will need to get evidence that users will adopt your solution. What are the key tech & market trends that make NOW the perfect time?

Are you scratching your own itch if not, do you have access to the people with the problem you plan to solve


A lot of successful tech companies started with founders solving their own personal problem (e.g Apple, Google, Facebook, and recently Slack). If you are not solving your own problem that is ok, as long as you can access early users to help you define and refine your solution.

Your idea is in a vertical of strategic interest for your company – Internal Innovators Only

Startup founders can approach investors that have an interested, connection for a particular industry. Internal innovators only have one investor and provider of resources so it is critical that the Internal Innovators get an agreement of funding and resources to develop their business idea which may or may not involve a spin out of the business.

You will be spending years of your life working on this idea so it is good to think long-term before you jump in, and once you jump in you now know how you can evolve your idea over time.


How we are building innovation from the inside

Nick O’Connor, the founder of Venture Toolkit and the Innovator’s Program, discusses how he founded Venture Toolkit to create programs that customers love.  To read his early startup experience, click here.

Building Programs that people love

Three years ago I had the opportunity to help SanDisk create its own innovation ecosystem, thanks to the help from innovation thinkers, Steve Blank and Colm Lysaght. The SanDisk Business Accelerator was a cohort accelerator program focused on customer development for early stage internal teams in Milpitas, CA.  It was a modest beginning with five internal innovation teams working part-time for three months with the goal of getting enough evidence to convince the SanDisk Exec. management team to provide funding for them to go full-time.

Over the past three years, I have completed twelve cohort based accelerators programs sponsored by companies such as: Ericsson, AT&T, Red Hat, Citrix, Cisco, and Tata Telecom; for 80 teams, 42 startups, and 38 internal innovation teams with some very promising outcomes so far.

Three types of programs have emerged:

  • Internal innovation teams only e.g SanDisk, Tata Telecommunications via RocketSpace, Ericsson and AT&T
  • External startups only e.g Cisco LaunchPad Bangalore
  • Both Internal and external startup in the same program e.g Citrix & Red Hat. Also know as, the Innovators Program

Our results so far

On the startup side we now have ten funded startups (~$1M), four acquisitions by companies like Citrix, PTC, and Facebook, many bootstrapped and profitable startups. We are also proud that we have helped a number of startup founders get enough evidence within a few weeks to either shut down or pivot their startup.

Savii Care – Funded startup in Raleigh

On the internal innovation side, we have experienced the full catastrophe of the good, the bad, and the downright ugly. On the positive side, we have a number of internal new businesses and a spinout. On the not so good side, we had one particular painful learning curve when a team did an amazing job and built a compelling solution that their customers loved, in a market that was ready to take off, but the parent company decided that it did not fit into their strategic objectives. Needless to say, the internal team founders were not too thrilled with this outcome. Early on, we also had a number of internal team founders who had impressive technical skills but not much passion or curiosity for their customers. This is something that we now filter for upfront.

Most importantly, I have had the opportunity to provide an apprenticeship to over 200 startup/internal innovation founders as they start their entrepreneurial journey. I also got to work with executives and innovation leaders who really believe that long-term company growth can only be achieved by developing their top talent to create new business.

Convoi – Internal Innovation Team at Citrix

Over the course of twelve programs, the lessons have been immense. We measure the impact of every workshop and on every session on founding team’s ability to make meaningful progress. This resulted in a lot of changes in our recruiting process and how we operate the program. We will not be happy until we have built something that our customers (founders and innovation leaders alike) really love!

We are now in the middle of program #13 with eight startups sponsored by Cisco in Bangalore and it is really exciting to see that this is the best program we’ve run in India so far, and we plan to kick off program #14 in Raleigh with three startups and three internal innovation teams sponsored by Citrix and RedHat in mid-July.

Changing big companies

Most “big companies” are struggling for growth right now and if not, they are certainly concerned about their capacity for long-term growth. As new technologies and business models emerge, the possibility of disruption is an inevitable reality. The business landscape has changed. It’s no longer about the big fish competing with each other, but with armies of startups going after a company’s individual products and services.  A surge of emerging startups are threatening big banks like Wells Fargo, and logistics companies like Fedex, are disrupting the automobile industry, even the Apple iOs isn’t safe.

With startup’s valuations soaring, acquisitions are becoming less effective while partnerships are complex to set up and often fail. Developing one’s internal talent to innovate is quickly becoming the most effective strategy for long term growth.

Essentially, big companies need to learn how to develop two new competencies:
  • How to effectively engage with startup via partnerships
  • How to create their your own army of internal innovators to build up their immunity to external disruption.

Big companies need to disrupt themselves before someone else does but first they need to develop their own innovation “muscle.” Executives need to be willing to carve out resources to develop their top talent so they can engage with current and future customers to develop new products needed for long-term growth.

Big companies are now in the process of adjusting to this new world; some have already failed and many more will follow. The successful big companies will emerge with a different look. Exactly what they will look like is not clear yet. Some early patterns of success are founder-led technologies companies like Amazon, Google, Facebook, and previously, Apple. Another example has emerged with SAP, who recently announced, a strategic investment model for both internal teams & external startups.

Venture Toolkit is delivering programs for companies, like Cisco, to partner successfully with startups. We developed the Innovators program to help companies like Citrix and Red Hat innovate, by creating an ecosystem of internal & external innovators around their companies in Raleigh, Santa Barbara, Bangalore, and Silicon Valley.

We certainly live in interesting times and it is truly exciting to be helping shape the next wave of innovation around the globe. Join the wave of innovation today, and find out more about how Venture Toolkit can help you create win-win partnerships with startups and high growth businesses by starting with more than a good product, but one that your customer will love.