Startups, Meet Big Business: My Walk And Talk with Bradley Horowitz, VP at Google about building a Corporate Incubator:

Here’s a short summary of my chat with Bradley from the prehype podcast. Check out the episode here!

How can big businesses build new businesses?

This was my big question going into my chat with Bradley Horowitz. If you don’t know him, this should explain why he’s the ultimate resource: Bradley’s not only a vice president at Google and creator of Area 120, Google’s corporate incubator program — he’s also the founder Brickhouse, an early corporate incubator that existed within Yahoo.

In this Walk and Talk, we discuss the rise and fall of Brickhouse, business lifespan and the importance of honing in your talent, and the advantages to building small businesses within larger ones.

We covered a lot of ground (literally and figuratively — we even popped inside Starbucks Reserve incredible new flagship), but here are six takeaways not to miss.

Again — you can listen to the episode here!

Bradley’s early entrepreneur learning: beg for forgiveness as opposed to ask for permission.

Before he started Brickhouse within Yahoo around 2004, Bradley founded a company Virage, which gave him a foundation for what it means to build a business from the ground up. Which turns out, requires a steadfast DIY spirit.

“So much of what I draw upon in a corporate setting is really informed by being an entrepreneur and understanding that journey. A lot of it is the do-it-yourself ethic,” he said. “In corporate settings, a lot of times people get too dependent, and they start to atrophy because there’s so much infrastructure.”

When he got to Yahoo and quickly got thirsty for that devil-may-care pace, he pitched Brickhouse — a corporate incubator for Yahoo — and they were receptive.

“Brickhouse was nothing more than ‘Let’s get a space where we can assemble a bunch of trusted known quantity resources, and then get out of their way,’” he said. “We really empowered people to do things at startup speed, but with the resources of a big company behind them.”

Incubating ideas can prepare companies for their second act.

Bradley and I spoke about how the lifespan of products and companies change, and how corporate incubators provide a way of thinking that could help a company recalibrate the value and place of their product or service. While Brickhouse suffered not because of the ideas created but because of a complicated time in Yahoo’s history, knowing what’s next for any business is still vital for survival — and having dedicated teams in place can help.

“Any given innovation, say page rank in a search engine, is going to have a life span. And hopefully that’s a long lifespan and a great lifespan, but the half-life is shortening all the time,” Bradley said. “So I think it’s imperative that companies figure out what their second act is, and where they go from here. And the best companies are going to have a vision for that, as opposed to milking that one idea until its conclusion.”

A benefit to having a corporate incubator? Eliminating the friction that comes with M&A.

As you can imagine, Google is pretty streamlined at M&A — but there’s also a good amount of tension, cost and culture shock that comes with bringing an outside company in. Bradley discussed how he uses the tools and resources that work well for Google’s M&A process, and applies them to Area 120.

“We are very good at acquisitions at Google,” he said. “We’re really good at bringing companies in, spinning them up at Google and getting them productive, so part of what I’ve done is leverage those tracks, so that when we build something and want to reintegrate it, we do it through the same process as M&A.”

He explained that you can think about companies within Area 120 like M&A, but with a bunch of advantages.

“First of all, it’s cheaper, but I think more importantly, we build them right the first time,” he said. “It’s like a startup who decided on day zero that they want to be acquired through Google, and every decision is seen through that lens.”

Plus, everyone building is already a Googler, so the cultural shock is behind them too.

“I want to still let Google acquire dozens of companies each year, but 2, 3, 4 of those will be things that we build in a bespoke fashion, and can reintegrate back into Google with much less cost and friction,” he said.

Appreciate a diversity of skills.

Bradley spoke to the importance of opening up to a wider skill set when incubating a business, especially in a climate where stakeholders and investors are only looking for ventures that can squeeze a large margin out of the company.

“The same people who are really good at squeezing another 10% out of a business are not the ones who are going to create breakthrough technology that is exponential in its growth,” he said. “They’re different skill sets, different processes…To actually create an environment and reward structure and culture for each of those to thrive is really important.”

Area 120 at Google was born out of this question: is there a way to have all the benefits of being at Google — the infrastructure, the talent, the data — but act like a startup in terms of our ability to execute quickly?

*Cue a bunch of Googlers excitedly nodding their heads*

Yep. Bradley chatted about the origin of Area 120, and how it was inspired by the same mission of Brickhouse, but with a new-and-improved shiny Google badge.

“We do a bunch of speed networking and help founders meet each other, so that when they apply, they apply not only with a great idea, but with a great team already assembled,” he said. “We run it in cohorts like Y Combinator, so they come in and we give them a boot camp and training, but mostly, we empower them and trust them.”

He then leaves it up to the talent.

“We say ‘Okay, it’s up to you now, the keys to Google are yours, what do you need’? And we act like a board and advisors and give them six months to prove a product market fit. At the end of that time, there’s usually two outcomes: it’s clearly working, this team is rocking and we fund them, or they have figured out that either the team hasn’t gelled or the idea’s time isn’t right.”

Don’t forget: corporate incubating is difficult. Like, really difficult.

I asked Bradley point-blank why he thinks being an entrepreneur is hard. His answer? It just is. Go figure. He talked about how, for every successful entrepreneur journey, there are 10,000 businesses that failed and melted into the background noise of the process.

“I just think this is hard work. Whether it’s at a company or whether it’s out in the wild, it’s very hard to have the perfect product and timing and culture and ingredients that lead to a durable, meaningful company,” he said.

If you’ve ever asked yourself, “I wonder what it’s like to head up a corporate incubator program at one of the largest companies in the world,” now you know. Again, here’s the full episode of the podcast.

AND… If you are interested in more about how companies can build new businesses then you might enjoy my upcoming book “The Acorn Method” — You can read more about it here