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3 Lessons That Pokemon Go Can Teach Us About Internal Startups

At least 30 people were in this park with me playing Pokemon Go on a Sunday afternoon.

If you have smartphone, young kids or have visited a public park in the last week then chances are you’ve seen people playing Pokemon Go. Its rise has been meteoric and is about to surpass Twitter for Daily Active Users.

But what can we learn from Niantic Labs, who only until last fall was an internal startup at Google?

  1. Internal Startups can still be successfully spun out from their corporate parents. Granted this spin out was shortly after Google’s transformation into Alphabet, but it is a big deal. This is a big deal because the stigma around internal startups (and corporate innovation in general) is that it is where startups go to die, not to be born. It’s important to note that they’ve not let Intellectual Property Rights (IPR) prevent this spin out from occurring. Many Internal Startups end up in custody battles over IPR and are never successfully spun out. Niantic Labs has shown us all that this is still possible.
  2. After Internal Startups spin out of a corporation, they can still raise funding from the ex-parent corporation and others. Niantic Labs raised from Google, but also The Pokemon Company and Nintendo. Raising after you spin out is not an easy task to say the least. At times there can be animosity with the ex-parent corporation, which results in them not investing because of emotional issues. Even if you can successfully raise from the ex-parent corporation, then it may mean you cannot raise from anyone else. The perspective from outside investors is that there is a “latent conflict of interest” with regards to the loyalties of the newly spun out startup. Niantic Labs navigated this all very well.
  3. Internal Startups can still launch Minimum Viable Products (MVP’s) while being part of the corporation. Back on April 1st in 2014, Google ran an April Fool’s Joke that allowed you to find Pokemon on Google Maps. Niantic Labs was the developer behind the joke. The rapid adoption and usage of the joke, combined with the learning from the integration was the epiphany for today’s Pokemon Go. Far too often corporate leadership doesn’t want to risk damaging the brand to release an MVP, even if the upside in learning is huge. They’d rather play it safe and not risk the bad press. Google addressed this by launching it as an April Fool’s Joke while capturing analytics on the experiment.

With Ingress and now Pokemon Go, Niantic Labs has proven that as an Internal Startup you can repeatedly create successfully products while being part of a large corporation. They’ve navigated the IPR issues, raising and logistics while creating a model Augmented Reality experience that everyone will now rush to copy.

The question I have is, why can’t your corporation do the same?

Interested in how to test your business ideas? Feel free to contact me.



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