New Products as Internal Startups

Treat new product teams as VC-funded startups that must prove ROI

Eeke de Milliano
How to foster innovation and big thinking

New Products as Internal Startups

"We really treated them like startups. We're like, Retool's the VC, and Retool funds with resources and Retool's existing customer base. Which is obviously quite valuable, because you have all these customers you can market to and promote to. But then, the teams really had to prove that ROI. Either in engagement, or eventually revenue, in order to be able to move forward." - Eeke de Milliano

What It Is

This framework describes how to structure new product initiatives within larger companies by treating them as internal startups. The parent company acts as a VC investor, providing resources and customer access, while the new product team operates with startup-like autonomy and accountability.

Retool used this approach to launch three new products in one year: Retool Workflows, Retool Mobile, and Retool Database. Each started with 1-2 people and only received more resources after proving traction.

How It Works

The Company as VC:

  • Provides funding (headcount, resources)
  • Provides unique assets (existing customer base, brand, infrastructure)
  • Sets expectations for proving ROI
  • Makes go/no-go decisions at funding checkpoints

The New Product Team as Startup:

  • Starts extremely small (1 engineer + 1 designer, or 1 engineer + 1 PM)
  • Operates with high autonomy
  • Must prove traction before getting more resources
  • Measured on engagement first, then revenue

The Investment Progression:

  1. Seed stage: 1-2 people, 6+ months
  2. Traction stage: Team talks to customers, builds, prototypes, proves something is there
  3. Series A: Additional resources only when traction is demonstrated
  4. Growth stage: Integration with broader company resources

How to Apply It

  1. Start extremely small - Resist the urge to staff up new initiatives; one or two people for six months minimum

  2. Keep teams separate early - Run new products independently from core product organization to allow different velocity

  3. Define success metrics upfront - What traction signals will trigger additional investment?

  4. Provide unique company assets - Customer access, brand, infrastructure—this is the company's value-add beyond just funding

  5. Accept some integration costs later - Keeping teams separate early means paying for integration later; this is worth it

When to Use It

  • When launching new product lines within an established company
  • When exploring adjacent markets or capabilities
  • When hackathon ideas show promise and need to be properly tested
  • When you want to maintain startup velocity despite company growth

Trade-offs to Consider

Benefits of Separation:

  • Team can move quickly without core product constraints
  • May discover different target customers (as Retool Mobile did)
  • Can develop independent culture and practices

Costs of Separation:

  • Must eventually invest in integration
  • May duplicate some effort
  • Creates some organizational complexity

As Eeke noted: "There was a cost to that, too... now we have these two products, and we have to... invest in [integration]. But I think it's totally worth it, because your team can just move more quickly, be more independent, and think more independently, too."

Source

  • Guest: Eeke de Milliano
  • Episode: "How to foster innovation and big thinking"
  • Key Discussion: (00:35:30) - Treating new products as startups
  • YouTube: Watch on YouTube

Related Frameworks

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