The serial builder advantage: Why repeat innovators win

Pick a business problem that you want to solve and think about business building as a way to solve the problem. We have found that players who take multiple shots on goal against a single goal tend to be much more successful than players that are placing lots of bets all over the place. That's McKinsey senior partner, Jason Bellow. Multiple shots, one goal.

Could corporate venture builders take a tip from soccer? Well, yeah, both require teamwork, creativity, and the ability to be very focused on one goal. Jason joins me to talk about why creating new businesses is becoming a strategic imperative for every company. This is the McKinsey Podcast, where we help you make sense out of the world's toughest business challenges.

I'm Roberta Fasaro, your host for today. Jason, thanks so much for joining the podcast today. Thanks for having me. It's great to be here.

We're here today to talk about McKinsey's latest survey on corporate venture building. What do we mean by corporate venture building? We mean a step-out business. So it can be in the area that you work.

It can be with the same customers that you serve. But we're talking about wholly new products. and it's important because it means you need a different level of investment and a different level of management. And oftentimes, even if it's the same customer, it's a different sales cycle or different way of selling or it's software instead of hardware.

So it's these things that aren't just another turn or an increment on an existing product that you have, but something that is using an advantage you have, but in a fundamentally different way. What was the research piece for this? Tell us a little bit more about the study itself. So the research looked at venture builders and companies that are experimenting with venture building.

We looked at a range of companies from large companies to small companies, and we looked at CEOs and the general managers of these new businesses. When you think about capital deployment, if you have a dollar of capital to deploy, you can deploy it to M&A, and that's great, but there's a lot of uncertainty. You don't necessarily know what you're buying and you're paying a big premium to purchase that. If you can deploy that capital internally against something where you might actually have more conviction on the opportunity, you just don't have a lot of conviction on your capability to deliver it.

It's a real opportunity. And so we started at that point asking ourselves, what do great business builders do that others don't? And how do we help others learn from those great business builders? This latest body of research shows that the companies that build three or more ventures all at once dramatically outperform those that only try it once.

Why do you think practice makes such a big difference here? I think it's exactly because this is a muscle. In order to lead a new business venture, you need to fund it differently. You can't just look at last year's budget and say, okay, you get last year's budget plus or minus X percent.

You have to actually think, well, what is my investment going to be to launch this business end to end? And then how do I break that investment into tranches so that I de-risk it? And also, you know, these businesses are quite cash constrained. Everybody's cash constrained to begin with.

So you don't want to overdo it. But thinking about that milestone-based funding is a fundamentally different way of funding a business. Thinking about how do you actually hold people accountable? You know, it's not like you're setting annual goals that are, again, just the same goals that you're using year on year on year.

You have to think, what is my objective and key results for the next quarter? And how do I track that? And how do I hold teams accountable to that? So every piece of business building is a little bit of a step out from what companies traditionally do.

And so when you do them over and over, you build that muscle. The other thing that I would say in terms of why serial business builders do better is they take a portfolio mindset. Not every one of these is going to be successful, just like not every M&A deal is successful. And just like not every product launch is successful.

And these have risk attached to them. And so when business builders say, I'm going to tackle three of these, they naturally de-risk and they also naturally get more comfortable killing things early when it doesn't meet the customer milestones or the performance milestones early on. So the experience and then the practice makes perfect. It seems like it's heavily reflected in the research.

Jason, one thing that also struck me was this question of cost, right? So in 2024, the average cost to reach break even on the typical new venture was around $125 million. In 2025, that number dropped to $77 million. What do you think is driving that shift?

I think it's two things. I think one is we are in an environment where capital is constrained and organizations are holding their businesses to a tighter leash. I think they are genuinely saying, find a way to get impact earlier. And they're looking for business cases where you can get 30, 50% of the value of your business case within the first 12 to 18 months.

I think the second thing that is driving it is the introduction of AI. AI has completely reinvented the way we do business building and the types of businesses that we're building. We can use AI companions throughout every step of the process. to make business building faster and better.

Managers and CEOs are recognizing that and holding their teams accountable for baking that productivity in. So how are companies using AI in the building and even the scaling process? Do you have any examples of people who are doing this well right now? Yeah, totally.

So let me give you kind of two flavors There AI as a business And then there AI in the background for business building Let start with AI as a business A lot of my clients are actually saying how do I actually completely reinvent the way that I work with AI? It may be actually somewhat close to their core work, but they're thinking, can I actually build a business off on the side that would be an AI native version of myself that would disrupt me. So for example, we've done it with a bank where a bank has said, I want to build a B2B bank for small businesses to take out loans, to do their daily banking, to manage their suppliers, but I want it to be completely AI native.

What they did was they built it as a new business off on the side, even though it was doing the exact same stuff that they do as a core bank, But the KYC, the know your customer process was fully automated agentic. The customer service was fully automated agentic. The flow of funds was automated and agentic. I spent all my life in healthcare.

I'm doing the same kind of things with healthcare payers and healthcare intermediaries where we're saying, okay, can we build totally new ways of doing prior authorizations or totally new ways of doing claims processing? using agentic we treat it like a new business and at some point we're going to reintegrate the rest of the business back that's kind of all like ai as a business we can also talk about now how founders and business builders are using ai to accelerate their own business within the business there are a couple things that i would highlight there one is using ai to do business building faster.

There are co-pilots for every step of business building. We've built our own platform called Beacon. Clients are using that. They're using native platforms.

They're using what you can get in Cursor or co-pilot or name your platform. And they're using it for product management. And product failures happen all the time when someone doesn't think through the nth degree of detail on those things. AI can actually do that thinking for you.

We've built platforms and there are platforms out there that allow you just to enter the one statement and then have a brief conversation with AI. And it fills out the whole, what we call the acceptance criteria, all of those different dimensions of what it means to have this feature automatically. Of course, we've all seen the use of AI to support software engineering and coding. And that's been huge.

So at each step, there's been a real productivity advantage. However, the more fun one and the more exciting one has actually been on the quality of business building. So talk about that. I'd love to hear more about that.

Yeah. So one is around ideation. In our Beacon platform, you can enter your idea or the seed of a concept, and it will draw from other industries, other places, and give you variations on a theme that help you actually ideate and broaden the aperture. So, you can imagine a business where you're very focused on one set of features and the tool can come in and say, hey, have you thought of using this other intermediary as a customer and getting them engaged?

Or have you thought about a different sales channel? Or maybe you were thinking about selling this product as a perpetual license or a pay-per-click, but a SaaS-based solution where you pay annually might be a better option. So it really is a challenger of your thinking along the way. And we've even been experimenting with things like synthetic customers.

Like I was doing one recently in the pet care space. and we were able to set up synthetic pet owners because there's so much data out there about pet owners. They're on Reddit, they're on Facebook, there's articles and we could segment them into older and younger, first time, multiple pets. And we had personas that were drawn on real data from these pet owners that when we're doing our ideating, we can just sit there and type them a question and they'll respond as that persona.

Now, look, it's not perfect. And AI can be sycophantic and our personas can be, they love everything. Right. That's one of the things I've heard about the synthetic personas is that they will enjoy every option that you provide to them.

Yeah. It's all how you prompt them, but it is useful, not as a replacement for user research, but as something in between, you know, something just to fill the gaps or even just to help you frame your questions to users in your real user research. So Jason, thinking about those sycophantic responses, is there a way around that? How do you sort of get your personas to be real with you?

Yeah. So, I mean, first of all, in Beacon, we try to build the platform to prompt the engine or the agents that are producing these synthetic personas to tamp that down somewhat. Right. Yeah, absolutely.

I mean, it's the way you prompt them that can help to some degree and encouraging the personas to challenge you can be helpful. You'd mentioned the use of AI in moving beyond the core. Business leaders can achieve this balance, right? You want to build new ventures.

You want to be enthusiastic about what's possible, but then you also have to manage the core. So how should leaders think about that balance? Yeah, I think you need to think of it like a portfolio. And my best advice is start with the business problem.

Don't take business building as a hammer looking for a nail. Pick a business problem that you want to solve and actually try to solve that problem through multiple avenues. Think about business building as a way to solve the problem. Maybe you can think about M&A as a way to solve that problem and start to experiment with multiple shots on goal We have found that players who take multiple shots on goal against a single goal tend to be much more successful than players that are placing lots of bets all over the place shooting at lots of goals or who are putting all their eggs in one basket doing one shot at one goal To me, that's the most important thing is if you know what you want to do, your odds of doing it well go up dramatically.

The second thing I would say is you do have to somewhat isolate the business. So pull it out from the day-to-day management, have it report directly to a C-level executive, and preserve the funding specifically for this venture. Your odds of being successful go up dramatically. It makes sense, right?

Otherwise, the initiative gets lost in the shuffle or other things take precedence over it, right? Yeah. There's a thousand ways to fail in business building. And I think that's why people get scared of it.

But if you actually look at the numbers, it's a great return on invested capital because you have so many assets, because you have the customer, because you have the intellectual property that's untapped. The odds of being successful with it when managed well are actually quite high. And now with AI, I know a lot of people say, well, it's so much faster to build or to scale really through M&A or other options. But with AI, there really is no excuse.

Yeah, totally. I mean, we used to wow our clients with wireframes or wow our customers, our clients' customers with wireframes. I remember I was doing a product in the digital surgery space and we rocked up at the conference. and on day one we showed clickable wireframes to the customers and then our team went and worked so hard overnight and came back on day two and showed them the next version of the wireframes and the customers and the clients were just completely blown away by that.

That's like old news and that was only 24 months ago. Now we don't use wireframes, we come with a vibe-coded actual prototype and that can be made in a day. And so you both have a much better visual and experiential anchor, but also you can use that to test features in the market. So Jason, are there other areas in which AI can help with new business building?

Yeah, absolutely. We're using AI now to help build business cases and pressure test business cases, to write surveys that go out to customers, to build marketing material and create A-B testing for marketing. Oftentimes when you're building a business, you need fractional roles at the beginning. And you can actually have AI play some of those fractional roles, like a sales ops role can be played to some degree by AI before you have to hire the full-time person.

If you think about the world we're living in and there's so much uncertainty, there's economic geopolitical issues. Does it still make sense to think about new business building in this market? And sort of what argument, I guess, would you provide to leaders who might say, well, you know what, it's just not the right time? Yeah, well, I would say in a period of disruption, business building is actually of paramount importance because you're very likely to get disrupted yourself if you don't start doing it.

And that's where a lot of this business building theme of building an AI native version of yourself has become such a powerful theme, which is build the business. You're actually not building a step out business in that case necessarily. You're building something that replaces you, but you're doing it like an attacker would become so important. I've also seen we're in a world where standards are being set.

I was just reading an article about how governments have actually been influencing LLMs potentially and trying to sway the way LLMs respond. everybody's using AI and your ability to build your workflow, your competitive advantages, the things that are great about your products into the AI workflows of others is really important as well. That's very important to note. Jason, another finding from the report shows that a culture of experimentation is positively correlated with successful new ventures.

But cultures are notoriously hard to change. What are the first steps you think leaders can take to build psychologically safe environments or environments where it's easier for teams to carry these new ideas forward? I think there are structural things that folks can do. And I think there are behavioral or cultural things that folks can do.

Break it into small pieces where you say, okay, I know my goal in 12 months, and maybe actually 12 months is too far. You're setting a goal that is six months, nine months away, that would have real customer impact. So you set a goal that's not too far away, that's very tangible. I want to be in the market with 50 users.

Let's say this is like a B2B business. I want to have 50 B2B customers on my platform in nine months. Great. Now split that nine months into three chunks.

What are you going to accomplish and what funding do you need either for the nine month period or for the three months period? and you just check in on, did we do what we said we were going to do? What new information did we learn and how can we pivot? And then let's release the funding and move forward accordingly.

And when you break it down like that, the risk of failure is much smaller because you're not betting the farm. And also you can attribute the failure not to a personal failing, but to something specific you learned. You can actually change course much more quickly if you're just like talking about one small bit of the entire process Yeah I did one once where we were looking at the product set where our client was in the high end of this product set And the products serving the middle range were kind of low end products Our client thought, hey, actually, if I could take my high end product and produce it at a lower cost, I could win this mid range market.

And we did this exact approach. And one of our early milestones was validating the size of that market. We found out that the market was an order of magnitude smaller than we thought it was. And that's fine.

We pivoted. We did a much smaller business build. They focused in a much more narrow way and ended up releasing a product that was super successful. It could have been seen as a failure, but instead it was seen as a pivot.

Can you talk a little bit about mindsets or behaviors that need to change? I think it has to come from the top. great business building leaders are really clear that this is a fact-based organization. We're going to learn from facts and have no shame about them.

If the facts tell us our products stink, so be it. If the facts tell us that we made the wrong decision about something, so be it. Get the facts on the table. And as long as you're part of the solution of figuring out what to do for the facts, there's no finger pointing.

So there's that top-down culture that you can set as a leader that is so important. So if you've set the structure, you've changed behaviors, people are like all in. Once that spark has been lit, it's hard to extinguish. So what is it about building something new inside a big company that becomes almost addictive?

I think the thing that is so addictive, especially about corporate venture building, is you have tremendous advantages. If you think about a startup, they spend half their time building their product, but half the time just going out, pitching to investors. That investment case is often much more streamlined because you know the people making the investment. It's your leadership team, it's your board.

It's a much more streamlined process to get investment. So you take away that huge pain of building a business. And then you add to it the advantages that you have as an incumbent. You usually have the customer base that you're going after, or you have some kind of untapped IP that you can leverage.

I do a lot now with clients that have data that's valuable data, and how can they find new uses and ways to monetize their data? They're just sitting on that data and not doing anything with it. And so it's the advantage of having the nugget ready-made for you, plus taking away the pain of having to go cup in hand, investor to investor, looking for investment that makes corporate venture building so addictive. It's the sweet spot of entrepreneurship.

That's excellent. It comes with its pain, too. I mean, like big companies struggle to move, right? Big companies struggle to do things differently.

And so that's why having the right leadership makes such a difference. And actually, if I can go back to a question you asked earlier. You asked earlier, what do great leaders do culturally? I talked one about setting the tone of it's okay to fail.

Yeah, removing the fear of failure. The second thing that I would raise there is great leaders actually are in the weeds a little bit. I mean, leaders have to have a top-down perspective, but they also need to complement that with an understanding of how products work and what customer needs are. And I think that's really important to making businesses a success as well.

I think when you really understand your customer and you really understand how your products are being used, the actual workflow, it makes all the difference in being able to steer a team towards the right answer. Jason, we're running up against time, but I would be remiss if I did not ask you about the businesses that you've built and the initiatives that you've been involved with. Which of these businesses are you most proud of? The thing that I get the most pride in is when I have built a business or helped a client build a business that within a year of us sitting in a room thinking through the idea, I see it in the wild, you know, unrelated to the client.

I've done a business where we built a new durable medical equipment device that helps with mobility, and I've seen people using it. We've built software that helps people get appointments with healthcare providers much more easily using AI. And I've been on a neighborhood group chat where people have recommended that particular product. And so when you see your own work in the wild, it is the most exciting feeling.

It reminds me of those stories that you hear about musicians who say, well, I heard my song in a cab riding through New York. Yeah, a lot dorkier, but yeah. No, no. Actually, way cooler, right?

The impact is so much greater. That's exciting. Jason, thanks again for joining. This has been a great conversation.

Thank you so much for having me. Thanks so much for listening to the McKinsey Podcast. I'm Lucia Raheli. And I'm Roberta Fasaro.

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