Planting the Seeds of Innovation

One of the most common patterns among companies that initially find product-market fit and grow rapidly—but then decline and become irrelevant - is that they stop innovating. Ironically, it was innovation that helped them discover product-market fit and scale in the first place. The reason they stop innovating is often rooted in the prevailing advice to “focus.” But what that often translates to is founders and leaders being encouraged to narrow their innovation efforts exclusively to the initial vertical where they found traction. The problem is that this vertical eventually hits the ceiling of its addressable market. When that happens, growth slows, momentum stalls, and the trajectory shifts from exponential rise to inevitable decline.

Of course, there’s a reason why the advice to focus exists. There are just as many cautionary tales of companies that, after initial success, expanded too quickly into new verticals. In doing so, they diluted their efforts, spreading resources and capital across too many bets. As a result, not only did those new initiatives fail, but their core, flagship solutions also began to suffer. That’s the danger. So while the guidance to focus has merit, the real challenge is that both extremes—over-focusing on the initial solution or spreading too thin across too many plays—can ultimately stall development and undermine long-term success.

In true Sword fashion, we’ve never accepted either of those extremes as acceptable (we’re terrible at compromising). And that’s why we built a system that allows us to succeed in the short term while intentionally planting and nurturing the seeds that will lead to meaningful growth two years from now.

We believe it’s possible to create a system that fosters innovation without compromising the flagship solution. As with all things, both the god and the devil are in the details.

This belief isn’t just philosophical (or should I say theological). It’s grounded in how different types of solutions behave at different stages of scale, which means they require two completely different operating systems.

Two different clock speeds.

If designed correctly (and we’ll talk about the founding team later), a new solution starting from zero operates at a much higher clock speed than one that’s already at scale.

When a solution is starting from zero and trying to find its way through the maze, speed becomes essential. The optimal way out of the maze isn’t found through creativity alone or speed alone—it’s the combination that matters. If you’re highly creative but move slowly, you’ll take too long to explore the full space of possibilities. Success lies in pairing rapid movement with thoughtful exploration. That’s why maintaining a high clock speed, while staying intentional, is critical in this early stage.

In contrast, a solution that is already at scale must be more mindful when moving quickly, due to the potential second-order effects each decision can trigger. These effects become far more significant at scale: even events with low probability become near certainties when applied across a large enough user base or system. So while a scaled solution should still aim to move fast, it will have systems and processes that mitigate those risks. Inevitably, this introduces more friction and leads to a lower operational clock speed.Success comes with its own price—and that’s one of them.

That’s why solutions at different stages of scale need different operating systems. The robust and slower decision-making processes that are generally healthy at scale become problematic when applied to a new solution still trying to find its footing. A smaller or newer initiative doesn’t carry the same risk profile—and therefore doesn’t require the same layers of process and countermeasures. Applying the same structures across both can unintentionally stifle the agility and creativity needed for early-stage success.

So, what’s the operating system that lets a new solution move fast, stay sharp, and actually make it out of the maze?

Welcome to the dark forest

Navigating a new solution is often like being dropped into a dark forest without a map. The paths aren’t marked, the risks aren’t visible, and conventional thinking won’t get you out. In Surely You’re Joking, Mr. Feynman! (my favorite book), Richard Feynman shares a story from a survival exercise during his time at MIT. A group of students was left in the woods with the challenge of finding their way back. Most wandered aimlessly, relying on instinct or groupthink. But one student took a different approach: he found power lines and followed them, knowing they would eventually lead to civilization. His was the only team that made it back.

This story captures the essence of navigating early-stage innovation: not just effort, but insight. Not just movement, but direction. In the dark forest, the winners aren’t the ones who follow the crowd or repeat what’s already known—they’re the ones who pause, think differently, and find the power lines.

That’s why I believe the best operating system for a solution starting from zero is no operating system at all. The moment you impose one, you’re essentially prescribing a way out of the dark forest—and in doing so, you constrain creativity and anchor thinking in existing knowledge. But if what you’re building is truly innovative and unique, then conventional thinking will only take you so far. To break new ground, you need to generate new ideas, not follow pre-existing playbooks. In the early stages, your job isn’t to apply an operating system—it’s to invent one. You operate from first principles, not from inherited frameworks. Any attempt to systematize too early usually just creates a repeatable loop of failure.

The only thing to lose is money

As previously noted, a key challenge in developing new solutions is ensuring that only money is truly at risk—not focus, not talent. That’s why the most critical element of the model for planting the seeds of innovation is how we choose to fund these ideas.

We believe that scarcity is essential for innovation. When a founding team has too many resources at their disposal, they often lose the sharp focus required to solve problems creatively and effectively. It’s no surprise that most startups die from indigestion, not starvation (a sentiment I wholeheartedly agree with).

That’s why, to replicate the early stages of company-building, we fund these new initiatives with clear constraints. Each team receives a 12-month budget of $1 million. With that, the founder must cover all expenses—salaries for engineering, marketing, design, operations, and any other costs. By the end of the 12 months—or once the $1 million is spent—they must demonstrate clear signs of product market fit to qualify for additional funding. That “next round” is their “Series A.” If successful, they receive another 12-month runway and budget to reach the next milestone, which would be their Series B and so on.

Each of these moments is evaluated just like a VC partnership meeting deciding whether to invest in a startup. This approach to funding builds a culture of creativity, urgency, and discipline—because without tangible results, there is no next round. We just simply kill the solution.

When it comes to allocating the $1 million budget, I believe it’s critical to maintain the high clock speed and experimental nature these innovative solutions demand. That means we can’t impose the same financial controls and processes used by the broader organization onto these new initiatives. While it’s especially tempting in a company like Sword—with a frugal mindset and a sharp focus on eliminating waste—to apply the same guardrails, doing so would risk slowing down the pace of innovation and stifling the agility these teams need to succeed.

While this model may involve some degree of waste, it generates wins that follow a power law dynamic. Much of the experimentation may not bear fruit, but the successful discoveries can be replicated across multiple solutions. These innovations are high-yield—not because they benefit a single product, but because they act as a rising tide, lifting the entire ecosystem. Their impact is horizontal and benefit all other solutions, and as a result, the wins more than compensate for the failures and the cost of experimentation.

Imagine if a successful startup in a VC’s portfolio were to openly share all its innovations with the rest of the portfolio. That would be an unrealistic dream in VC land. But that’s exactly what we achieve internally with this model at Sword.

You need Tolkien

Of course, you can’t simply hand a million dollars to a random group, give them an idea, and tell them to think from first principles—and expect success. That’s why the biggest bottleneck in this entire model, and arguably the entire endeavor, is selecting the founding team.

To explain the importance of the founding team, I usually tell this story that showcases the difference between having an idea and having the right people to execute it: I could tell you I have an idea for a fantasy epic about a group of unlikely heroes who must journey across a mythical land to destroy a powerful ring. But having that idea is a world apart from creating The Lord of the Rings. For that, you need Tolkien. The same applies to early-stage solutions: ideas are common; execution is rare—and it lives and dies with the founding team.

Unfortunately, defining what makes a great founder or founding team is incredibly difficult. There’s no one-size-fits-all formula. That’s why people often say selecting a founding team is more art than science: it’s nearly impossible to codify what makes a great founder into a fixed set of rules or variables.

From our experience, although there isn’t—as noted earlier—a clear set of criteria that define a great founder, we’ve found clarity in understanding what doesn’t make one. By defining the opposite of a great founder, we shed light on the selection process for a founding team.

So, what makes someone not a great founder or part of a strong founding team? There are a few key signs.

The first—and perhaps most obvious—is lethargy, or the inability to move and act. You often see this when an action plan is created, but two weeks later the team is still discussing it, with no meaningful progress. That kind of inertia is a red flag.

The second is linear thinking—an inability to think outside the box. This becomes clear when a team faces a new problem that requires a new solution, but time passes and the conversation never evolves. Rather than trying different approaches and learning from what fails, the team keeps circling the problem without forward motion. Every discussion becomes a rehash of the issue itself, rather than a reflection on what’s been attempted and what was learned.

The third is fearfulness. Innovation requires challenging the status quo—and that’s never comfortable. Entering a new space means facing entrenched competitors who won’t welcome your presence. If you’re fearful, you won’t be bold enough to assert your value or stand firmly behind your ideas; you’ll hold back, worried about how others might perceive you.

You also won’t be able to defend your thinking. As the ultimate owners of both the success and failure of a new initiative, the founding team must be willing to take a stand. If they’re hesitant to engage in tough debates or push back against dissent, their ideas risk being watered down to the lowest common denominator, shaped more by consensus than by conviction.

So, if you flip the lens on all three traits, what you’re really looking for is someone with high agency, strong creativity, and real courage. And let me tell you—that’s a rare combination.

And that’s why, at Sword, we have a long list of ideas in the pipeline that we’re not currently executing. We’re waiting for the right person to come in and lead them. Talent is the biggest bottleneck in our innovation process—and without question, the rate-limiting step in the system we’re describing here.

So far, we’ve identified two ways to find this very unique profile. The first is internally, which is often easier because you’re operating with more information—and therefore facing less risk. You can spot the people who are not only excelling in their current roles but also consistently looking to expand their scope: always asking for more, proposing new ideas, and pointing out what’s not working.

In my experience, the best founders often carry a quiet grudge against how the world is structured. They see countless ways to make it better and aren’t afraid to speak up. If you pay attention, you’ll spot these individuals inside your own organization. They shine at what they do, they constantly push for more, and they surface overlooked opportunities or unresolved problems. And most importantly, they don’t just raise issues—they come with solutions. That’s a critical distinction.

So take a close look around. Chances are, those people are already there. You just need to recognize them.

The second way to find this profile is externally—and while it comes with more risk, it can also unlock extraordinary upside. The challenge is that when you’re evaluating someone from the outside, you don’t have the same depth of context. You can’t see how they behave over time or how they respond to real challenges inside your system. That means your filters need to be sharper.

What we’ve learned is that traditional signals—like impressive résumés or polished interviews—are largely irrelevant. Instead, we look for patterns of behavior: people who consistently build things from scratch, take initiative without waiting for permission, and show a clear bias for action in ambiguous situations. These are often the ones who’ve done unconventional things not because they were asked to, but because they couldn’t help themselves.

And just like with internal candidates, one of the strongest signals is a deep dissatisfaction with the status quo, paired with a compulsion to fix it. They don’t just notice the cracks—they imagine new systems entirely.

At this point, you’re probably thinking, “Sure, that sounds like a good description—but how do I spot that just by looking at a LinkedIn profile?” And you’re absolutely right. The truth is, these types of profiles usually self-select into challenges. They’re eager to jump into the fire.

So when you post something on your social networks saying, “Hey, I’m looking for this kind of profile,” they often raise their hands. Then, in the first conversation, you simply ask them about the biggest challenge they’ve ever faced. From there, you peel the onion. You see whether, at each layer, they reveal the characteristics you’re looking for. And if they do, it becomes clear, very quickly that they’re the profile you’re looking for.

Builders build. Everyone else should support.

Continuing the theme of maintaining a high clock speed, once we select the leader of the team, they have full independence to structure the team and define the org chart as they see fit—based on the goals ahead and the budget at their disposal.

To keep their focus on the mission, we don’t want the founding team spending time building out HR, finance, or legal functions. These areas are critically important at scale to preserve and protect value, but they aren’t essential when you’re just starting out. That’s why our founding teams rely on existing horizontal platforms for HR, legal, and finance through a shared services model(1).

This allows them to focus entirely on what truly matters: building a solution that customers love. By removing the operational burden, we give them the space to concentrate on the only thing that will determine their success—creating something great.

When it comes to developing the solution, it’s essential that the engineering team is fully dedicated to the new solution, but with a dotted-line to the global engineering leader to ensure everything being built is reusable and aligned with the broader platform. In this dual structure, the solution leader owns the what, and the global engineering leader owns the how.

Without a consistent approach to how things are built across solutions, you end up with siloed systems that don’t speak to each other. Just as a new solution benefits from the platform’s existing infrastructure, whatever it builds should also be constructed in a way that future teams can reuse. That’s why it’s important to build in a modular, plug-and-play way — otherwise, you lose the compounding value of shared progress. The same rationale applies to design: while each solution has dedicated design resources, all designers maintain a dotted-line relationship with a centralized design leader. This structure is essential to ensure consistency and aesthetics across solutions. Without it, the brand image risks becoming fragmented and carnivalesque. Centralized oversight enables a coherent visual narrative that reinforces a unified brand identity.

Shifting the Odds from Impossible to Probable

With this model, the founding team is set up for success from day one, thanks to a deliberate focus on clearing the runway so they can concentrate solely on lift-off. For example, founders aren’t wasting time structuring a fundraising round or pitching to dozens of investors—they get immediate access to funding.

New solutions also benefit materially from Sword’s scale, tapping into a commercial book of business that includes over 25,000 global enterprises and partners. Just as importantly, they leverage Sword’s strong brand equity and are seen as natural extensions of the value Sword has already delivered. This credibility is critically important when introducing a new solution.

As a result, these initiatives aren’t perceived as isolated, unproven, startups—they’re viewed as part of Sword’s broader mission. That makes gaining traction significantly easier. Founders also receive mentorship from other leaders at Sword who are deeply invested in their success, because their success benefits the entire ecosystem.

We remove all non-essential work from their path, allowing them to focus entirely on creating value and building something great. That’s why the likelihood of success for the same idea—built within this model versus from scratch outside of Sword—increases by an order of magnitude, if not more (probably more).

So what does this look like in practice? Let’s take the first solution we launched using this model: Bloom, our AI pelvic health care solution.

At the time, most in the market viewed pelvic health as a niche problem with little chance of broad adoption. The prevailing belief was that it simply wasn’t relevant to a large enough population to warrant client interest. If Bloom had launched as an independent startup, this perception alone would’ve made fundraising slow and difficult—potentially stalling it before it even began.

But our model is different. Thanks to our nimble structure, we can take high-risk bets—because we’re only risking capital, not the organization itself. So we funded Bloom internally, built it quickly, launched it, and introduced it to clients. Many of them weren’t actively seeking a pelvic health solution, but because of the trust we had built through Thrive, they gave us the chance to show them what Bloom could do.

The result? Immediate product–market fit. In its first year, 2022, Bloom generated $500,000 in revenue. By 2024, that number had grown to $25 million. And in 2025, we’re on track to reach $50 million—100x growth in just three years. If Bloom were a standalone startup, this would place it among the fastest-growing companies in healthcare.

Here’s the key insight: pelvic health wasn’t a niche problem. It was a silent one. Conditions like urinary incontinence or postpartum complications had been normalized—people assumed they just had to live with them. By taking the risk to build and launch Bloom, we gave voice to that silent problem. And once a solution existed, demand surged.

That’s the power of our model: we can pursue bold, high-upside bets that standalone startups often can’t. And when they work, the returns are asymmetric.