It’s a story that’s played out hundreds of times in Silicon Valley: two potential cofounders meet on Stanford’s campus. They shake hands and agree to work together on the next winning startup idea.
After getting to know each other while working on projects and ideas while in school, Olivier Babin (a former Softbank VC) and Naunidh Singh Bhalla (a former JPM engineer) were 100% committed to starting a company together. All that was missing was an idea. To find one, they forgoed the traditional post-MBA path of taking corporate jobs and undertook a systematic ideation process called Research Driven Ideation (RDI) that would lead them to the next big thing.
It's the same framework my co-founders and I used to discover our company ideas – a rigorous approach we continue to employ for incubations at Innovation Endeavors.
Almost a year later, we announced that we led a seed investment in Tetrix, a company that we believe will revolutionize the way information flows in alternative investments. Olivier and Naunidh’s highly-intentional approach to their incubation process was impressive. It’s a case study of how to make the most out of the RDI process and one that I believe new and seasoned founders could benefit from.
Olivier and Naunidh graduated from the GSB in 2023. After taking a brief break to recharge, the team moved into a shared office on the corner of 26th and Madison in New York City, ready to dive into the ideation process.
But before they started on the “what” of the process (i.e. generating and testing business hypotheses), they spent time outlining the “how”: namely the culture, working norms, and values that would underpin their approach. Statements like “value individuality, act collectively” and “embrace the work, savor the moments” reflected the sense of teamwork, camaraderie, and passion they wanted to instill in the company. They implemented a sacred ritual of weekly feedback where, on Fridays, the co-founders would take time to both align on action items and also exchange personal and team feedback, check-in on each other, and celebrate small wins. We find that this investment, when done at the beginning of the process, helps teams stay aligned and moving forward through the ups and downs of the search.
The team next brainstormed a set of key attributes they wanted to see reflected in their final idea. These included features like “large market”, “B2B focus”, “we have go-to-market access” and “we’re fired up about the idea”. They complemented this with a list of necessary assumptions that need to hold true for a given idea to become a big company (as in, about the buyer persona, willingness to pay, competitive dynamics, etc.). They organized their work in an “opportunity matrix”, listing ideas in each row and learnings and beliefs in the corresponding columns. As they talked to customers and explored an idea, they would gradually fill out the matrix and, if it didn’t seem like it would reach the bar for selection, the idea would be killed.
Olivier and Naunidh started looking for “haystacks”, or broad industries to explore for new problems. With both co-founders having worked at large financial institutions, the financial services market was an easy first pick. Still, I encouraged the team to explore and develop multiple haystacks in parallel. When my co-founders and I were starting our first company, we explored four spaces simultaneously, with each team member taking point on one space. This gave us a margin of safety, so that if one domain didn’t yield any interesting ideas, we could switch tracks without losing time or momentum. Going deep on a few areas also results in a nuanced understanding of the space and the buyer persona. Having supported many teams through incubation, I have found this approach is the biggest differentiator in yielding a robust idea compared to teams that jump from one idea to the next across unrelated spaces. So, building on some research they had completed at Stanford, Olivier and Naunidh decided to explore opportunities in the supply chain space in addition to financial services.
The team started with a wide lens by thinking about the key trends and the “why now” across the haystacks they identified. They then reached out to experts in our combined networks, followed by cold emails to potential customers, industry experts, and consultants to engage in research conversations and discover trends, current painpoints, future painpoints, and generally learn more about how these markets worked. “As we refined,” Olivier later reflected, “we realized there was real value in talking to the decision makers at the potential clients, not just an outside person.”
The process compounded on itself and had a clear flywheel effect, as initially cold outbounds turned into cascading warm introductions. While their first calls focused on understanding the mechanics of the industry and pain points, after 5-10 conversations, the team could see patterns emerge and would start asking much more pointed questions. For example, they could start going in-depth with customers about whether a given price point for a solution to a pain point represented a discount, market value, or premium, which gave them nuanced insight into willingness to pay. “I really enjoyed when we got to the point of idea ranking, saying ‘these were the five pain points we heard your peers have, how would you stack rank them?’” Olivier said.
The team embraced continuous improvement and iteration throughout the process and remained vigilant for new directions that could take them deeper into an idea or surface other opportunities. “At the end of every call or so, Olivier would distill out certain threads to pull in the following call, so instead of applying the same script ten times, the script would morph based on ‘these are three threads that I think I can pull, let me go there’…and that would get you deeper and deeper” Naunidh explained. “He would spend hours just sitting on the couch and reviewing every transcript that we ever had and try to brainstorm what idea could come out of what someone has mentioned, even if it was one line in passing, and he would add it to the idea list.”
Once an opportunity passed the initial screening with customers, prototyping played an important role in refining and pressure-testing the idea. Low fidelity prototypes like wireframes unlocked more concrete feedback than customer conversations while requiring significantly less resources than a high-fidelity mockup in a tool like Figma. “Having people visually see something and react to it was very helpful when we were getting to precise needs and potential solutions” Olivier shared. “When we had higher conviction, we were willing to invest more resources in Figma,” Naunidh said.
As ideas became better defined, the team would also adopt a more sales-oriented approach. The team’s ability to convince customers to part with money, even at a very early stage, was a helpful barometer for the level of pain their solution was addressing. “Olivier and I agreed early on: don’t do stuff for free.”
Over time, the team concluded that the financial services space was a much better fit for their interests and background. As they continued to diligence ideas in this space, they gradually found some separating from the rest of the pack in terms of the market opportunity, technical “why now”, and enthusiasm and urgency from customers. Soon, they felt an insatiable pull to one of their top ideas and, feeling they had done the right level of due diligence and validation necessary to commit themselves to it for the foreseeable future, decided to take a chance and go all-in.
This idea became the company now known as Tetrix.
In the financial services world, capital allocators like pension funds, sovereign wealth funds, university endowments, and family offices are responsible for investing in a diversified portfolio of assets, which can include traditional investments (public stocks and bonds), as well as so-called “alternative investments” like private equity, venture capital, and hedge funds. These alternative investments are attractive because, while typically less liquid than public market securities, they can sometimes offer greater returns to investors.
While there is robust data and reporting infrastructure for an allocator to understand their holdings and positions in public securities, private markets are a different story and typically involve the managers of the VC/hedge fund/PE firm sending a quarterly report to their investors (called an LP or limited partner). These reports are commonly unstructured PDFs, and formats vary greatly from firm to firm. LPs often contract with outside data ingestion services to manually parse data from the reports to make them consumable via spreadsheets.
This creates three problems: data is often time lagged by weeks or months due to the manual nature of this extraction (often done using overseas teams), the data can be inaccurate subject to human error, and there is varying level of analytics and insights available to allocators on risk and performance across their holdings. Despite these challenges, investment in alternatives is expected to increase substantially over the next 2-3 years, projected to reach $23Tn by 2026.
As more investment flows into private markets, and more emerging managers establish new funds to take advantage of this capital influx, it is easy to see how the problems associated with collecting and analyzing this data will scale.
“Hearing how painful it was for a large alternatives investment firm internally and how much they were spending on that problem was really eye opening…this is a big problem that even big players haven’t solved yet,” Olivier would explain.
At the same time, the technology shifts around large language models and AI agents create unprecedented opportunities to ingest and analyze this data at scale, by enabling any document in any format to be processed into a structured data lake. In doing so, Tetrix can completely automate and scale the information extraction process while also offering much deeper analytics and insights into performance and health of an allocator’s positions.
With their vision for the company set, Innovation Endeavors led the seed round into Tetrix last year, and we’re excited to continue to work with them as they embark on the next phase of this journey: launching the product, onboarding their first few customers, and scaling their sales and go-to-market.
Learnings from the process
Completing an incubation process like Tetrix is not a simple feat. The path to reach an idea is opaque and there are many pitfalls and dead ends a team must contend with. Olivier and Naunidh succeeded in finding an idea because they trusted each other and their process, took setbacks and obstacles in stride, and ultimately became domain experts on a huge space.
The Tetrix team had a few qualities that set them up for success:
Reflecting on the journey and how prospective entrepreneurs can set themselves up for success in research-driven ideation, here were a few of Olivier and Naunidh’s key insights:
If you’re an entrepreneur looking for your next idea, you can find resources on Research Driven Ideation here or get in touch.
