Portfolio Testing Method

Jack Abraham shares his approach to testing and validating new business ideas by leveraging his existing portfolio of companies before wider market release.

Core Philosophy on Idea Generation

• Avoids traditional brainstorming sessions

  • Believes contrived solutions often solve problems that don't exist
  • Never had formal brainstorming sessions in over a decade at Atomic

• Problem-First Mentality

  • Observes real problems in the world
  • Focuses on problems within existing portfolio companies
  • Looks for patterns across multiple companies/situations
  • Maintains list of 600+ observed problems in Evernote

Testing & Validation Process

• Initial Deployment

  • Builds product to solve observed problem
  • Tests solution across existing portfolio companies
  • Uses portfolio as built-in customer base
  • "Dog foods" the product internally first

• Validation Steps

  • Ensures product works within controlled portfolio environment
  • Gathers real usage data and feedback
  • Makes improvements based on portfolio company experiences
  • Only releases to wider market after proven success

Investment Structure

• Multiple Investment Stages

  • First check: $100K-400K (typically ~$250K)
  • Second check: $1M-4M (typically ~$2M)
  • Third check: $3M-8M
    • Sometimes done alone
    • Sometimes done with other VCs
    • Depends on company needs and milestones

• Portfolio Company Independence

  • Companies pushed to become independent
  • Designed to be "uncomfortable at the atomic level"
  • Prevents companies from staying in incubator too long
  • Companies typically emerge with large funding rounds