I was in a "startup inside a <mid-sized> Company" (about 5 years old at that point, pre-IPO) a few years back. It operated independently, separate building, sep

I was in a "startup inside a <mid-sized> Company" (about 5 years old at that point, pre-IPO) a few years back. It operated independently, separate building, separate recruiting with a large amount of equity compared to the main company. The benefits were that we could hire major talent who wanted to take some risk but not complete risk (i.e. our funding was "secured"), politics were completely removed, we operated in semi-stealth and we had an already established base of customers to do POCs and get feedback from. It was successful and post-IPO of the main company it merged fully and became a fully branded product under the same umbrella. It was almost like a Cisco-style "spin-out-spin-in" but way less equity. The downside was if the project failed for technical risk reasons, we would all be axed, of course, and the partially vested equity wouldn't have been worth as much of course. I think really think the biggest benefit was the removal of politics and distractions from the main company. Other large companies (Ex. Oracle) you cannot innovate internally unless you do it faster than someone can find it and kill it. After a company reaches a certain size and maturity, the only growth is through M&As not through internal innovation and taking risks IMHO.