The 70-20-10 Innovation Portfolio
Fund the core while reserving resources for adjacent and venture bets
- Difficulty
- Advanced
- Time to result
- ~ongoing to results
- Steps
- 5
- Confidence
- 99%
Armstrong says Coinbase uses a 70-20-10 resource allocation to sustain repeatable innovation. About 70 percent supports the scaled core business producing most current revenue, 20 percent funds adjacent extensions, and 10 percent goes to venture bets with higher failure risk and potentially large upside. The protected venture share remains in both strong and weak markets, allowing the company to keep searching for its next act rather than waiting for the existing product's growth curve to flatten. The allocation is a portfolio rule, not a prediction that every bet will work. It requires explicit classification, continued core support, tolerance for failed experiments, and periodic review of whether bets should be stopped, promoted, or reclassified.
Origin
Armstrong describes 70-20-10 as Coinbase's resource-allocation practice for balancing its current core, adjacent products, and riskier venture bets.
Core principles
- 01The current core deserves most resources because it supports the company today
- 02Adjacent bets extend capabilities or markets near the core
- 03A protected venture allocation preserves exposure to high-upside ideas
- 04Continuous investment helps a company create a next act before the current curve flattens
How to run it
- 1
Define the core
Identify the product or business that operates at scale and produces most current value. Make its essential capacity and reliability needs explicit.
Pro tip Use current evidence rather than historical identity to define the core.
- 2
Map adjacent bets
List extensions that reuse core capabilities, customers, or channels while opening meaningful growth. Keep them distinct from maintenance work.
- 3
Map venture bets
Identify ideas with a high chance of failure but potentially large strategic upside. State the thesis and the evidence that would justify further investment.
Pro tip Keep each venture bounded enough to stop without threatening the core.
Watch out High upside does not justify unbounded financial, legal, or safety risk.
- 4
Allocate the portfolio
Direct roughly 70 percent of relevant resources to the core, 20 percent to adjacencies, and 10 percent to ventures. Adapt the denominator and cadence to the organisation.
Pro tip Measure actual people and budget allocation, not labels in a strategy document.
Watch out Armstrong presents Coinbase's allocation, not a universal optimum.
- 5
Review and graduate bets
Assess evidence at a defined cadence. Stop weak bets, continue promising tests, and move proven products toward adjacent or core status.
Pro tip Judge venture work against learning and thesis milestones before mature-business revenue.
In the wild
Armstrong says Coinbase assigns 70 percent of resources to its current core, 20 percent to adjacent extensions, and 10 percent to venture bets. He says the company keeps the venture share in both up and down markets so it can continue building potential next products.
→ Future-oriented work receives an explicit allocation instead of depending on spare capacity.
Common mistakes
Treating the ratio as universal
The episode describes Coinbase's practice; company stage, runway, and risk can require a different allocation.
Calling every new idea a venture
The categories need distinct strategic relationships to the core or the portfolio becomes accounting theatre.
Protecting failed bets forever
A protected category still requires evidence-based stopping and reallocation within it.
Is it for you?
Best for
Established organisations with enough resources to support a portfolio of core, adjacent, and high-risk product work.
Not ideal for
Very small teams whose survival depends on proving one core product before maintaining multiple bets.
From the transcript
“70 of our resources go to the core business today”
“10 go to these venture bets which are basically like kind of crazy ideas that have a higher chance of failure”
From the episode
Coinbase Founder: The Crazy Journey Of Building A $100 Billion Company: Brian Armstrong