I just published a report on startup studios at Trends.vc. And thought you might be interested.
These 'startup factories' are fascinating.
Would love to know what you think. Especially ways to improve these reports. Thanks! 😆
Trends #0010 --- Startup Studios
🔍 Problem
Startups face a common set of challenges.
- Validate a value proposition
- Build a product
- Recruit
- Raise capital
💡 Solution
A startup studio is a company that builds companies. Startups such as Giphy, Dollar Shave Club and Liquid Death were born in startup studios.
Studios specialize in early stage company building.
Some of these companies are eventually spun off and the studio keeps an equity stake.
🏁 Players
Startup Studios
Products
🔮 Predictions
- Most studios will focus on a single vertical or model. Science specializes in B2C. Betaworks runs themed startup camps. High Alpha focuses on B2B SaaS.
- Some digital agencies will morph into startup studios.
- No-code startup studios will become major players in this space. No-code makers are pros at building things fast and cheap. Those who learn how to validate value propositions will run the table. Bram Kanstein teaches you how to do just that.
☁️ Opportunities
- Build a startup studio focused on a single vertical or model.
- Become an expert at validating value propositions fast. Using paid methods (Google, Facebook, IG ads). Or free methods (Reddit, Product Hunt, Indie Hackers). It's easier to recruit and raise money when you have demand.
- Do a hardcore year. Build a new product each month.
- Too easy? Build a new product each week.
😠 Haters
"There are lots of startup studios. But you only listed 10."
If you read all of the Trends reports, you'll notice that no list exceeds 10. The value of curation lies in taste and constraints. With this in mind, I picked 10 out of more than 151 startup studios. There are links below. You can dive deeper if you want.!🤘
🔗 Links
- Sarah Mcbride, Articial Intelligence & T-Shirts --- Sarah works at Betaworks. Her ambition and hustle will leave you inspired.
- Fabrice Grinda, #1 Angel Investor In The World --- Fabrice runs FJ Labs. He's smart, well-rounded and passionate about marketplaces.
- Startup Studio --- This Wikipedia article covers the history and types of startup studios.
- What is a Startup Studio? --- Kim Heras covers 4 types of startup studios: platform builders, crazy creators, execution engines and service experts.
- Startup Studio List --- Jules Ehrhardt complied a list of 100+ startup studios and partners to follow on Twitter.
- The Startup Studio Ecosystem --- Don Fontijn compiled a list of 201 VC firms, 169 accelerators and 151 startup studios.
- Idealab: L.A.'s Vintage Incubator --- Bill Gross lets us in on the original plan behind IdeaLab. The OG startup studio.
You can also check out other trends 🙂
Thanks for checking it out!
- Any thoughts?
- What did you like?
- How can this be improved?
🦄
This is great content - thanks for sharing! Just signed up for newsletter too; looks like a lot of good stuff. I'm working on converting my digital agency to a studio, so that prediction definitely resonates.
What I liked + suggestions:
Vertical focused studios definitely seem to be a thing. It might be good to include a spreadsheet with a list of these in the article. I'd be happy to help populate as I've been doing research on them
And yes to validating ideas fast. Recently read this article and tried out a version of it: https://medium.com/@jakehurwitz_71965/playbook-does-your-startup-idea-suck-824d45daa56e
🙏 This is great feedback.
Thanks again :)
dru_riley AMAZING! you use spiffy for a checkout do you have any other in mind that is more affordable to test some other ideas out? Especially what I'm looking for is for simple landing page and checkout. Spiffy looks amazing but to test idea out it's a bit expensive. Thanks
@datagod Gumroad is an option
What is the difference between a ‘startup studio’ and an accelerator like YC? I’m confused..
Startup studios start companies, build teams and spin them out.
Accelerators take existing companies and 'accelerate' them. In terms of product/growth/both.
👍🏼
This is great! Maybe it could be improved by showing key word trends for the topic you're writing about. I like the links for further researching
Thanks for the feedback Ulysses!
Love these posts as usual! In particular:
There are some small formatting things I think could be improved with how your posts look on IH specifically:
Thanks for the feedback Courtland!
You're spot on with the Tyler Cowen reference.
And I will format the post better next time. 👍
It was great meeting you in Mexico City. And thanks for checking it out!
Yep we don't support horizontal rules, but maybe I'll add them one day! We also don't support #, since the title of your post is you heading level #1. Perhaps I should allow # but transform it into ##.
Cool. The text size difference should be enough of a change. I may be able to get rid of the lines completely.
And good idea with converting # to ##. From a UX perspective, I gave up when # didn't work. It made me think that all headings were disabled.
Thanks for the post! I'm always waiting for the next edition.
Thanks Yaro!
Very cool - thanks for prepping and sharing!
NP! Thanks for checking it out :)
Your newsletter is great! Just signed up :)
Thanks Roland! :)
Thanks for putting this together, @dru_riley. There are two perspectives here, and there's tremendous value in exploring both of these further. I founded Permanence Labs as a mission-focused startup studio: We're focusing on solving problems that lead to an enduring human civilization. As an experienced operator, building our first product and coming up with ideas for a new product aren't the hard parts: It's capital.
What I've found is that VC isn't configured to invest in startup studios. This leaves a huge market gap between wealthy serial entrepreneurs and bootstrapped indie studios. There's currently no VC-like funding model for funding studios that's as accessible as raising a funding round. Currently, it's more like finding limited partners, which is requires a different set of connections and skills. This is the market opportunity that's missing. I would suggest focusing on funding models for startup studios. The opportunity you have is to create an industry similar to VC (or help shape it in the early days, for good).
One other resource you might want to note is the Global Startup Studio Network, which is an industry group focused on supporting startup studios.
Thanks for checking it out Tela!
Maybe this is why a lot of studios have a venture arm.
I checked out GSSN during research. There are a few orgs out there with a similar model.
I agree that it requires a different set of connections and skills. I thought I wanted a studio until I noticed this. Still aiming for a similar model but designing around this piece.
Just curious. Have you validated demand for 1Brand and still unable to find capital? And if so, do LPs/investors give a reason for declining?
If their reasons have anything to do with the unlikelihood of venture-scale outcomes. Have you looked into 'Bootstrap Funds'?
https://trends.vc/trends-0005-bootstrap-funds/
Hey Dru, I have validated 1Brand I believe it may be a venture-scale business. I made a conscious decision and strategy to grow 1Brand on revenue, and use this revenue to seed future new businesses from the studio. Raising capital for a standard model is challenging enough, and I have had investors interested, but we'd have to abandon the startup studio model. Instead, I decided to bootstrap because it seemed like the lower-friction path.
If I can prove the studio with one or two successful businesses, I'll have the credibility to bring investors on for each project with a separate investment vehicle. For now, I'm a startup studio indie hacker ;)
Love this approach.
We're on the same wavelength. Andrew Wilkinson (from Tiny Capital) did this with Metalab. It was throwing off $7m/yr in profit at one point.
Have you listened to his interviews?
I had not heard those! Thank you. Digging in...
I think you'll enjoy them 👍
In my opinion, the products that a studio is launching are generally not venture-ready, especially if you're forming a new team around them each time. I would think that you should have your network of angel investors behind the studio, and make a special-purpose vehicle for them to invest in each new product as they choose - to get the seed funding at least.
Could you tell me more about the concept of venture-ready. Is it more about having your pitch together or validating demand?
On validating demand. I'm thinking about the post @opebukola added.
Love this approach: https://medium.com/@jakehurwitz_71965/playbook-does-your-startup-idea-suck-824d45daa56e
Validating the value before building.
I think this is a very cool idea, if you're basically doing the spray and pray shotgun version of startup ideas. I will certainly use parts of this.
For the vertical niche studio, with more domain experience and a more focused set of ideas, I don't think this exact approach is necessary. I believe there is a risk of losing the trust of your potential customers if you start putting out fake company ideas.
I also really take exception to this comment from the post:
Try to convince any investor that you found product-market fit by collecting emails for a non-existent product / service, but not credit card numbers. 🤣
I don't necessarily think convincing investors is the goal here though. For a lot of startup founders, especially for consumer companies, it can be an easy way to validate the value proposition and problem exists beyond your immediate circle. If you're an IH type founder, taking a week to confirm someone other than your friends has the problem you're trying to solve is a good thing
You're absolutely right, I am just wary of using it if you have multiple products in the same niche, targeting similar groups of people. I believe you run the risk of damaging your own credibility, because the potential customer doesn't want to be part of your experiment. They want their problem solved.
For example, I am designing products to help people migrate to a different country, which is a terribly emotional, expensive, and difficult process. There's no way I want to be deceiving these people with ideas I have, only to pull the landing page down and come back with a new one in a month, asking for their email address again. It just doesn't sit well with me.
But for my new social media product called TrikTop, sure, why not? 🤣
👍 Yes. It's about speed/pace. Before and after validation. Which is why no-code will play a big role going forward.
A lot of people who use this model will collect payment. And refund. Most are bootstrapped founders. I think Native Deodorant launched this way. Then sold to P&G. 2 1/2 years later. Anecdotal but more than a few.
You've narrowed the scope though. This might not be the model for Emigro.
Not sure what venture-ready means.
Or what it means to pre-product investors. Or pre-idea investors, betting on the person.
Venture-scale speaks to potential. This is the key distinction between VC funds and Bootstrap funds. Either can work but the models are night and day.
https://trends.vc/trends-0005-bootstrap-funds/
Meaning growing at least 10% week after week. if I remember correctly from Jason Calacanis...
I don't have any data in front of me, but as far as VC funds with LPs and GPs are concerned, I believe this is the exception, not the norm, and what @tela is referring to.
Great point. I haven't heard of pre-idea at the fund level. Usually angels. And founders with a track record.
Superb content @dru_riley! I really appreciate the research and depth you covered.
Thanks for checking it out Troy!
I love this sort of content. I subscribed immediately!
Great! Thanks for checking it out. And subscribing 😄
Dru - You're like a magician with these trends reports! All - Dru is doing the research and heavy lifting (synthesizing) for you! a must have in the inbox!
Thanks Vik! That's the goal! 🙌
Thanks for the interesting article. I'm building a startup studio now, covering the global mobility and immigration niche. My hardcore year is just beginning!
https://www.emigro.io/
This is awesome! I see that you're focused on immigrant entrepreneurs.
Do you notice any themes between the companies that they start?
B2C, B2B or specific industries?
Thanks Dru! Well, what I'm doing is somewhat like that because my products are in the GMI space, and therefore the entrepreneurs that I'm partnering with will have first-hand experience and a story to tell.
Could you explain GMI. Is it global mobility and immigration?
And does this mean these entrepreneurs will help other entrepreneurs move between countries? Or are they free to serve any vertical/market?
I started making these tools when I was an immigration consultant and wanted to scale my business. Over time I realized that I couldn't build all the things that I wanted, and I wasn't the right "face" of the businesses, even if I had the expertise.
Nice. I like that approach. Deep domain experience. And you can pool insights between projects.
And customers can seamlessly transition between products and service providers as they go through different stages of their process.
🤯Great point. Lower CAC (customer acquisition costs)
And a universal profile where the appropriate parts can be ported across apps! 😃
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Awesome insights. Thanks for putting this out there.
Thanks for checking it out! 🙂
As with each report, the research is fresh and the presentation is crisp! Great job @dru_riley
Thanks KP! 😃
This fascinates me. I am definitely a big believer in studios like bad unicorn and even
Stir. Both of them launch new products constantly (even weekly I believe?) but what I find so brilliant about them is how they’ve baked these experiments into their brand such that the even the failures are ultimately successes. Some of these experiments have turned into long term products. Others have imploded disastrously. The whiffs become fun memes that humanize the brand and keep their network coming back for the next one. This is especially true for bad unicorn. “Human” is the marketing buzzword of the year. Everyone in advertising is telling their clients to “act human.” However, most ppl still have no idea what that actually means in practice. These weekly launches are among the most effective examples of branding for the human era across any industry imo.