Welcome back, Insiders! For our past blog, we covered the differences and similarities that other business models like incubators share with the startup studio model. We learned that while both models are similar in that they both work with business-savvy individuals who have the time and resources to execute their ideas all the way to launch, startup studios stand out due to their highly-involved operational model with their partners. In a nutshell, startup studios have created a unique opportunity for founders to minimize the risks that come along with building a startup by highly focusing on the early-stage experiments and prototyping which are critical stages of founding any startup. This is a highly effective and beneficial advantage over other business models since startup studios are able to determine from the beginning whether a startup idea can move on successfully after passing down to further stages of launch.
Most startup studios thrive in and stand out in the startup ecosystem for their ability to scale great business ideas. This is essentially the core of their operations: coming up with great ideas and ensuring they can be molded into successful companies. For both seasoned and new entrepreneurs — especially those who have created a successful company — who don’t have a next great idea waiting in the wings, they can receive one by pairing up with a studio.
Startup studios aren’t only filling market gaps. Startup founders locate consumer friction points and consumer problems to determine where their needs are not being met. Once a market gap is identified, a solution is created. According to our contributor Diana Lesage, “startup studios produce new ventures in half the time it takes traditional startups to launch.” This is no surprise, as we have learned that studio-born startups tend to be 30% more successful on average when compared to other venture building models.
In this article, we will be exploring how good ideas for startups are discovered and brought to life through the startup studio model.
1. Deliver A Concrete Singular Vision
We’ve all heard the saying, ‘the early bird gets the worm’. The same can be said for the world of startup studios. It’s been previously noted that startup studios are often the first in discovering new opportunities. Startup studios know the market, which means they know where consumer's needs are not being met.
A great example of a successful company founded by startup studio is Dollar Shave Club, a wildly popular online subscription, offering personal grooming products at affordable prices. Their founding studio, Science saw an opportunity in the market to fill a consumer's want for an affordable grooming product subscription, and Dollar Shave Club quickly filled this market gap. Dollar Shave Club was the first to expand on the market gap of the recurring need of grooming products.
Traditionally, consumers ordered shaving products manually or grabbed them at the store, and for most consumers these products are recurring purchases. By creating a convenient subscription based service for grooming products, Dollar Shave Club was the first to fully fulfill the recurring grooming product needs.
2. Offer Complete Operational Guidance
Startup studios research and develop ideas for new businesses and products, figure out how to optimize those ideas for mass appeal, provide the business with funding, teams, and resources, and build up a startup until it can stand on its own. This is the reason that startup studios exist, as they help identify direction points and develop viable solutions.
Expansive research is conducted, and the idea is backed by data before spending any funds on marketing. Wilbur Labs, for example, approaches new ventures with research driven decisions, which is how they are able to transform ideas into industry dominating companies. The research-based startup studio has founded some of the most successful companies in their specific industries, including VacationRenter, Joblist, and Barkbus. By placing research at the heart of the company, Wilbur Labs has been able to scale businesses like never before, as they make decisions founded in research and data. The Wilbur Lab’s founders encountered friction points, just as every other consumer does, while looking for a rental to host their quarterly company off sites. They found themselves scrolling through a massive list of rentals, which was time-consuming and frustrating. Through research, they discovered others were experiencing these same friction points, and they knew they needed to fill the market gap. To solve this problem, Wilbur Labs created the solution: VacationRenter. Wilbur Labs, just like any other startup studio, wield the power to solve problems and create a better experience for consumers.
Besides creating new companies, startup studios also provide financing opportunities, along with software development to help businesses flourish. Additionally, they often provide in-house staff that are industry experts in the field. These benefits combined create a team filled with unlimited potential.
3. Learn From Past Challenges
Navigating the world of startups is challenging, as 30% of new businesses fail during the first two years of their creation, while 50% fail during the first five years according to the Bureau of Labor Statistics. If failures are so common, how do founders pivot and come out the other side stronger?
With the repetition behind the core of startup studios, they have a layer of shared resources which allow for a more rapid development and faster growth process than many other incubators or accelerators. From strategy playbooks to cross-collaborative teams, processes, and backing, these resources have allowed companies to take their development to the next levels.
When great founders stumble, they immediately get back up. They also learn from others, being careful to not repeat any previous failures. Accepting that failure will occur along the way can be a hard pill to swallow, but once you understand it’s a necessary component of success, you’ll be on your way to achieving it. Additionally, startup studios are invested in the process of developing a product beyond its launch. As such, many studios have developed programs to share resources and guidance beyond the launches from the startup studio and into the spaces beyond them.
The most successful founders recognize that they aren't experts in everything and surround themselves with people who can fill in the knowledge gaps. As the founder of Spanx, Sara Blakely has said, “embrace what you don’t know, especially in the beginning, because what you don’t know can become your greatest asset. It ensures that you will absolutely be doing things different from everybody else.” Understanding and accepting your weaknesses are a sign of a great founder.
4. Provide Thought Leadership On Strategy
Startup studios founders have found success when they leverage their deep knowledge and understanding of the startup ecosystem. Successful startup studio founders have mastered onboarding expert teams, creating or utilizing innovative technology, obtaining a clear understanding of value propositions, articulating value propositions to investors, and by understanding which market segment to target.
By utilizing a repeated process, as well as the experience of the entire team, these studios are capable of developing plans from the start, and imparting wisdom and experience onto younger entrepreneurs. While the startup studio model is not for everyone, it is a true partnership that provides more than just financial backing. A studio is a great model for entrepreneurs who thrive off of teamwork and collaboration, and who may be looking to deepen their experience and learnings. While they can require flexibility and trust in their studio’s guidance, they are often a critical tool in pushing startups to the next level.
It’s imperative that the startup studio founder obtains deep respect for collaborative environments, as these studios are staffed with innovative minds. These founders leverage the knowledge the staff has to help create a self-sustaining business model. The startup studio is successful due to a community of individuals working together to reach a common goal. Great founders build great teams.
Even the smallest idea can be transformed into a successful business through the help of startup studios. If you’re ready to take on an idea, you’ll want to surround yourself with industry experts to help guide you along the way. By surrounding yourself with innovators, you'll be more likely to succeed. Lastly, you’ll want to prioritize building your community. Successful companies leverage their community to help reach their goals, and without a strong community, you won’t travel as far. If you have an idea, let startup studio models help bring it to life.