Studio: The Concept.
The concept of studios has been around for a while; a complex machine with many parts aiming for a single goal while having as much control of risk. The term rings best when it comes to Film studios. In it’s purest definition, a Film Studio produces movies primarily on their own filmmaking lots with creative personnel under often long-term contract and vertical integration, i.e., the ownership or effective control of distributors and exhibition.
Universal was the first (1912), followed by the likes of Walt Disney, Warner Bros, Paramount, Sony, and 20th Century Fox. Here in India, Bollywood production houses came about during 1920–1945 — the Golden Age of Bollywood. Today the space is dominated by the likes of Yash Raj Films, Dharma Films, UTV Motion Pictures, Red Chillies Entertainment, etc.
A Production House for Startups?
Startups are at the end of the day, a production — A symphony of many moving parts aiming for a single goal. An idea to product market fit to a Company with sound fundamentals (though the latter is questionable these days :P)
The concept of a startup studio was first developed by Bill Gross’s idealab in 1996. The concept was simple, bring together a group of insanely talented minds and work on ideas till they essentially meet the same goal: ie. Idea > Market fit > Sound, Scalable Company.
The first studio to take Bill Gross’s concept into the post dot-com early 2000s, was Betaworks, founded byJohn Borthwick in 2007.
So what is a Startup Studio?
It’s not the following: It is not an incubator, and accelerator, or a VC.
Jules Ehrhardt puts it best: “ A Startup Studio is a platform on which you can launch your startups. If your startup were a rocket, the startup studio would be the launch pad, Houston control, the ground crew, and NASA’s legal department making sure you’re allowed to take off. Whereas venture capitalists are focused on providing capital to young businesses, they provide little human ‘capital’ or support. They prefer to vet startups and then decide if the current team can handle launching the startup at all before investing.On the other hand, accelerators and incubators tend to provide everything but capital. They provide a place to work, advice from experienced founders and investors, and other kinds of non-financial aid such as getting over legal hurdles, help with HR, and general management advice.”
Early Stage VCs and Accelerators have 3 core issues which create problems when aiming to mitigate risk:
a). Vetting. They have to go through hundreds of applications to select a handful.
b). Bad Hands. If the picks are consistently bad the firm is typically in trouble.
c). Limited Touches. They can only commit to time and resources post the raise, ie. post the MVP, typically later in the lifespan of the startup.
Startup studios are different, they strive to reduce this kind of uncertainty.
Startup studios aim to mitigate risk by owning the whole stack. Ie. From the ‘idea on napkin’ phase, building, hiring, marketing, raising and liquidating. Being a part of every phase allows startup studios to intelligently manage risk for not only the ideas but future investors and potential hires.
As of recent following are some startup studios that are doing excellent work.
Since there isn’t a clearly defined formula for how a Startup Studio should operate, Studios like the ones listed above are building out their own innovative models that better help define this studio model, while keeping risk mitigation front and center.
Our Methodology of Operation.
We are a Startup Studio and our approach is different, by design.
Our model is simple:
- We seed an Exploration.
- We then aim to build out the right initial team and find product market fit supported by a sound (moat-like) business model.
- We recognise that product — market fit also depends on time (occasionally ideas are a bit too early), hence an exploration may stay in closed beta, sometimes for years.
- When we believe an Exploration is ready, we raise a small growth round (~10% equity sale) with the aim to scale the company up for an institutional round within 12–18 months.
Our Founding Principles.
Stay Intellectually Curious.
Conflating luck and skill happens all too often, and the byproduct is an incrementally predictable set of decisions that compound ignorance. We must be in constant pursuit of ground truth, knowing that the next layer of detail will bring more questions than answers. Ultimately, there is no right or wrong; there is only learning.
Maintain High Integrity.
In our hyper-connected world, empathy is increasingly scarce. Kindness, honesty, and authenticity often lose out to speed and ego. We are owners of our reputation, our time and our capital, and when we choose to do something, we must remember that we’re allocating precious resources that aren’t easily replenished.
Always be Self-directed.
A world where you do what is necessary not because someone asks something of you but because your internal voice says so is a world where you are empowered versus managed. It happens when your actions and intentions are so consistently high quality that they can’t be ignored. It not only empowers you but also enables and motivates others.
Maintain an Appetite for Change.
If it were easy, everyone would do it. While we don’t know the future, we can increasingly know ourselves: the strengths and weaknesses that make up our character. When we know these, we can make even the most difficult decisions in ambiguity and have the courage to change our minds and course correct, understanding that the path to achieving our mission is non-linear.
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