Announcing Untitled Labs

I’m excited to announce I am starting a new company in the consumer space — Untitled Labs!

I’ve missed working in consumer since the early hypergrowth days of social gaming. After 5 great years at Gigster, I am thankful to have that opportunity again with fantastic backers including Founders Fund and many of Gigster’s early investors. We are running a “search lab” model, testing ideas in areas like social networking, travel, and premium services, then building an enduring company around the winner — a product that improves life for millions of consumers.

What is a search lab?

A search lab is a full-time, funded effort to systematically launch and test business ideas until a promising candidate for a company is found. It can start with a pre-seed or seed round and, if more funding is required, can advance with a proper seed or series A. Early team members at a search lab are highly entrepreneurial, often choosing to join forces rather than pursue their own startup efforts. The name is inspired by the concept of search funds in private equity.

This is my 3rd search lab after Curiosoft (which found Dope Wars in 2007, the precursor to Mafia Wars in 2008) and Liquid Labs (which found Gigster in 2014). I wrote about those efforts in more detail here.

Most people I meet aren’t familiar with the concept of a search lab. I know a few founders who have run this model but none who have written about it publicly. I hope that offering my perspective here can inspire other founders who want to take the same approach.

The most common questions I get about the search lab model, directly or indirectly, are the following:

Why explicitly set the intention to experiment?

Setting the intention up front has many benefits:

• You can be more objective / lower-ego about the success or failure of each idea
• There is no shame in a “pivot” because it’s by design
• You set expectations with employees and investors
• You become a magnet for your friends’ good ideas. Everyone has an “idea shelf”

Why raise money to experiment?

Consumers expect a relatively high production value for the applications they use.

As time passes from the introduction of a new consumer platform, the average production value of apps on the platform goes up. It has been over 10 years since mobile, the most recent mainstream consumer platform, was introduced, and break-out indie successes are increasingly rare. When I joined Zynga the social space was very new with many indie developers earning millions of dollars from apps that took mere weeks to develop. By the time I left we were spending millions pre-launch to produce each title.

It can be expensive to prototype an idea to a viable level of design and feature completeness, and bootstrapping may not always be a financially feasible or desirable option. With seed funding you can meet high consumer expectations, move faster, explore more ideas, and pay yourself and your founding team.

Is it a studio model, incubator, or investment firm?

No, a search lab is none of the above. Incubators, such as YC or Techstars, fund a large number of independent companies, taking low equity with low involvement in each. Studio models, such as Expa or Atomic, fund a small number of semi-independent companies, taking high equity and providing a lot of help and shared resources to each. Search labs do not fund or create any independent companies, they test ideas with internal R&D until a winner is found. A close analogue is Max Levchin’s experimental firms MRLV and HVF (which spawned Yelp and Affirm).

Search labs for consumer

Search labs are a particularly good fit for consumer because it’s very hard to predict what millions of consumers want next. This is distinct from, for example, enterprise SaaS companies, which VCs like to joke “can be evaluated on a spreadsheet”. Some even believe SaaS companies essentially are glorified spreadsheets. In consumer, outcomes are binary, especially when network effects are at play. Given this unpredictability you need more at-bats to succeed.

Unsurprisingly, many great consumer products were experiments, side projects, or pivots:

• Twitch spun out of Justin TV
• Slack was an internal tool for a game called Glitch
• Twitter was a podcasting network called Odeo
• Zynga originally wanted to be a toolbar company
• Wish started off building ad tech
• Instagram was a Foursquare competitor called Burbn
• Youtube started as a video dating site
• Pokemon Go was originally Field Trip, a startup within Google to test location based functionality
• Lyft was Zimride, a long-distance ride sharing matchmaker
• Flickr was an online RPG called Neverending
• Facebook evolved from FaceMash, a “Hot or Not” for Harvard college students
• TBH, which recently sold to Facebook for ~$100M, was their 10th attempted consumer product after building 30+ prototypes

Not bad company to be in.

Approach

At a high level our process is a repeating sequence of up to 4 steps:

1. Idea generation — devise a possible blueprint for the product encompassing market, problem, need (or want), and solution. Use a variety of ideation methods to produce different ideas. Think like an investor when accepting ideas.
2. Prototyping — design an MVP that is truly viable but minimal. Find a killer feature and make the rest derivative. Code as little as possible.
3. Testing — build a small audience of early adopters. Allow it to grow organically. Early growth may feel unscalable.
4. Validation — look for high engagement, low churn, and hypergrowth. Prove a sustainable business model.

We repeat these steps until success is obvious — an overwhelming influx of demand.

Assuming a 1–4 month cycle time with a team of 4 and a modest marketing budget, the all-in cost to test each idea is $50–200k. With seed capital you can run a number of such experiments, each essentially a “mini startup” with $200k in funding that shares resources with the other startups. This gives each idea a much higher chance to succeed and lower ramp time.

We are currently evaluating ideas in social and professional networking, mobility, personal finance, premium services, health & wellness, travel, photography, and dating.

Why “Untitled Labs”?

There are plenty of names that could evoke a sense of search or experimentation. For Untitled Labs, we were inspired by fine art. You often see “Untitled” on a museum placard when the artist wants to let a piece speak for itself, without being defined or preceded by a title, or when they simply didn’t bother to focus on branding.

Like iconic works of art, the best consumer products seem obvious. It takes vision to create something that is both novel and resonant with millions of people. We hope to apply this same kind of vision toward the next great consumer business.

Join us

We are looking for pioneers and heroes with talents spanning engineering, design, and product. Full-stack, entrepreneurial optimists who can hang onto a rocketship when they find one.

If you are driven to build beautiful, valuable products that reach large audiences, let’s talk.

Here’s to what’s next!

Roger

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