Shortcut Startup Success — From a Startup Studio’s POV
Why do startups fail? It’s a common question — Maybe, we need to ask a different question. Perhaps it should be: how can we make startups succeed? And how can we get them there faster?
I wish I’d had the answers when my own entrepreneurship journey started. I began coding at thirteen and started my first company at sixteen. Since then, I’ve started another six in industries from Web Design to Fashion, Recruitment, Accounting and Legal, and even Funeral Tech. I’ve run companies with over one hundred staff members, and each time I started, I felt like there were lessons to be learned from my previous experience.
And yet I didn’t have a proper learning process to capture the key lessons. And while I was successful, in retrospect I feel I could have gotten further, faster, with some tools, the right personal support and the right data.
Learning by doing with the Stage-gate model
Builders Studio’s stage-gate model provides a much-needed learning infrastructure. It equips founders with the data and human support necessary to make better decisions as their company starts and scales.
Our goal as the Builders Startup Studio is to reduce the chance of failure; encourage fast failing, increase the speed of success; do proper validation to reach product-market fit within 18 months. At every single turn, we are all about Data and People.
From both our experiences (and in practical terms), what does it take for a startup to succeed? Ultimately it’s about:
- The founding team
- A validated market need
- The money to fuel growth
First, let’s talk about Founders. The important thing you need to know about a Startup Studio is that the Founder doesn’t bring the idea into the studio. We (the studio), research trends and business opportunities, and match the right Founder based on data. It’s miles apart from the ‘garage’ story — two kids from college come up with an idea and change the world! That only happens once in a lifetime. From what we have seen first-hand, what matters most is not the idea behind the business — it’s the execution. And who delivers on the idea? The Founding Team.
We also believe in Validation at every stage of development- especially validating thoroughly even before even launching the company! It’s all about testing the proposition before there is a high level of risk.
The Founding Team is formed during Validation. Here’s how it works: we identify an opportunity by looking for trends within our studio scope. For example, we focus on the PropTech market, dive into the data to find the biggest trends, and rank the trends on our trend scorecard. And as a rule, we trust the data above all, especially when we are in doubt about our intuition.
Next, we publish a teaser on our website and go on the hunt for a matching business founder profile. The first step is to find a founder whose values fit our concept. We do this by creating a persona. Our ideal business founder profile is someone who is experienced — either a former C-level or a product expert position within a growing tech startup. Their network is also very important, as it should help sign at least 10 launching customers before incorporation.
What does it take to make a business idea viable?
It’s our mission is to Validate the idea within a 2-month timespan. The CEO needs to prove why they believe in this concept, and gain a granular understanding of potential customers’ problems and why they matter to them. This validation process includes market research and a minimum of 100 customer interviews to understand the problem and the basics and co-create documentation including competitor landscape, a Business Model Canvas, etc. alongside the studio. At this stage, we also run experiments to shape our proposition and conduct follow-up interviews with those who show the potential of fitting our customer profile.
We’ve learned that this is where you find out if the founder is REALLY resilient! After roughly 40 interviews, they often say “Isn’t it enough now? Don’t we know what we need to know?” But we’ve discovered that you learn most by reaching past the 100 interview mark. So while a Startup Studio is about speeding up success, you sometimes have to go slower to get there quicker. Sometimes, there is no shortcut. Interviews done properly at volume will speed up the business long-term.
This, we found out, allows the CEO gets their story straight and become a thought leader. By getting to know customers so well, the CEO can get clarity on their values — and communicate them. They must be able to explain to everyone why they believe in what they are doing — and why they believe in solving this problem and building this company.
Founders start the journey of getting their personal brand clear in tandem with building their business. We then coach them to spread their story across channels to create brand awareness, attract employees and customers, press attention, and build investor trust. This is an extremely intensive part of the journey for the founder, which we believe has a big influence on the company’s future success, especially when it comes to marketing.
Navigating today’s market
Today, products succeed not just because they’re better than the competition in terms of features or functionality. They succeed because of the human touch — people behind the brand who step forward as thought leaders to share what the company and product stand for.
A combination of a product-first approach and thought leadership is extremely powerful. Here are some examples of what we mean by thought leadership: publishing online articles and creating discussions around it; appearing on, or publishing podcasts; creating video content, and giving keynote talks. In a world where growth marketing is pouring consumers into the funnel, marketing with the power of people and data is the next level in the process.
Let me share with you how this has changed in an incredibly short time. 8 years ago, I placed Facebook ads for my company and sold 10 subscriptions, each worth €3.000. How much did those ads cost? €90! Try this today, and the costs will be exponentially higher, with less chance of breaking through the noise. Nowadays, unfortunately, online ads are the tax you have to pay if you are unremarkable as a business. And the tax is only getting steeper. Paid ads should not be your main growth driver, rather you should take a holistic marketing approach and create an all-encompassing brand experience.
This is why we strongly believe in thought leadership. It helps shape potential customers’ minds and drive growth, as customers are far more digitally savvy! They check everything online — the About section of your website, your company’s LinkedIn page, the profiles of people in your team, and any video content explaining the company’s values. To make this work, as a CEO you need to believe in yourself, your company, and your offering. The main point of sales is transferring that belief to someone else. You are the brand. Your brand impacts your customers’ willingness to pay.
So — let’s take a step back. We build trust through a great product, thought leadership, service and speed. All these dots need to connect for you as a company and for your customers. How do we do it at Builders?
Stage Gates: the tool to fail faster and survive longer
Along the way to building a great company — from early validation (before incorporation), to forming a team and the first funding, we build in Stage Gates — which we divide into soft gates and hard gates.
The soft gates are scheduled as deliberate pauses. We ensure we finish all our deliverables and get ready for the next phase. Besides that, this is our time to reflect, and we always ask ourselves these questions:
- What can we do to go faster?
- Do we still believe that we’re on the right track?
On the other hand, our hard gates are connected to cash or legal decisions, i.e. the crucial moments when we decide to scale or pull the plug.
The stage gates are there to align the entire team. If you’re responsible for growth, product, or HR, we all need the same sources and data to make proper decisions and move faster. Ultimately, the data will tell us where we stand today and how to conquer the market. The cumulative data informs our next decision, the next one, and the next one, with the goal of making better decisions at each stage of growth*.*
All of this — a stage-gate model, identifying ideas, founder matching, validation before incorporation, a marketing strategy based on data and people, etc. means Startups founded by Studios such as Builders have an extraordinary survival rate of 60% — while the average across all startups is less than 1%.
So get rid of the ordinary startup chaos and make your learnings in a step-by-step (or gate-by-gate) process. Plan moments of decision making, and put great emphasis on the order of your steps, so your entire organisation is aligned and involved at every stage.
This way you can use your resources efficiently and craft the best go-to-market strategy, where thought leadership is the new way to accelerate successful growth.
Ultimately, you can use all the data you like, but an entrepreneurial journey will always be about People and Processes.
If you’ve made it this far, and the idea of starting a company in a less chaotic manner brings about a warm fuzzy feeling rather than dread, you can subscribe to the Builders newsletter here to keep up with our latest thoughts.
Builders is always looking for Future Founders. If you think our philosophy aligns with your ambitions, feel free to reach out to me personally, and check the Builders website for more about what we do.