Top Startup Studios in Action
Over the past few months, we’ve been extensively reviewing the top startup studios around the world. Our research has shown that while studios reduce the risk of startup failure, they do not operate an “umbrella” or “one-size-fits-all” funding platform. For instance, from the services the studio offers, to their level of involvement, to whether they generate ideas internally or externally — no two studios work off the same business model.
However, all top startup studios essentially function to bring an idea to life, employ a team of business experts to conceptualize the idea, develop a go-to-market strategy, and launch the business in its best shape possible. Once the venture is launched, there is an ongoing level of extended support provided to ensure the startup has the greatest chance of exiting successfully.
To learn more about how this model functions, take a second to brush up on the Startup Studio Model here.
Sounds great in theory, but do startup studios actually work?
While this model may not be right for every business, for those interested in expanding their resources and capital, there are measures the top startup studios take to ensure the companies they develop will be successful.
Let’s go over key commonalities of this business model to better understand how these studios are diving success:
Highly selective: With the time and resource-intensive nature of studios, it requires them to be far more selective with their vetting process than other entrepreneurial founding models. This differentiates the top studios from their competitors (accelerators and venture capitalists) who invest in dozens, if not hundreds, of companies at the same time. By being meticulous in their pitching and vetting processes, studios are very careful to select only the best ideas they receive or generate internally.
For example, Helix Collective notes on their website: “We are highly selective when it comes to working with founders, so the following process ensures that we are a good fit.” This means the studio will put a considerable amount of time, resources, and energy into developing one out of every hundred startups that cross their desk. In other words, the goal is not to hedge its bets across many companies, but to identify and develop the startups most likely to obtain real-world success.
Expert team: Startup studios are equipped with the brightest, most innovative minds in the industry. Not only are these experts passionate about building businesses, but they play a pivotal role by specializing in specific industry functions like marketing, legal, finance, and human resources. This provides startups with the opportunity to work on various stages of business development simultaneously. In the same way that studios are strict with vetting the startups they select, they pay the same attention to choosing the best team possible. By bringing in experts who have previously seen startups through the exit and worked across different industries and sectors, the top startup studios are better positioned to anticipate and capitalize on market opportunities and challenges.
Sharp strategy development: As part of their selection process, the studio team conducts in-depth market research. According to Studio Hub, once ideas have passed the quality gate from experts, the market exploration phase begins: “This requires detailed qualitative and quantitative analysis of the target groups. This is supported by various design thinking methods.” Both the product concept and the business model hypotheses must be validated, as well as receiving the necessary feedback obtained from partners and early adopters. As soon as the product or service is validated to ensure a product-market fit, the studios tap into the experiences of other companies within their portfolio to glean learnings and areas for accelerated growth. In summation, the top startup studios provide tailor-made strategies to develop, launch, and scale startups from the ground-up.
Shared services: One of the top benefits of working with the best startup studios is the access entrepreneurs will have to resources that enhance and accelerate the success of their business. By leveraging their skill sets from a diverse portfolio of clients, they are able to avoid preventable errors by learning from successful past business ventures. This insight allows the startup studio to cut down product launch time from one to four years (what is typically achieved with a traditional startup) to about three months to a year.
Proven Success — Startup Studios in Action
The startup studio business model provides efficiencies that are unique to studios versus other investment models. For instance, while many startups have struggled with the impact of the pandemic, studios have continued to churn out successful, stable companies despite the financial and technical challenges.
Studios provide the startup with a “safety net” in the form of shared resources and support that remain with the startup from launch to exit (as opposed to an accelerator where after acceleration, startups receive less mentorship but continue to use community space and office hours). With a startup studio, momentum rarely slows as expert teams are always adjusting and refining the business plan. This allows them to better anticipate and prepare for any challenges that may come their way. Whether it be injecting the necessary capital, tweaking research and development, or reworking the go-to-market strategy, startup studios know when to reallocate resources to give the startup a fighting chance.
If you’re the “see-it-to-believe-it” type, here are a few examples of major companies that have found success with the help of a startup studio:
Him & Hers, launched out of top startup studio Atomic in 2017, became the second fastest-growing startup with a valuation of $1.6 billion. The direct-to-consumer telehealth company combines both branded products and telehealth services focused on a wide range of both men’s and women’s wellness products for hair loss, erectile dysfunction, skincare, and birth control. Even with its unicorn valuation, the founder of the San Francisco-based startup, Andrew Dudum, does not appear to be slowing down anytime soon. With goals to bring Him & Hers into a full-fledged telemedicine platform by expanding its portfolio to virtual primary care visits and mental health services, Dudum has his heart set on bringing the three-year-old startup into a valuation of $20 billion. Keep an eye out for this quickly growing startup that recently launched in March 2020 into Target stores across the nation.
VacationRenter, built in the San Francisco-based startup studio Wilbur Labs, set out in 2017 to launch a travel site that makes finding and booking vacation rentals all over the world easier for travelers. As the founders of Wilbur Labs, David Kolodny and Phil Santoro note, “We love vacation rentals, but not how time-consuming and complex it can be to find the right one.” Eliminating the need to search across several sites and scroll through pages of irrelevant results, VacationRenter uses a combination of AI and automation to match the searcher with the best rentals available. VacationRenter also offers users local expert travel guides and smart destination pages to help renters plan the perfect trip at competitive prices.
Where other travel sites have lost their footing during the pandemic, VacationRenter has evolved to meet the changing needs of travelers. By focusing on keeping guests and hosts safe through contactless check-in and enhanced cleaning procedures, personalizing their search to expedite the present-day needs of travelers, and becoming the first travel site to offer over 100,000 safe and socially distant RV rentals — VacationRenter has been recognized as the health & safety-conscious rental option. Achieving such incredible notoriety during a pandemic is impressive, to say the least. And with the company already announcing $1 billion in gross bookings run rate last year, and with plans for international expansion, VacationRenter has become the fastest-growing travel startup ever after this milestone.
Dollar Shave Club, launched out of startup studio Science, is a mail subscription service that delivers personal grooming products to customers’ homes. It all started in 2011, when Mark Levine contacted an old family friend, Michael Dublin, and told him, “Hey Michael, I have a warehouse filled with 250,000 razors from South Korea — any ideas on how to sell them?” Michael saw right away there was an opportunity to disrupt the current razor model. If a buyer wanted to purchase a set of shaving razors, they had to go to a store, ask a clerk to unlock a glass case, and shell out $20 for a pack of razors. Because of this frustration, Michael thought, “What if I created a subscription service that sent blades to customers automatically every month, at a reasonable price?” Thus, Dollar Shave Club was born.
And after a highly successful YouTube video went viral, the company blew up — both figuratively and literally. The viral video created an unanticipated amount of traffic that crashed the company’s servers. As soon as the servers were brought back online, Dubin enlisted a team of contractors to package the first 12,000 orders and had them mailed out within 48 hours of going viral. Fast-forward to 2016 and Dollar Shave Club was acquired by Unilever for $1 billion.
What do all of these successful startups have in common that made them the perfect fit for the startup studio model?
When people think of startup studios, they think of risk reduction, which is extremely valuable and accurate. However, it is important to note that with the support, approach, and resources of startup studios, an idea can accelerate into a functioning startup in a duration that is unmatched by its competitors. This combination of the lower downside and the increased upside is unique to startup studios, and the results are evident with the success of Hims/Hers, VacationRenter, and Dollar Shave Club.
The top startup studios who have found success have done so by leveraging a deep understanding of the startup ecosystem. While each startup studio has its own approach to achieving this understanding, they have continued to replicate successful venture projects for four vital reasons: bringing on expert teams, using innovative technology, clearly articulating value propositions, and narrowly targeting a precise market segment.
Their diverse and dynamic team of experts gives them both the breadth and depth to create successful venture projects. Through the team’s innovative use of technology, they leverage top tech and access to advanced technology development. This allows the studio to optimize its offerings for convenient and accessible data-driven solutions. By having a clearly articulated value proposition, the startups are able to launch from a sturdy and clearly defined foundation. Lastly, by identifying and narrowly targeting a precise market segment — backed by deep and insightful market research — the studio team is able to clearly define their intended audience to know exactly how to appeal to the consumer.
In a startup ecosystem where entrepreneurs want to minimize risk, innovate, create, and profit — this model provides higher value to benefit both entrepreneurs and investors alike. To see what some of the best startup studios have to offer, I highly recommend checking out their websites here:
Sources
Studios
Startups
Dollar Shave Club
Articles
Hims CEO Andrew Dudum says the company is going to be worth $20 billion
Hims & Hers — Featured At Target, Goes Where Few Brands Have Dared
STARTUP STAGE: VacationRenter aims to solve the industry’s inventory fragmentation
We’re Traveling Fast: Three Award Wins in Two Weeks
VacationRenter Hits Exponential Growth and Plans International Expansion
