Here’s how we are diversifying our revenue streams at build3 (co-create an agency with us!)
As mentioned in my last couple of posts, we have been looking to diversify our startup studio revenue stream, which is primarily equity based and hence peaky in monetisation. My initial research led me to the cohub business model which we are on the way to launching by the end of this month.
We also hit upon another concept that should work. So here goes, I look forward to readers poking holes in this plan and/or becoming believers and reaching out to join our merry bandwagon :)
Having run our startup studio for nearly 2 years, we have many learnings; some are merely process and approach tweaks, and some are new services that we can add.
In the latter group is a request for four distinct types of services that most of our startups need —
Support with hiring
Software product development
Go-to-market/growth support
Creating financial models
Raising capital.
The obvious way to solve this challenge and improve support for our startup founders would be to hire folks with these skills. The challenge with this approach is pressure on the payroll and a need to create enough demand to ensure these folks have enough work to do. Not to mention finding and retaining these folks.
Digging deeper, one will realise that we need two types of support: strategic (what to do) and implementation (doing the work!).
The first part may be solved with a group of mentors and venture partners, and the second through freelancers and dedicated agencies. We have had some success with the former and worked with a fantastic bunch so far — shout-outs to Kunal Muthu, Anurag Gupta, Sumit Chachra, Sameer Guglani, Prem, Pranav, Anurag ji, Ashwin Jain, Shreyansh, Yogendra, Shikar, Pranay, Jagman, Dhimant, Govind Wakhlu, Sandeep Mukherjee, Shanta, Apurv Agarwal, Snigdha, Bhagyashree, dr. Sneha, Ryan Mendonca, Ivan, Atur. (Check out this linkedin post for the profiles of the people above https://rb.gy/6pdm8)
With implementation work, it’s been a bit of a hit or miss. Some of our freelancers have gone on and gotten full-time jobs (rendering them no longer freelancers). In some cases, both the freelancer or agency have not had a price point compatible with early-stage startups. Sometimes the quality or service approach did not work for founders, who may be rigorous and demanding.
Soooo… the thought that’s currently coming to my mind is to work with experienced professionals in these fields who are in a mid/senior professional position and partner with them to cofound an agency (i.e., a 50-50 partnership with folks who know their craft sufficiently well, yet want to have greater freedom and enterprise in the way they pursue their work).
Here are some of the benefits of co-founding an agency with build3 :
build3 would bring business launching and building expertise to get an agency up and running.
Some cash to help the agency achieve escape velocity (product market fit/financial breakeven).
Potential client leads to the table. (we receive more than 25 applications every month from startup founders looking to partner with us)
This could also work if you already have your own agency and are looking to relocate to Goa :)
As most early stage startups are crunched for cash, I anticipate agencies need to be comfortable with a mix of cash and equity for their services provided to early stage startups.
When startups achieve product-market fit, they typically have more cash to go around and will be able to pay close to market rates for an agency’s service or build an internal team.
Hence, we believe there is also scope of working with more mature startups that will provide a diversity of work and revenue (cash based income streams!) to help ensure the agency is financially sustainable.
If this sounds like a fun idea, please read on. These are some of the philosophies we believe will need to play in each of the agency types mentioned previously, given our primary client base (early stage impact-centric founders) and what we have learned about them.
Hiring
Having hired over 1500 people over the last 15 years at 8 startups, I feel like I have reached a point where I have a system that works quite well.
I have been inspired by the systems of top organisations like Google (leverage interviews+projects, focus on diversity, smart creatives, test scores), Amazon (bar raisers, 6 pagers, avoid false positives, value alignment), and most importantly, by the organisational system known as teal.
My reading of Reinventing Organisations by Frederic Laloux provided me with a framework that seemed intuitively correct and has improved our ‘fit’ rate by many percentage points, when we practice it well, that is ;)
We still fall into the trap of hiring fast because we have a need, didn’t receive enough applications, didn’t spend the time to draft an accurate job description, or didn’t design our project questions to test for the proper role… But when we do things patiently and with deftness, things work out.
This framework calls for us to always look for 3 areas of fit, namely:
Purpose (sharing the same north star, in our case being in service of entrepreneurs looking to build impact-centric startups),
Organisation (i.e. folks who share and operate with a similar set of values or culture),
Role (have the necessary skills to do the work they are opting in for — this could mean the ability to use Excel well, communicate effectively, research demand for a product/service, etc)
The hiring agency in question would have to go beyond just looking for a role fit at a startup; they would also have to ensure new hires are in sync with the values of an organisation and the direction in which it is going. Essentially go beyond just checking a box and truly see if an individual matches with a startup. (Hopefully better than Seema aunty from Indian Matchmaking ;)
As a potential hiring agency partner, I’m sure you have your own hiring philosophies and we would be keen to hear them out :)
Go to market/Growth support/Digital marketing
Realistically speaking, early-stage founders need to get to market in the scrappiest possible way to validate their brand persona, customer persona, a couple of channels, unit economics and basic manufacturing/servicing process.
This typically means :
Strong hypothesis and paired experiment creation (typically using the leap of faith assumption framework, inspired by the lean startup/the leaders guide — Eric Ries)
Rapid iterations,
A lot of creativity,
Awareness about various channels and their pros and cons, and
Fairly solid design/content skills.
Practically, we have found that Goa offers a really unique group of customer personas (local well to do Goans, local and immigrant folks with lower economic means, different religions, affluent migrants from india and abroad that create a cosmopolitan vibe, tourists looking to spend on a good time, the typical materialistically focused customer persona as well as a more mind, body, earth conscientious persona, in essence this makes for a fabulous experimental ground to discover product market fit, but not necessarily scale.)
Content and local offline experiences seem like a great way to get our feet wet, perhaps with a bit of performance marketing (without creating long term dependency), would be the needs of the day!
Software development
An early-stage startup needs to speak with a savvy, full-stack cum product person who can guide founders on what is possible and what is not, who in turn can take calls on what platforms/frameworks to use and then put together something demonstrable (not something that is bulletproof and works for 1 million hits a second and holds strong against cyber hackers from foreign nations!).
Somebody who can do this quickly, make it not look like crap, and do it singly or with the fewest numbers of people (ahem, did I mention thrifty!). That’s the ideal team a startup founder needs. They should be comfortable with frequent and fast iterations until we reach product market fit.
So to sum it up, we are looking for :
Mid to Senior level folks who have proven expertise in the fields of hiring, software development and go-to-market/growth support who are looking to create their own agency or relocate their existing agency. (As mentioned earlier, build3 will bring business launching/building expertise, some cash, and clients to the table.)
Professionals eager to move to Goa and get their hands dirty with early stage startups.
