The math behind our startup studio 📐 🚀
Growth. It’s the most important thing I learned about entrepreneurship during the last 2 decades. We want growth. Not just on a personal level, but on many others. It’s one of the reasons I started the startup studio We Are Builders a few years ago. A vehicle to grow companies and to grow the people that enable growth.
But where does growth come from? Is there a formula for success, to grow a flourishing company out of an idea? That’s where this blog post is about.
Together with investors and entrepreneurs we transform unique ideas into strong and independent companies. In this article I’ll share our core beliefs and the model we use to grow companies.
The math — Idea x Execution
- Ideas without execution are worth nothing.
- Ideas based on assumptions are worth nothing.
- Ideas don’t generate revenue, and thus are worth nothing.
Derek Sivers once wrote a great blog stating: “ideas are just a multiplier of execution”. A simple explanation:
According to Sivers’ equation you need to multiply both to make a business. You get it, the most brilliant idea, without execution, is worth $20.
What does it have to do with our startup studio?
We work on both sides of the equation: optimising the idea and executing with a well-balanced and experienced team of venture builders.
I’ll continue this post with explaining how we build successful companies.
We act on ideas
We Are Builders is a startup studio. We act on ideas from investors, entrepreneurs and organizations. They bring cash but aren’t able to work on the ideas themselves.
We have a clear process for validating ideas and turning our learnings into a viable business model. We start by improving and validating the idea before we start building anything. An experienced and balanced team brings the resulting concept to life. Because we work on both sides of the Sivers’ equation, we greatly improve the chances of success.
The We Are Builders magic sauce
Below you see the steps we take from idea to an independent venture. Each step is concluded with a check-up meeting where we decide to continue or to regroup.
Step #1. Desk — Market orientation
This is no ordinary desk research, we have this down to an art 👨🎨. Our team turns the internet upside down to see what the market for the idea is like. At the same time we learn how to reach potential customers & influencers, find events and learn all about the competitors.
Step #2. Field — Customer discovery
This is the phase we roll up our sleeves, get outside the building and experiment with the idea. Often it involves interviewing market stakeholders about their perceived problems, building a concierge MVP or do a Wizard of Oz experiment. We run several iterations until we stop learning.
We finish by putting serious effort in creating a learnings report and designing a sneak peek of the concept.
Step #3. Proof of concept — Solution test
Now we turn the validated data into a working solution. The goal is to show stakeholders how we’re solving their problem. This also involves creating the first design iteration and branding of the soon-to-be-startup.
In addition, we run preliminary tests to prove the technical feasibility of complex parts of the solution.
Step #4. Launching customer — Start doing business
When everyone is still on board and super excited to launch, we build the first version of the product together with the launching customer, who is paying to use the product/service.
A new feedback loop begins. The users provide us with feedback to make the product even better.
Step #5. Build & Grow — Founding the company
Now we get serious, this is the moment were we actually launch the company with shareholders. Two founders (business and technical) from the Founders network will join, we stay on board as the third co-founders. And of course, we keep tuning the product and operation as a team.
At the lower part of the model, we mention the ‘Founders network’. This is a group of experienced entrepreneurs we keep in touch with. They get the unique opportunity to become founder of a validated concept. Often they get involved early on during the validation process. By the time we reach the Build and Grow phase they are ‘hired’ by the new venture and get half of the company’s shares. The remaining shares are divided between us, the initiator of the idea and maybe other investors.