Like most other newly-formed businesses, simply creating a startup studio offers few if any guarantees of future success. In fact, the startup studio operated by the esteemed Harvard Business School closed after one two years for a variety of reasons. A key factor in the shuttering of its operations involved too much focus on features that offered little relation to their core goal of successfully bootstrapping new businesses.
Arguably ranking at the top of the list of these reasons involved the location of Harvard’s startup studio: New York City. Needless to say, exorbitantly high real estate prices failed to attract interested entrepreneurs and startups, even with Harvard covering half of the rent. Additionally, a strong focus on industry-specific case studies, social mixers, and other educational programs attracted little interest. As such, Harvard reopened a smaller studio concept closer to its home in Boston.
Any successful venture studio typically boasts a collection of critical components, ranging from talented technology and management professionals to the critical funding necessary to hire this talent while providing additional operating resources. With a goal of forming a startup studio with a real shot at making an impact, check out this list of the most important components for any startup studio.
A Talented and Well-Managed Software Development Team
If your startup studio focuses on incubating businesses based on modern transformational technology innovations, you need a top-shelf software development team. Considering the current tech job market favoring candidates, expect to pay competitive salaries and offer a robust benefits package to both source and retain the necessary software engineering talent, as well as designers and project managers
Of course, look for developers with experience in the platforms your startups plan on targeting. These include mobile development for iOS, Android, and wearables, in addition to high-end web developers with experience building compelling interactive websites. Exposure to the operational pain points of the business sector the startup studio specializes in also remains critical.
Finely Tuned Operational Processes
A mature startup studio essentially functions as a state of the art factory, forming new startups in a repeatable fashion, while leveraging finely-tuned operational processes. So in addition to building a talented software engineering team, you also need the sharply-defined procedures and processes typical of a veteran venture studio. Without these processes, a startup studio effectively flies blind.
For example, choosing a modern software development methodology remains a critical piece of this puzzle. Using an iterative approach, like Agile or one of its variants, helps reduce the impact of cost mistakes in design or coding. Lean Startup, partially based on Agile, uses a concept known as a Minimum Viable Product (MVP), effectively an evolving prototype which vets multiple pieces – design, coding, target market, etc. – throughout the project. This ensures any mistakes are caught as early as possible, ensuring they get fixed before the issues become too cost-prohibitive.
Deep Research of The Studio’s Target Market
Another example of a startup studio flying blind comes into play when they form a startup aimed at a certain market without conducting sufficient research of their target. In this scenario, it helps if the entrepreneur, tech team, and/or project managers boast experience in that market or business sector. When following Lean Startup, the target market research is one of the criteria vetted throughout the project.
Here at NineTwoThree, we leverage the agency builder venture studio model, where we take on projects for third-party clients. In addition to providing a valuable source of capital, this approach also provides critical insights into a variety of business sectors. This informs our ideation process by identifying the specific operational pain points in those sectors.
Access to Capital Funding
Not surprisingly, capital resources remain a critical piece in the potential success of any startup studio. Mature studios want their startups to leave the fold with minimal debts owed to outside venture capital investors. This scenario remains another reason why following the agency builder model makes a lot of sense for emerging venture studios, as noted earlier.
In addition to outside project work providing a helpful source of capital to agency builders, it also helps glean insights into new business sectors, as noted earlier. This approach keeps your technology team and project managers busier throughout the year. Working with third-party organizations also identifies additional talent that might be interested in joining your startup studio.
Strategies For Long-Term Growth
All four of the previously-detailed components combine as part of an overall strategy for long-term growth when operating as an agency builder. It helps studios hone their processes and procedures for software development, market research, and more. It provides access to talented tech and business professionals; keeping them busy throughout the year.
Finally, the revenue earned serves as the means for forming new startups. Combined with a focus on continuous improvement, this means mature startup studios enjoy a greater chance of incubating successful new startups with a potentially exponential increase in revenue over time.
If you want more advice on building a thriving startup studio, connect with the team at NineTwoThree. As thought leaders in this industry, we provide useful insights to improve your operations. Contact us soon!