Why Failure Is The Beginning - Not The End For Startups
Why failing can help build businesses by revealing flaws and weaknesses that demand improvement - and how the venture studio model counters this risk.
I'll let you in on a secret.
One project failure doesn't mean your team isn't capable of success the next time around
Startup failure is a very real and very consistent threat, especially for early-stage founders.
And the reasons for those failures are often times related to a lot of things like a lack of market research, bad financial management, or being in the wrong market.
Rarely, if ever, is it because the people you have in your team are incapable (as long as your hiring process is solid).
But in typical SaaS approaches, one project failing can sink a team containing great developers, project managers, and marketers as the whole thing goes up in flames.
Instead of being able to learn from that failure and iterating or pivoting into a different vertical, the baby gets thrown out with the bath water and the team is let go.
This is one of the reasons becoming an agency-based startup studio is the perfect workaround.
The Startup Studio Approach
Not familiar with the startup studio approach?
You just might know it under another name.
Some call them venture builders, others talk about parallel entrepreneurship.
Put simply, building companies through a startup studio creates many advantages coming from the studio’s infrastructure.
One of the most important pillars of this infrastructure is the talent that drives it.
A studio team is made of experts in their fields (design, marketing, code, and other specialties) working together.
Recruitment of great talent is key to addressing larger markets because of the shared knowledge and pooled resources provided by hiring people that have years of experience in their individual fields.
Unlike a typical startup where failure usually means no more company, a startup studio can repeatedly validate, execute and iterate on new business models and even overcome failures that would sink others.
While some studios develop their ideas internally, many startup studios partner with new startups to act as co-founders.
Even if the startup they’re working on were to fail for some reason, the studio can keep the team going and divert them into working on another proven idea or starting another new startup from a fresh concept.
The part that makes them so risk-averse is that they know how to guide these projects through failures because they have faced and overcome them too.
Startup studios are made up of people who have already developed several of their own successful businesses, so they have faced the same challenges startup founders do.
This means they also have a better handle on what to do when things don't go according to plan.
We teach kids and young entrepreneurs that failure is an opportunity, don't we?
So why can't the same apply here?
The concept fails, but the team has gained lessons from it.
If you don't apply those lessons elsewhere, it's potential wasted.
TL: DR Don't run a startup, run a startup studio. Keep your team and learn from the failures.