9 differences in starting up in a startup studio

The differences between a traditional startup and one created in a startup studio that made me appreciate the advantages of venture building

The first time I heard the term “startup studio”, I believe I thought of something halfway between a co-working space and an incubator or accelerator. In short, a “studio” (in a physical sense) made available to new startups, perhaps offering services (from a coffee machine to marketing consultancy) to young entrepreneurs just starting out. If you are approaching the world of startup studios for the first time, it’s likely that you have thought of something like this too.

In reality, there is nothing further from the truth. In this post, retracing some of the thoughts and doubts I had when I approached the startup studio model for the first time, I hope to help clarify your ideas.

First of all, what is a startup studio?

Established that it is neither a co-working space, nor an incubator, nor an accelerator, to clear up any misunderstandings, I will immediately provide a definition, the same one that was given to me when I was told about the startup studio for the first time:

The Startup Studio (also called “venture builder” or “company builder”) is a serial generator of startups: a company that founds and builds new companies in series.

It was then explained to me, by a proponent of the idea, that the Startup Studio model is based on the idea of “parallel entrepreneurship”: the studio acts as a “serial founder”, that is, it founds multiple startups “in succession” and launches them to grow “in parallel”. In short, it is a “factory” of startups.

Thanks to this explanation, I had a first idea, correct although perhaps a bit approximate: the startup studio must be some kind of “container” that “produces” multiple startups, which are worked on at least partially in parallel, although they are launched one at a time. 

So far, I was following the discussion quite well, even though some questions were already beginning to flash in my mind: But aren't the various startups made by various founders? In what sense is the founder the studio?

I was then explained that this model was born to shorten the time to create and launch a startup, increase the “quality” of the produced startup, and reduce the risk of failure.

At this point, I remember having had more than one doubt: Is it really possible not only to create more startups in less time, but even to “do them better”? And what does it mean to increase the quality of a startup? Why might a startup born in a startup studio have a better chance of success? 

On one hand, the idea that creating more startups in series could yield efficiencies seemed intuitive, but on the other hand, that alone did not explain why the founded startup could have a lower risk of failure, even marginally. After all, a startup is a startup… right?

Perhaps not.

There are startups and startups…

Despite having been shown data indicating that startups spawned in a startup studio yield higher returns and reach funding rounds more quickly (see, for example, the GSSN white paper), part of me remained unconvinced.

It may be that most of my career has taken place in a corporate context where there is a strict rule that admits very few exceptions: to do something better takes more time. Something therefore did not add up.

I believe I started to truly understand the advantages of the startup studio model when I momentarily stopped thinking about the overall vision (the entire “portfolio” of the studio) and instead focused on the single startup. I tried to understand how the path of a “traditional startup” (that is, born as any startup is: with a founder who has an idea and turns it into a business…) differs from that of a startup spawned in a studio, and there I found my turning point. 

First of all (and I apologize if this is trivial), it should be noted that the label “traditional startup” covers a huge and varied category, ranging from Airbnb to that time when a friend of mine and two of his former schoolmates created an app that would revolutionize the social media landscape, and – alas – threw in the towel within a year: a genesis in many ways similar with a terribly different epilogue. 

In short, there are startups and startups. But the point is precisely this: for every successful startup, there are many startups that fail, some because they did not find the right conditions to develop, others simply because they could not work out. 

To the uncertainty inherent in the very concept of a startup (uncertainty regarding the idea, the business model, the problem/solution fit, the product, and its commercialization…) are added additional and contingent difficulties (difficulty in finding capital, resources, skills, experience, contacts…), and it is often difficult to retrospectively determine what the cause of a new venture's failure was.

The startup spawned in a startup studio, obviously, does not have any guarantee of success, but it starts in an environment designed to offer the new venture better and more controlled conditions in which to develop.

The genesis of the startup, the “controlled” environment in which the startup is generated, and the creation process characterize the startup studio model and explain its advantages. And when I finally managed to see it this way, I began to understand the sense of this venture building model.

Below, I have tried to summarize nine differences, which I believe are fundamental.

Nine differences between a traditional startup and one created in a startup studio

Here are some of the attributes that differentiate the initial path of a startup born traditionally from one created in a startup studio:

1. Validation of the business idea

• Traditional startup: The genesis of the business idea can follow a thousand paths, and the validity of the idea itself depends on the creativity of the founder and especially on their ability to  validate it. The subjectivity of the founder, who in most cases is precisely the person who came up with the idea, can be an obstacle to an objective assessment. 

• Startup studio: There is a process of “natural selection” of the idea: starting from a wide selection of business ideas, only those that prove most promising based on an objective and collective validation are selected. Thanks to greater resources and the approach taken, the Startup Studio is able to collect, analyze, compare, and validate many more business ideas (and do so with more objectivity) compared to the “average” traditional founder.

2. Validation of the business idea

• Traditional startup: the founder is usually the person who had the business idea. In order for the startup to succeed, it is necessary not only that the idea is valid, but also (and above all) that it was conceived by a founder, or a team of founders, with the necessary skills and experience to carry it forward. 

• Startup Studio: first, the idea is identified. Only after the idea has been “validated” internally within the studio is a co-founder chosen who has the experience and skills best suited to carry the project forward and act as CEO of the startup. 

3. Lean roadmap (selection, validation, and iteration)

• Traditional startup: The approach considered most promising for the traditional startup is the “lean startup” method based on iterative cycles aimed at generating “learnings”,  pivoting to different solutions or, if things don't work out, “pulling the plug”. In the case of the traditional startup, halting the project means closing the startup for good and admitting defeat. It is not an easy choice to make, and many traditional startups end up iterating solutions ad infinitum, hoping to achieve success despite evidence suggesting otherwise.

• Startup studio: The startup studio adopts both by choice and necessity a roadmap made up of predictable milestones (managing various startups simultaneously would not otherwise be possible) and “stage gates”, moments of truth in which it is decided whether or not to take an initiative to the next phase. The startup studio therefore proceeds through selection, validation, and iteration, adhering to the lean startup philosophy. Unlike the traditional startup, the lean methodology is applied not only to the individual startup but to the entire portfolio: if a startup does not receive the necessary feedback within the set time, it can pivot or the project can be shut down, reallocating, without drama, teams and resources to another startup. 

4. Experience and human capital

• Traditional startup: The level of internal experience in a traditional startup depends a lot on the founder's CV and their ability to assemble a quality team from the beginning, as well as the financial resources available.

• Startup Studio: The startup studio is made up of professionals, entrepreneurs, and former successful founders (if you're curious about the Startup Bakery team, you can find it here). In the early stages of the startup’s development, the studio's team is effectively the startup's team and is therefore able to avoid the typical mistakes of a “new” founder as well as identify and employ the most appropriate best practices. Moreover, the experience of the team increases over time as the number of startups “produced” by the studio grows. 

5. Resources and financial capital

• Traditional startup: Before reaching a funding round, the average startup hardly has access to significant capital. Consequently, the initial development of the startup and its ability to test, validate, and improve the idea and solution it offers are generally quite limited or proceed slowly.

• Startup Studio: The startup studio provides the startup with its resources from the outset, and indeed, the validation of the idea occurs even before the startup is founded. The studio's resources provide the new startup with the ideal environment in which to develop, allowing for a significant shortening of timeframes.

6. Repeatable processes, services, and intellectual capital

• Traditional startup: Except in cases of “serial” founders, the life cycle of a startup is essentially a unique project, with a beginning and an end, but which does not repeat. Many of the activities necessary for creating and managing a business (such as the legal establishment of the company, brand creation, tech stack development, contract creation, compliance with various legal and administrative obligations…) are mostly learned on the job by those who are learning to be entrepreneurs for the first time. Consequently, these activities are often carried out with non-optimal times, methods, and costs. The creation of processes and their optimization occurs on the startup's product but not on the startup itself. Indeed, a lot of time, resources, and energy are spent on management and administrative activities that, although essential, have nothing to do with product development.

• Startup Studio: The activity of the startup studio is instead characterized by the standardization of processes around a “recipe” in successive phases, and the creation of a series of dedicated services. Every repeatable activity from one startup to another is “engineered” and optimized. Startup Bakery, for example, has formalized its approach to developing a startup in a four-phase business recipe, setting up a series of dedicated services to provide startups with the necessary support at every phase. By virtue of the internal intellectual and human capital, the startup studio can create significant efficiencies: it eradicates or reduces the learning and execution times of many tasks, allowing the team to devote much more time and energy to product development. 

7. Absence of bias

• Traditional startup: A traditional founder is often “in love” with their idea and, more or less unconsciously, motivated to push it at all costs, perhaps ending up spending time and resources chasing an idea that simply does not work as desired.

• Startup Studio: The collegiality of the startup studio, the presence of governance, and the act of managing a portfolio of startups tends to eliminate, or at least significantly reduce, individual bias. If an idea isn’t working, the Startup Studio has the interest to redirect resources to other ideas and other startups within its investment plan.

8. Synergies and economies of scale

• Traditional startup: In a single startup, it is quite obvious that there are no synergies or economies of scale.

• Startup Studio: The startup studio is able to create synergies and economies of scale on various fronts, from software licenses to office spaces to negotiating services with third-party companies and external professionals. 

9. Network of talents, entrepreneurs, investors, and companies

• Traditional startup: The network of a startup is essentially the network of its founders and team.

• Startup Studio: The startup studio actively and continuously works to become an integral part of the entrepreneurial community, weaving relationships at local, national, and international levels. In addition to creating a continuous pipeline of talent, over time startup studios become a point of reference for entrepreneurs, investors, and partner companies.

Sometimes, to do things better, less time may be needed

In light of these differences, that strict rule I mentioned earlier needs to be revised: to do things better takes more time… given the same resources, skills, and experience. 

The financial, human, and intellectual capital of a “traditional” startup is difficult to quantify: while some startups boast significant resources, are backed by visionary investors, benefit from incredibly experienced teams, and have a clear methodology from the outset; in most cases, however, this is not the case, and everything must be built from scratch.

The startup studio, on the other hand, already has a base on which to build the startup. This combination of human, financial, and intellectual capital is a differentiating factor and is why the startup studio is undoubtedly a model worth betting on.