Five months ago, I decided that I wanted to launch a startup studio in Pittsburgh. Since then, lots of people have asked me, "Why a startup studio?" I figured I'd share my reasoning for building Better Work Ventures. And talk a little bit about why I LOVE the studio model.
But before I dive in, let's start with the basics. What exactly is a startup studio? And what makes it different from an accelerator or VC fund?
Startup studios combine venture capital and company building. Instead of distributing resources to a wide range of startups that have a high probability of failure, as is the case for most incubators or accelerators, startup studios focus all their resources on developing a few highly promising startups. - SeedReady
Here are three of the main differences between startup studios and accelerators:
- Startup studios get involved at the earliest stages. We work with founders when they have an idea. And yes, it could be on a napkin. We don't want them to have incorporated or built anything yet. That's something we do with them.
- Startup studios act as co-founders. We build companies from the ground up with founders. Better Work Ventures will handle everything from marketing, operations, technology, recruiting, and beyond. Accelerators, on the other hand, are more focused on education, networking, co-working spaces, and mentorship. Not building.
- Most accelerators “batch” cohorts together and run group sessions. Everyone starts and ends at the same time. Meanwhile, startup studios typically stagger the start dates of their ventures. This helps balance the resource demands required to build companies.
Here's a great visual that shows the differences between studios, accelerators, incubators, and venture capitalists:
The differences above are just a few of the reasons why I love this model so much.
Another reason I love the startup studio model is that it addresses most of the reasons that startups tend to fail.
Why Startups Fail
I've been working in early-stage tech for a long time. I started working on my first startup in 2006. I've seen so many things change and evolve since then.
I succeeded (exited) and I failed (crashed and burned). I have a lot of friends who have been wildly successful – and some who have also failed. If you take a step back and look at the failures, they typically fall into several buckets.
And unfortunately, founders make these mistakes over and over and over again. Mostly because they don't have the right support to do things differently.
Founders Need More Options
This is a big one for me. This drives me.
Founders aren't one size fits all. Traditional VC is not the right path for everyone. And it definitely doesn't support everyone in the ecosystem equally.
I was, and still am, an overlooked founder.
When starting ShowClix, I was frequently the only woman in the room at pitches, networking events, and (sadly) our board room.
On top of being a woman, I hadn't graduated from a prestigious university. In Pittsburgh in 2007, if you didn't go to Carnegie Mellon University, nobody was super interested in talking to you about your startup. In some ways, this is still the case in Pittsburgh – and it frustrates the hell out of me.
I went to Penn State for three years before dropping out to move to New York City to work in television. I did end up finishing college a few years later. I graduated from Duquesne University with a degree in Journalism.
After ShowClix, I launched LaneSpotter. As a solo founder. This was so much harder than I anticipated.
I went through two accelerators with LaneSpotter: AlphaLab and Techstars Mobility.
These were two very different experiences. That said, the one thing they had in common was that these were educational experiences.
And while I learned a ton during my time at Techstars, it wasn't the biggest benefit of that experience. Mostly because I knew how to build a startup. In fact, I'm really good at building startups – especially the 0 to 1 stage of startups.
The biggest benefit of my time at Techstars was the people I met. The people I met in Detroit changed my life in the best possible way.
And while I'm so thankful for that experience, looking back, what I actually needed the most during this time was people to help me build. I needed people to take some of the work off of my plate. I needed an engineer I could trust. A designer who could free up my time. A financial person to make sure I'm not doing anything dumb.
If I would've known I could build LaneSpotter with a startup studio, I would've done it in a second. I didn't know this was an option.
It's All About the PEOPLE
And this takes us to one of the other things I love about the studio model. It's all about the people: the team, our network, the founders, and the local tech community. Everyone is working together to make these companies successful.
When I launched ShowClix with Joshua Dziabiak in March 2007, we didn't have a hard time raising money. We were in the right place at the right time. And while we raised money fast (which was great), we raised the wrong money (which was not great).
Too early, we invited the wrong people into our lives. People who didn't understand (or care to understand) what it's like to be an early-stage founder. This mistake had a massive impact on my life. If I could change one thing, this would be it. I'd go back and time and not sign that term sheet.
Through this experience, I learned that the best (smartest) thing you can do as a founder is to surround yourself with the right people.
Smart people. Experienced people. Empathetic people. People who care about you as a human, as well as a founder.
One of the aspects of Better Work Ventures that I'm most excited about is the opportunity to work with the best people possible. Included on this list are:
The Studio Team: Venture studios go beyond mentorship. Experienced founders and operators are on the team, building with founders.
Network: Building a studio gives me the opportunity to leverage the amazing network I've built over the last 15 years – for others. Early connections to the right people help lay a solid foundation for a startup – and often lead to its initial traction and success.
The Local Tech Ecosystem: The best studios are an integral piece of the entrepreneurial community. They're the ecosystem’s epicenter for entrepreneurs, corporations, and investors. I want Better Work Ventures to be this in Pittsburgh.
The Founders: And of course, none of this works without amazing, passionate, gritty founders who want to change the world.
Mash these people together and it's a recipe for success.
Validation is Top Priority
Back to the reasons that most startups fail – this is a big one.
Founders come up with an idea, think it's awesome, don't talk to anyone about it, start building, and then validate it. That is absolutely the wrong order.
Josh and I made this mistake with ShowClix. we set out to build a solution from the ticket buyer’s perspective. Our goal was to lower service fees, deliver tickets faster, and provide exceptional customer support. But our mission contained a major flaw: we weren’t selling our software to ticket buyers. We were selling it to venues and event promoters, and they didn’t give two shits about the ticket buyers, service fees, and customer support.
Our optimism and naivete led to other problems. We were determined to take an entirely different approach to the business and launch as an all-digital ticketing company. Print-at-home and mobile tickets only — a radical idea in 2007, before the iPhone even existed.
Needless to say, we didn't validate our idea before building it. We couldn't sell it. So we pivoted, and lucky for us, we survived. In fact, we thrived. But not until we started talking to potential customers and validating our ideas.
Startup studios focus intensely on validating ideas. As a studio team, we won't build anything until we're confident that a real problem exists and that our idea is the solution to that problem.
During validation, our team (with the startup founder) will:
- Research total addressable market and trends
- Build an ideal customer profile and interview those customers
- Look at tech feasibility
- Outline what the early ideal team looks like
- Research the competitive landscape
- Create wireframes or a light prototype
- Run demand generation tests
We'll only move something to the build stage if, as a team, we're overly confident that this startup will be successful.
Hyper-Focus on Repeatable Process
Launching a startup is typically a one-time event. But for startup studios, turning an idea into a business is a repeatable and standardized process. The more you do something, the better you get at it. I love this about the studio model.
Validation is just one part of the repeatable process. Better Work Ventures will use stage gates to build and invest in our companies. These stage gates are:
There are over 100 steps that Better Work Ventures will take as we work our way through this process with founders. In addition, we'll have a layer of shared resources available to our portfolio companies. These resources include research, engineering, marketing, finance, design, and operations. These shared resources allow for rapid development and faster growth between idea, validation, build, and launch.
Our repeatable processes and shared resources take bureaucratic duties off of founders’ plates. Instead of filling out tax applications or spending hours trying to hire a Head of Product, founders can focus on building a great product. And a great product is the universal element at the core of any successful technology company.
On top of this, a studio usually has a thesis by which it builds its companies. High Alpha builds B2B SaaS companies. Enhance Ventures builds marketplace startups.
Better Work Ventures will work with overlooked founders to build community-driven tech companies.
Our focus on community means we'll be using the same tools over and over again to build, launch, and scale our startups. Tools that we've mastered – and that we can help our founders master to scale their companies.
Moving at Maximum Velocity
If you know me, you know I love to move fast. And I definitely believe that speed is one of the things that can make or break any startup.
Speed is the ultimate weapon in business. All else being equal, the fastest company in any market will win. And I believe that speed can be habitual. The startup studio proves that.
The faster we move, the faster we'll learn and evolve. And thanks to our team's experience, we'll make decisions faster, pivot faster, and make it to product-market fit faster.
Faster wins. Not only with customers, but with investors.
According to Global Startup Studio Network (GSSN), on average, studio startups get to Series A funding in 25 months. It takes traditional startups twice as long – 56 months – to get to Series A.
Higher Chance of Success
Everything above leads to one thing: an increased chance at success.
I've had a couple of investors say, "Don't use the term 'de-risk' when you talk about your studio. Nothing de-risks a startup."
I disagree. I think a studio's focus on people, shared services, stage-gate building, repeatable processes, and speed are exactly what a founder needs to increase their chance of success.
And this is why I'm building Better Work Ventures.
Until next time,
#blacklivesmatter #womxnrule #legalizeit #investinthemidwest