‘Founders’, operating out of Copenhagen, Denmark are the only startup studio in the Nordics. In order to find out why that is, I caught up with one of the co-founders Simon Sylvest to get his views on the model and his thoughts on what the future of it might look like. Before we delve in though, let’s just take a minute to understand exactly what a startup studio is.
Disclosure: Founders are partners of The Nordic Web, and we have closely collaborated on putting this article together, however there is zero obligation for us to have written this article.
So what is a startup studio?
The definition offered to me from Founders is:
“Startup studios own their own infrastructure made of pooled resources like: office space, back-office solutions, technical tools, management processes, and a multi-disciplinary team. By building several projects a year with the same team, startups studios can re-use this infrastructure, software and best practices across products”.
How Founders see the entrepreneurial space
The popularity of startup studios has not yet hit the heights in the Nordics as it has in the U.S but first-mover Founders is starting to get traction. It’s coming up to three years since they formed the company factory and currently they have four sustainable startups as well as already seeing an exit.
So how do they make a company?
Founders make their companies through what they call the Idea Creation Process which consists of 4 elements.
NM (Neil Murray): As far as I know you’re the only startup studio in the Nordics, why do you think that is?
SS (Simon Sylvest): The “studio” concept is becoming more popular in the US and in Europe (think Betaworks, Expa and Efounders, beside the obvious Rocket) but it is still a relatively new model that nobody has really codified. There are studios acting mostly as ways for serial entrepreneurs to find their new thing and there are actual companies managing a number of projects. We sit in between, we start companies from scratch but aim at creating independent and self-sufficient startups when a certain degree of product-market fit has been proven. To do that you need capital and a lot of operational experience. In the nordics the two things are still kind of separate, where you have VCs of the more traditional type (not so many previous entrepreneurs) and a few angels that are just starting to re-invest their capital, but mostly ad-hoc.
NM: Due to it being a unique model in the Nordics have you had difficulties conveying exactly what it is?
SS: Indeed. The startup community itself is somewhat stuck in old definitions of investors, “garage” companies and accelerators. And now somebody comes along and claims you can do things different? We have been mistaken for many things including consultants, investors, or corporate funds. A lot of the blame is on us, since the beginning we have been mostly focusing on building companies and maybe not so much on telling our story.
NM: Do you think we’ll see an increase in popularity in this model in the Nordics?
SS: We hope so. We believe that it’s a model that brings something really valuable to entrepreneurship. Process, structure, and a lot of risk taking in the very early days.
NM: If so, how would you differentiate yourselves if/when that happens?
SS: We will do what we do today, focus on our own beliefs and strengths. We concentrate 100% in the first 12-15 months of a company, where the goal is building a product customers love and finding scalable acquisition channels. We have built our team and expertise around that, product and growth, and the more we build the more we learn. In that sense there is a certain network effect in running a studio. But at the end of the day what will count the most is building successful companies.
NM: What are the main advantages and disadvantages of being first movers in this market?
SS: We don’t really think that first-mover dynamics play a role in this market. Like everybody else we compete hard for the best talent and having an established brand and track record surely helps us. At the same time we are doing a lot of work to “educate” the market about the studio model and this could make it easier for other to follow after us.
NM: Why should someone consider becoming a part of a startup studio rather than pursuing their own ideas?
SS: A lot of people dream of creating a hugely successful company, maybe working with a couple of friends from their basement or garage. They are inspired by popular success stories like Apple, Microsoft and Facebook, but the reality is that most great companies are started by people with some experience, earned painfully by trying and failing before or by working at a successful startup.
If this is your first startup, a studio gives you the chance to work together with people that do nothing else than building products and companies. You avoid making all the usual beginner mistakes and your chances of hitting on something are much higher.
But there is a lot of value also for more experienced people. They have been through the fundraising circus before and they understand how important it is in the early stage to focus heads down on execution and finding product-market fit. On top of that they get access to talent and skills that it would be almost impossible to hire in the early days of a company.
NM: And finally what does the future of the startup studio model look like?
SS: Tough to say right now. It’s a bit of a frothy market where new things are popping up every day. I am sure some will disappear, some will converge into the one or two most successful companies of their portfolio, but some will definitely prove the ability to consistently create new products and businesses, regardless of technology trends and market conditions.
We really believe that the future of developed economies will rest in entrepreneurship as a form of distributed innovation. Whatever helps people getting started and creating things is welcome and we think the studio is a very good model for that.
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