Inside the Top Startup Factories

Some people dream of starting a successful startup so they can strike it rich, sell the company, and retire on a beach sipping mojitos. Others entrepreneurs nurture their one big idea and dream of creating a stable company that they guide through its growth for many years to come.

But the serial entrepreneur is a person with dozens, hundreds, even thousands of business ideas, who relishes the challenges and excitement of starting a new venture. Many serial entrepreneurs start one company after another, waiting just a couple of years for it to become stable before passing on the reins and diving headfirst into another startup.

The popularity of serial entrepreneurship has spawned a new business trend: the startup factory, or startup studio.

A “startup factory” is a moniker for a type of business that exists to create new businesses. Often launched by successful entrepreneurs who have exited their startups and are looking for the next challenge, startup factories work on multiple startup projects simultaneously. Often their projects are pitched to the same funders and customer base and built using the same technologies, but sometimes they work on completely different ideas, like throwing spaghetti to see what sticks. The startup factory model allows these businesses to experiment with different ideas instead of focusing all their resources on just one.

One example is Mint Digital. Founded by Andy Bell, Mint Digital is a startup studio that’s working on creating custom cardboard avatars and delivering craft beer to your office, among other ventures.

Just Add Red is another startup studio, founded by a group of successful internet entrepreneurs. They’re working on facilitating the renting of conference and meeting spaces, bringing together a community of pet lovers, and promoting socially responsible and sustainable luxury products.

While you hear more about individual entrepreneurs than startup factories in the news, the business model is behind the scenes for many popular startups including Twitter and Tumblr.

Are startup factories the future of entrepreneurship? Check out the graphic below for a behind-the-scenes look at the workings of startup factories.

Inside the Top Startup Factories

Transcript: Inside the Top Startup Factories

Increasingly, instead of just starting a new company, talented entrepreneurs and company-founders are launching a new style of business that some are calling “parallel entrepreneurship” or “startup factories.” These include Mark Pincus of Zynga, Garrett Camp from Uber, and Kevin Rose of Digg. But what is a startup factory, and what do they do? Let’s take a closer look.

What is a Startup Factory?

There are a number of different types of startup factories (or “startup studios”), but there isn’t one set definition of what the term means. Primarily, startup factories share the following traits:

  • Work on several projects or products simultaneously Traditional startups tend to focus on one project or product
  • Take advantage of their existing resources Most ideas are pitched toward the same customer base or use similar technologies as other current projects
  • Primarily started by successful entrepreneurs Founders tend to be entrepreneurs who have exited from their previous products, Those entrepreneurs are often involved in several products
  • Well-trained team Teams tend to be experienced, usually with other start-ups, People rotate between projects to increase cross-pollination of ideas

Types of Startup Factories

In a broad sense, there are three basic classes of startup studios:

Operator-led

  • Typically designed to help the operator find their next business idea Operators tend to be exited entrepreneurs
  • The main goal tends to be the creation of a “real” startup
  • Advantages: Team knows their field well, People come up with ideas quickly, Team can execute ideas well
  • Disadvantages: Ideas can be held too dear to the heart
    • This can cause problems if an idea should be dropped but isn’t

Company-led

  • Emerges from existing business in addition to their day-to-day operations
  • Takes advantage of the company’s extra capacity, money, or time
  • Advantages: Existing infrastructure helps support new projects, Team with necessary abilities are already available
  • Disadvantages: Balancing new projects with normal business needs can be challenging, Required capital can be more than expected, The company culture needed to work at a startup can be in conflict with that of an existing brand

Investor-led

  • Usually created by early-stage investment houses (those that invest in early-stage companies)
  • Advantages: Provides entrepreneurs with mentors and advice in addition to funding
  • Disadvantages: Typically require a greater share of equity than the other types of studios

Startup Factories

Betaworks

  • Founded: 2007
  • Type of studio: Investor-led
  • Founders: John Borthwick, Andy Weissman
  • Base of operations: New York, USA
  • Involved in: Giphy, Bloglovin’, Dots, Digg/News.me

Elepath

  • Founded: 2011
  • Type of studio: Operator-led
  • Founders: Jake Lodwich
  • Base of operations: San Francisco, CA
  • Involved in: Keezy, Exposure, Thinglist

Just Add Red

  • Founded: 2011
  • Type of studio: Operator-led
  • Founders: Karen Hanton, Olaf Siedler, Angus Bankes
  • Base of operations: London, England
  • Involved in: Pets Pyjamas, Positive Luxury, iTrigga, Hire Space

Mint Digital

  • Founded: 2004
  • Type of studio: Company-led
  • Founders: Andy Bell
  • Base of operations: New York, USA and London, England
  • Involved in: SitckyGram, Boomf, me, Projected, OllyFactory

Sidekick Studios

  • Founded: 2009
  • Type of studio: Company-led
  • Founders: Adil Abrar
  • Base of operations: London, England
  • Involved in: League of Meals, The Amazings, Buddy

HVF (“Hard, Valuable, Fun”)

  • Founded: 2011
  • Type of studio: Investor-led
  • Founders: Max Levchin
  • Base of operations: San Francisco, California
  • Involved in: Affirm, Glow

Forward Partners

  • Founded: 2013
  • Type of studio: Investor-led
  • Founders: Nic Brisbourne
  • Base of operations: London, England
  • Involved in: Appear Here, Hailo.com, Unbound

While there are many different kinds of startup factories, they all have some things in common: a passion for creating new things quickly and the ability to work on many projects simultaneously. It’s because of startup factories that we have Twitter and Tumblr. Who knows what we’ll see next?

Sources

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