Startup studios, a clearly defined model or moving target.

Michael van Lier
Builders Universe
Published in
12 min readNov 9, 2023

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Builders has now been running for 2.5 years as an independent studio. Not the most uneventful years, to say the least. And as one cannot time the market, let me entertain you about our time in the market. Let’s recap and identify essential learnings; they’re not all pretty and most, as always, could have been avoided.

As you might know, Builders evolved from an agency and corporate product-building background into the studio it is today. Before Builders saw the light of day, we experimented for years with different models of collaboration and skin-in-the-game.

Timeline of Builders Studio

Early days

In the early days, we supported scale-ups and corporate innovation teams to get a better product out the door and into the market, in some cases, we even started from zero and laid the foundations for the corporates. The biggest shift in mindset came after a few occasions where the scale-ups ran out of money faster than anticipated. Since we were all for having skin in the game, we were quick to be convinced to invest cash into a funding round that would extend the runway for an extended period. Working directly with the founders and taking an advisory role is just what we’re into. Loved it.

Guess what? These startups ran out of capital before you knew it. This wasn’t the only occasion where our work couldn’t get paid and the capital was depleted. Losing that initial capital hurt, a hard realization we needed to put into learning. Losing some of the capital was not our first aha moment but it was pivotal for our operational model. We’ve explored dozens of models and collaboration models with founders, startups, and corporates before we launched Builders.

The pivotal moment to launch Builders wasn’t a surprise, after all the ‘dry-runs’ we were ready for the main game. So when the opportunity arose to sell one of the companies I had built over a decade we wholeheartedly jumped in. Using the capital from that exit to kickstart the studio.

Birth of Builders

In our first year of existence, we set up shop with a small team and incorporated all the venture-building learnings from the decades before. We defined a master plan for the next 4 years with these main pillars: partner with founders pre-idea, keep at it until we can build 2 companies a year, expand into multiple cities, keep working towards an exit that will make the studio evergreen, and co-found at least one company that will be best-in-class. Easy peasy.

To complete the master plan, we set our scope: build SaaS companies for the future of work and living and defined our operational model. Raise 6mm into a holding, build, finance, and launch 8 companies over a 4-year timespan, starting at the beginning of 2022. We’re approaching the end of year 2 and have made some pivotal changes from hard learnings.

These learnings might come as no-brainers to you, and they seem avoidable to me at this point in time as well. These are not single decisions, they creep up on you. Have fun reading about our learnings, one thing is for sure, they don’t come cheap but are worth every penny.

PS. Lots of what we do works, but it’s less fun to read about ;)

PS2. Without the awesome team, investors, and advisors these learnings wouldn’t be possible.

Our current Studio Focus

Founder and/or Idea

Let’s start at the most important part of any studio. What ideas do you pursue, and who do you pursue them with? Almost all studios seem to start with their own ideas. They match these with founders who have the same conviction as they have to get to the finish line. We were no different, researching our verticals as a starting point, and creating business cases ready to validate.

You know what, that actually never really happened. Even though we set out to follow that route, every time we’ve ventured down that path, we pivoted to an idea closer to the founder’s heart. Even worse, when you set out to find a founder that matches your ideas, you’re asking someone to come on board. It involves some sort of convincing that what you believe to be true is actually true. This can only work if the studio does most of the validation before attracting the founder, and guess what. Then the founder feels like they don’t own the outcome. In hindsight, it all makes sense looking at what conditions are needed to empower the founder, but in the trenches, you just want to get the idea validated.

Today, we still research trends as a starting point for a conversation, but most importantly, we partner with founders with their own ideas for the future of work. These can’t be just dreams about a better future. We pride ourselves on starting with problems worth solving, experienced by the founders themselves. Before even considering a collaboration, we have many problem story conversations on why founders believe this problem has such impact and how it’s solved today. This is rocket fuel for the entire validation and creation process.

Strict Scope or Agnostic

Okay, so now we’re accepting founders with their own ideas within our scope. Let’s talk scope. There are some agnostic studios out there, but most are pretty focused on a certain vertical or horizontal, yes, that’s a thing. It makes a ton of sense, of course, because knowledge, network, people, infrastructure, there’s a lot to reuse and make a studio operate more efficiently.

At Builders, we focused on the future of work and living because we believe these are closely tied together. We researched both work and living thoroughly and went on the hunt for founders within our scope. But it’s not focused enough for an upcoming studio, not only is it a split focus. It needs different founders, networks, and infrastructure. Even worse, ‘living’ is translated to proptech and most of the time ‘work’ to hrtech. So now you are communicating one thing to the world and another thing to founders and investors. It’s just too much.

Today we focus only on the future of work where we build software companies with a sprinkle of AI, which we sell to businesses as a subscription. The difference in focus is very notable, and everyone understands that even more business pains can be solved because of the new AI toolset available to all of us. Our inboxes have exploded with great founders with real problems to solve and there’s overlap in learning between companies, frickin’ awesome. Narrowing down the studio scope simplifies operations and fuels growth everywhere.

Skin in the Game

Do you believe that a founder needs to invest cash to have enough skin in the game? Well, like ourselves, most studios actually compensate founders who build a company with them. That compensation is a third to half of what is market or their previous role. Still, I’ve only met one studio that asks for a cash injection by the founder in residence. All others believe that the cut in compensation is enough investment by the founder. Of course, when incorporating a company or spinning out of a studio, this is all different, but it does frame the relationship from the first day.

You know what, I’ve changed my mind on this, and I’ve been on camera numerous times dictating that founders need to be compensated until they spin out or incorporate. I don’t see it anymore and believe it’s also an excuse not to innovate, bad for the founder, and a limitation on scaling for the studio, let me explain. Builders has a 10-week validation cycle and we need to hit the ground running there, but would need at least those weeks to evaluate if the founder-opportunity fit was there. Remember my previous statement, it could be that the founder is working on a studio-born idea and actually needs the time to explore. As the idea bringer, it’s hard to disagree with that. So there’s actually two things that we needed to improve on; get clarity sooner for everyone and scale validation.

Today, we partner with founders with their own ideas on the future of work. Before we even consider partnering up, we’ve conversed very clearly on the problem worth solving and are on the same page for the steps taken. To get clarity for the founder and studio, we’ve worked on an improved validation cycle of 4 weeks. In those weeks it’s clear for the founder and studio if the idea holds value and if we want to proceed further. The studio invests resources to empower the entrepreneur to do a proper job, and the founder forgoes compensation. Why? To scale up a studio, one needs to build multiple companies at the same time. Let’s assume that not all partnerships are home runs, so partnering with a few more founders is very logical. But when founders are compensated, it’s increasingly harder to take a wildcard risk with some founders. From my experience, that’s where magic happens. So the founders are putting skin in the game, and together we get to the answers as rapidly as possible.

The team working towards our goals 🖖

Mo’ Startups Mo’ Problems

Studios are mostly run by real builders and operators. They’ve had success as founders themselves before or have a strong financial background. Whatever they are, they love to build, create, solve with others, and create new companies out of that passion. Most studios are able to build 1 or 2 companies each year at the start and ramp it up later. Within the studio space, after the 4th or 5th company, a studio is recognized as mature. The simple reason being you’ve repeated a process and have been able to finance the companies to get there, no simple feat.

At Builders, we created a master plan of which one of the first bigger steps was to launch at least 2 companies a year. So whatever failure rate we had before launch, we needed to get to 2 per calendar year to prove that our way of working, eh.. works. The failure rate was actually the thing that stopped us from reaching that goal. Because of compensating the founders, we wouldn’t risk adding too many to the studio and because of that, you’re investing even more in the founders. This is a good thing in many cases, but when you invalidate a business or 2 with each founder you won’t make the 2 per year deadline, ever. On top of that, there are also running companies that need your resources and attention as well. Doable but could be more fun.

Today, we aim to launch 4 startups per year. Wait, what? Yes, 4 per year. This guides our strategic decisions and goals moving forward. We still aim to be the best institutional cofounder ever and spend the time needed to build greatness, but we’ve also looked at ourselves and said, what can we optimize further? With all the changes listed above, we’re now able to have several founders in residence at the same time and empower the founders even more. To make this workable, we’ve worked on making our Playbooks even better and included guides per stage. Basically, it tells the story a venture builder at a studio normally would. That venture builder is still there to empower them, but it’s crystal clear what the founder can do to validate any business case. The biggest win? When aiming to build 4 startups each year, you’ll battle-test your models way more, and the efficiency of the studio and its team members grows with spades. I might even dare to say it’s almost impossible to do with just one each year.

Stage gates to heaven or fairytales

Studios operate with stage gates and playbooks, at least that’s what we tell the outside world. A few of us including myself are asking for caution and not to over-index on processes and focus on the outcomes. Saying that I’m the person who hosts a boot camp session for studios on organisational structures and processes. I know I’m part of the problem, so let’s get it out while we’re at it. Stage gates should be used to overcome premature scaling and do things that do not add value at a certain stage of validation or build. Playbooks should empower founders and the studio to use previous learning and templates to make everything more fun.

At Builders, we take our stage gate and playbook designs very seriously, one might say we go a bit overboard. Our co-founder Sharon, who runs the studio operations, has a strong belief things should look good and have its place. For that reason, our playbooks might be our best-kept secret to success. But there’s no use for any playbook if it only gets used once a year, check my previous point and no need for stage gates if you don’t stick to them. That’s exactly what happened, we had stage gates but we would interpret success once we got there. Not wrong but also not improving what needs to be done to get to a gate faster, better, and with more energy.

Today, we take a serious look at our stage gates once in a while and check if everything still makes sense in the current world and with what we learned in the last cycle. We’ve added a simple scorecard to each hard gate which we align with the founders before we even start collaborating. Each gate has only a few key metrics and the rest is scored by the founders themselves to get an understanding of where the startup stands. Fairytales don’t exist anymore, if the key metrics are off, there’s no funding from the studio. And the playbooks? Most of them we’ve rewritten towards a more founder (CEO) driven process where we empower the founder instead of playbooks for the founders and the studio separately. So don’t over-index on your gates or books, focus on sticking to the gates first; all other learnings will follow.

Partnering with Founders in Residence

What kind of founder studios partner with differs immensely, but most of them are looking for one of these three profiles: previous founders, second in command (CCO, COO), or product managers. The reasoning is simple: these profiles will have made some mistakes before and won’t repeat them with the studio. Once they’ve validated a business worth building, or sooner, most would partner up with a co-founder alongside the studio to spread some of the load. That co-founder is most likely a CTO or COO, or they partner with both, completing the trifecta the tech community is coming to like so much.

At Builders, we were hunting for the exact same animal: exit founders, repeat founders, and product managers alike. We’ve had awesome opportunities to work with a few of these rare beasts but also figured out that this pool of talent is limited. Unless the studio partners exited a company for hundreds of millions, the exit founders would always harbour some doubts. The added value of a studio has to be pitched hard, and it’s easy to overpromise. Partnering with a CTO, we’ve learned to do later in the process, actually around 8 to 4 weeks before we would incorporate a company. We’d learned to first complete a mini-brand, clear founding story, and vision on what to build before hunting for the perfect match. We’d receive as many as 100 great CTOs in each search, of which 5 are spot-on matches.

Today, we’re not just hunting for that small subset of founders. In fact, we’ve turned the tables and allow founders to find us as well with their own ideas. We’re not only selecting repeat founders but have updated our persona to a very strict set of personality traits, including experience in bringing projects to life, but it doesn’t have to be a big exit. The real differentiator is partnering with founders who have identified a problem worth solving and are able to tell a story about the origin of the problem and how it can be solved. Of course, there’s much more to it, but this is the essence of the lesson. And CTOs? The studio now partners with CTOs year-round to lend their expertise to the startups. These CTOs-in-residence fit the studio mould and are potential great matches for the founders validating ideas; matching happens almost organically.

Closing remarks

Running and building a studio is the most magical thing ever, but it’s a moving target for sure. Learnings should be incorporated within main operating processes and one should not over-index on the process and focus on the outcomes. At Builders, we evaluate our modus operandi every quarter these days whilst including the core team in big changes.

Here’s to all studios who are in the market, not timing the market. Build.

Forward, always.

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Michael van Lier
Builders Universe

Founder and Managing Director at builders.studio building companies for the future of work and living.