The Studio Flywheel and Beyond

Must be the most asked question by far every week: ‘So, how is your studio going?’ Great, of course, always great. Since the beginning of our studio, we’ve connected with the global studio network to learn from best practices and share our passion for building and launching companies.

You may remember from my previous article on the concept of studio-market fit, where we discussed the key factors determining a studio’s success. But when is your studio doing great? The answer isn’t as straightforward as it seems.

Understanding Studio Maturity

Overall, it seems the studio world has concluded that a studio can be considered mature with the launch of its 5th company. It also means that until then, the capital and probably the founder market will look at you as a studio that still needs to prove itself. During those crucial cycles of building companies, it’s important to define when you’re doing great and when you need to change pace.

For some reason, most studios think the best playbooks and the best processes are the only way to get the best results. My experience tells me otherwise. Yes, great tools help a lot, but they can and maybe should be created along the way, not as a starting point.

Getting the Flywheel Going

Looking back, the most important thing one should do is get the flywheel going. Focusing on going through the venture-building cycles a few times a year. Failing to complete these cycles is part of the game, failing to run them at all is just plain failure. And we’ve been there. We had a year with a complete focus on one of our companies. It all made perfect sense, and it will, again and again. But when doing so, you’re training the wrong muscle. You become great at operating a company together with co-founders. And since we’ve all been operators, it might even be our default: issues? Operate the crap out of it! Solved, we rock. Wrong!

The key here is to consistently go through the venture-building cycle with your co-founders. Learn what works, what not, and where to document your learnings, yay, playbooks!

It seems that every time we go through a venture-building cycle, we get more efficient at getting through the steps and we also get stuck later in the process. And one will always get stuck. It’s easily definable by the fact that one is not looking at your stage-gate model anymore, you’re just winging it. There’s absolutely nothing wrong with that, but again, you’re not building the studio flywheel when you maybe should.

You should when you want to go from emerging to a mature studio. You should if you want to reach the next tranche of much-needed funding. You should because of your core team formation. And you should because even the best fund managers aren’t always right about the winners in the portfolio.

The Role of the Stage-Gate

So, where do you focus to make sure you’re going through the paces and making progress with the studio? For us Builders, it’s been focusing on the next stage gate. Everything in between has seen different formats, styles, and paces, but the gates have been holy. Every gate holds a scorecard, a fundamental sheet that scores if the essentials are taken care of and that our scope is met. That scorecard also helps tremendously when we are on our way there. Founders instinctively check if any of the work between the gates is of value and will challenge the status quo when needed or when running out of time.

You heard that right, we have a deadline per stage gate. Not that we stop the cycle when we hit the deadline, but we do stop to check if there’s light at the end of the tunnel. If it still fits our scope and the founder is still energised, we move forward, but you should pivot or kill it if not. Why? The flywheel, the flywheel.

Avoiding Pitfalls as an Emerging Studio

So if you’re reading this and consider yourself an emerging studio (you’ll know if you’re one), let me give you some learnings on what not to do. I know you’re going to do them anyway, but hey, maybe you’ll skip one and this saves you a few bucks and half a cycle.

1. Do not consider yourself a pseudo-CEO when it becomes convenient. Yes, you can do some of the tasks associated with the role but do not sit on the chair. The second you do, you’re no longer the CEO of the studio. Other portfolio companies will question your vision and skill set, and your eyes will be off the flywheel.
2. Keep the EIR funnel going. There are no cycles without co-founders, that makes sense, right? Well, it’s the hardest thing in the world to keep your EIR funnel healthy and ongoing. I’ve talked to so many studios, even the very successful ones, that need to revamp their funnel because they’ve not been running enough cycles. It takes months to quarters to get the funnel up and running. In addition, studio branding contributes significantly to the success of your studio. It helps create a buzz around your studio’s name and enhance the appeal to potential founders. By that time, you’re launching your next company in the next year and failed to keep the flywheel going. Keep the funnel alive!
3. Stop giving yourself slack. Maybe the most talked-about subject among studio founders is when to cut ties with founders. Way sooner than you might expect. Yes, I’m a firm believer in sticking with your founders no matter what, but if the company is progressing way slower than you were expecting, stop giving slack to yourself and to the co-founders you’re building it with. It’s either moving forward all the time and making your flywheel run, or it’s not. If it’s not, take action, today, do it now. If this doesn’t resonate today, come back in a while and it will.

Keep the Flywheel Running

Okay, enough of that. By now, you’ve figured out the point. Do the cycles, launch multiple companies per year, heck, launch 5 a year if that’s your dynamic. Studios run cycles, they keep the flywheel going. Not feeding the flywheel will make it harder over time to get it going again. One could argue once momentum is lost, it’s gone for good.

Consider the flywheel as the heartbeat of your studio — it needs to keep pumping to distribute the lifeblood of your enterprise, your venture creations. Fail to maintain its rhythm, and the health of your studio suffers.

Keep it going strong, and you’ll breathe life into a vibrant portfolio of ventures that speak volumes about your studio’s capabilities and resilience.

So, let’s act as if momentum, once lost, will be gone for good. Keep going through the cycles, and keep the heart of your studio beating until we hit the 5th company. By then, the flywheel should be going full steam, the heart of your studio will be strong, and your studio will have reached maturity. Feel its pulse, heed its rhythm, and let your studio thrive.

Ok, you got the message. Did you? In my next article, I’ll go deeper into studio flywheeling for sustainable growth. Until next time!”