Dear Aspiring Entrepreneurs...
“As an aspiring entrepreneur, how can I best engage myself with a startup studio?” My answer: Don’t. Start a company first.
Howdy, and happy Thursday!
Before we dive into an awesome topic this week, I want to give a major shoutout to Nick Zasowski and GSSN for publishing Disrupting The Venture Landscape,a new white paper reporting on the details of the startup studio asset class.
This report is a major step forward for the studio asset class, as it dives into the capital efficiency and the return profile of the studio model, includes a number of case studies, and much more. If you are an investor who is interested in the studio asset class, this white paper is a must read.
Onward with today’s topic.
Last week, I had the pleasure of speaking to a group of MBA students at Cambridge University about startup studios.
(Major hat tip to Wojtek Wojaczek for organizing the event and for inviting me to speak alongside Nick Zasowski of GSSN, Michael Van Lier of Builders, and Romain Diaz of Satgana.)
One of the bright students in the audience posed an interesting, yet popular question:
“As an aspiring entrepreneur, how can I best engage myself with a startup studio?”
My answer:
Don’t. Start a company first.
Here’s why:
The most important stage of the entrepreneur-in-residence (aka the EIR) journey at a startup studio is the validation stage. At many studios, including Jack Spades, this is the first stage. The studio team will push HARD for the EIR to validate their concept sufficiently over the first 1-3 months.
For those of you who are unfamiliar with this process, validation is the first step that entrepreneurs should take when it comes to starting a new venture. This process usually takes 30-90 days, and is pretty much nothing but customer interviews and market research.
At Jack Spades, we firmly believe that entrepreneurs should not write a single line of code or get attached to any ideas until they have become an expert on the problem in which they are seeking to solve. There are no shortcuts. Incidentally, we require that our EIRs conduct 100-150 customer interviews in their first 30 days of validation. This is a full-time job.
From my perspective, the most common mistake made by 99.999% of founders is that they either skip the validation process altogether or jump to product-development too early. This almost always results in building a product that nobody wants to buy.
By the way, I learned the hard way. I made this mistake...Twice...And it cost me about $100,000 and 18 months of my life.
However, I would not trade this learning lesson for anything.
The only way to learn the importance of validation is to start your first company, to probably fail, and then to realize what you should have done differently (eg — spend more time becoming an expert on the problem).
Now, to tie it all together, this is a lesson that an aspiring entrepreneur must learn before a studio will want to partner with them to launch a venture. The only way to learn this lesson is the hard way. See you on the other side!
Cheers,
—Jake