This is not "the next big thing." It's actually symptomatic of a bug in silicon valley culture - high profile entrepreneurs aren't allowed to fail in the same way as normal folks.
When these studios work, it's not because the studio approach is inherently a better way to do things, but rather because the people running them are really awesome.
The only reason to start a studio, as far as I can tell, is to set the expectation you'll release a few crappy products at first.
This is normally what a startup does anyway. I guess the difference is that high-profile entrepreneurs aren't given the same leeway to fail, which kind of sucks.
I read the grandparent post as "People in Silicon Valley often have the unrealistic expectation that everything a previously-successful entrepreneur does will succeed. When their first try inevitably doesn't work, this poisons the well for subsequent refinement and iteration. As a result, previously-successful entrepreneurs are creating startup labs to set the expectation that everything coming out of it is an experiment and insulate themselves from the PR backlash of trying some dumb ideas to get to a good one."
Which is not at-odds with your comment, although as a previously-successful entrepreneur, perhaps you can speak to whether or not there really is that backlash and premature judgment that he posits.
(Personally, as someone without much of a brand name, I relish the freedom that gives me to try stupid stuff. There's no way I'd be brave enough to try my current startup attempt - which is really quite humble - if everyone expected me to invent the next big thing.)
>My next thing is unlikely to be venture backed until it already has some success or momentum.
Can you elaborate a bit, Joshu? I took this to mean that you're electing not to seek venture backing early because of how it might skew incentives, but I can imagine some alternate readings as well.
I think that it is better discipline to raise when you have a product that needs it, rather than beforehand. There are many unnecessary ways to fail if you raise out of order.
I would speculate that this meta-startup makes sense for career entrepreneurs in the same way that a media startup makes sense for media people or medical people starting medical startups. It's kind of like YC being started by experienced startups guys. They knew about startups and they started a startup that leveraged that.
I'm not sure that a creative enterprise like entrepreneurship is amenable to any sort of factory model. While theoretically it could be a bit like drug discovery -- make lots of permutations, test them, iterate, goal seek -- the problem is with the human factors. Companies aren't organic molecules that can be reliably produced and then re-produced. They're made out of people.
I suspect that these entities would become echo chambers dominated by cronyism. The term "stars" already gives me that feel. The incentive structure gets all wacked out... it ends up being more about status within the startup ecosystem than shipping stuff that works and that the market likes. The SV ecosystem in particular already has this problem, and concentrating it more into a more institutional model might make it worse.
I think the same problem haunts modern-day academic "factory science," where people who specialize in getting grants are very good at getting grants and churning out very mundane, plodding science.
The best accelerators escape some of this problem by accepting open applications from anyone, anywhere.
Calling these entities "factories" is silly. Factories, as traditionally understood, stamp out identical copies of a product. That is not the purpose of these organizations. Yes, they intend to generate other businesses, but these business will not be copies.
Update: I'm not criticizing the thread here; the article used the term.
I think you're right to be skeptical. I'm in one such "startup factory" (which does not accept outside proposals), as an employee in one of the startups. I can confirm that your comments are spot on.
>> “A lot of entrepreneurs are motivated to understand how to make their success repeatable,” says Prof. Williams. “But what they have to recognize is there’s a lot of luck involved in entrepreneurship, and most entrepreneurs in the tech sector might only get lucky once.”
This actually seems like a good reason to start a studio or accelerator. Even YC understands that half of their companies will fail. In many cases this not because the founders are lazy or untalented but because there's a good deal of luck involved in creating a product that sticks. Consumer products in particular are extremely hit-based so it kind of makes sense to make a "record company" rather than put all your eggs into a single band.
"Lately, however, a new formula has begun to take hold, one that challenges the very idea of how a business should be built. It plays out quite differently: you start a business, your business experiments with lots of ideas, many ideas fail but some succeed, you turn these ideas into new businesses, and the formula repeats on its own. Or at least, you hope it will."
Where I am confused/interested is how the investment/ownership works in this case. So if I start a company, discover a great business/product and then create another company around it, I would assume that the investors in the original company would get the same percentage in the new company?
these sorts of efforts seem to simply stem from a thinking paradigm, that.. hyperbole ahead.. may be most easily accessible through programming, of organising your process in order to reuse as much functionality as possible for highest efficiency
musk talks about how interesting process manufacturing is:
~"
very often people think of manufacturing as some rote process of making copies, which it isn't, which it actually isn't, it's building a machine that makes the machine, and if you think the machine is important, well then building the machine that makes the machine is also extremely important, and more often than not, what i've found is, um, it is the manufacturing that is harder than the actual product
".. Elon Musk, One on One with Elon Musk MIT AeroAstro Centennial Symposium .. ,45:13~47:39 .. https://www.youtube.com/watch?v=SOpmaLY9XdI#t=45m13s
When these studios work, it's not because the studio approach is inherently a better way to do things, but rather because the people running them are really awesome.
The only reason to start a studio, as far as I can tell, is to set the expectation you'll release a few crappy products at first.
This is normally what a startup does anyway. I guess the difference is that high-profile entrepreneurs aren't given the same leeway to fail, which kind of sucks.