A few weeks ago, I read an article reported by Techcrunch about more and more successful entrepreneurs are moving towards being company builders instead of the traditional route to become venture capitalists. It’s interesting and I this trend will continue to grow and the economics of building companies are become faster and cheaper. Also I like the idea of successful entrepreneurs are investing their talent more than just capital.
John Borthwick and his New York City-based technology studio, Betaworks, was one of the recent pioneers of what Borthwick calls a “new asset class” in the VC world. And Bill Gross started this in the nineties with IdeaLab. But we’ve seen many others follow.
Twitter co-founders Ev Williams And Biz Stone launched the Obvious Corp.; Mike Jones and Peter Pham run the LA-based studio Science; Max Levchin debuted his R&D lab HVF; Snapfish founder and Mayfield partner Raj Kapoor is in the process of launching his studio cofounder.co; Michael Birch has Money Inferno; Groupon co-founders Eric Lefkofsky and Brad Keywell, along with partner Paul Lee, are incubating ideas and startups at Lightbank; Kevin Ryan operates AlleyCorp; and most recently we heard that entrepreneur and Menlo Ventures partner Shervin Pishevar is creating is own startup-creation venture, Sherpa. Even VC giant Andreessen Horowitz is building an army of marketers, business development execs, recruiters and more to help aid in the creation of startups.
Each model differs slightly. Some take bigger chunks of equity than others. Some of the studio creators take co-founder titles on certain startups. Many studios not only create and incubate ideas in-house, but also make seed-stage investments in startups outside of the company. But at the heart of what each of these studios is doing is using entrepreneurial expertise and in-house resources to help generate ideas and build companies at scale.
Amazing stuff comes out when talent becomes more integrated to the idea and business development mix rather than just capital.