By Andrew Amann, CEO of NineTwoThree Digital Ventures. Andrew Amann and his team have created 45 products and 9 startups & featured in the Inc 500 in 2021.
So you conjured up a great digital business idea with the potential to go viral, hoping it leads to strong profits and eventual global domination. You might feel that forming a startup company gives you the best chance to transform that idea into a mobile app or website. However, the current technology job market, among other reasons, might hamper your efforts at bootstrapping a new business.
For this scenario, forming a digital venture studio first provides the best chance to source and hire the technical talent you need to transform your idea into a great app. This kind of organization involves building an exceptional team to serve other companies in your industry with the potential to become an incubator for new startups. After all, each new startup only takes a compelling idea, a technical team with superior skills and a project manager with the entrepreneurial chops to ensure success.
Let’s look more closely at some of the reasons why building a digital venture studio makes sense as a predecessor to forming a startup. In the end, why limit yourself to only one successful startup organization? Build something able to transform any spark into a game changer!
A Single Startup Is A Risky Proposition
Simply stated, launching a startup company offers no guarantee of success. In fact, a recent study noted that 90% of all startup organizations fail for one reason or another. Even once you overcome the challenges of coming up with seed funding, this can often create unrealistic benchmarks and timelines which cause a startup’s growth to sputter out. This is why most investors and entrepreneurs aim to launch or invest in multiple startups with the expectation that only a few will need to succeed to see a positive return.
In order to succeed, your startup needs funding and enough runway for your engineers to fully realize the company’s goal. The traditional method of launching a startup makes this a risky proposition.
How Global Talent Reorganization Is Impacting Startups
Transforming a compelling business idea into an easy-to-use mobile app or interactive website requires exceptional software engineering and design talent. Needless to say, these top-notch programmers and designers don’t grow on trees, nor are they available on Upwork. A focused effort to source and hire the technical talent you need — including a project manager — is a must.
Adding to this staffing complexity is the shift to remote working accelerated by COVID-19. We’re seeing Silicon Valley companies start to hire engineers in the midwest. In response, some midwest agencies have started to look overseas, and on and on it goes. This talent reorganization greatly widens candidate pools for companies seeking talented and experienced technology professionals but it’s also required some to offer increased salaries to compete.
For this reason, many startups are facing hiring challenges, largely due to the higher salaries required by today’s workers and the fact that “remote work” is no longer a rare perk. A generous compensation package and opportunities for growth definitely matter when convincing experienced tech professionals to join a fledgling organization.
The Demand For Outsourced Development Services Now Increasing
Due to the talent reorganization and funding crunch, more companies are looking to outsource their development to digital venture studios. This is especially true as companies look to expand into AI and blockchain with the desire or ability to bring experts in-house. In fact, the global market for outsourcing services continues to rise, approaching $100 billion per year.
This presents an opportunity for young entrepreneurs with a startup idea. If building software that uses the latest technology innovations requires experienced professionals, an agency represents a lucrative way to grow and develop this talent.
Go Gradual: Nurture Talent By Forming Your Own Digital Venture Studio
Given all these difficulties, securing the necessary talent to quickly transform your great idea into an enthralling digital venture, my team and I have found success by first nurturing talent within a digital venture studio. While it is difficult for startups to find and bring on an entire team of developers, agencies can take a more gradual approach. Building a digital venture studio allows you to find and nurture talent while slowly building up a team of developers.
While traditional agencies might have difficulty keeping all their developers busy as they ramp up, digital venture studios can use any lulls in client work to put engineers on their own startups. This approach enables you to slowly build a talented team filled with exceptional engineers, designers and managers.
Hiring a few experienced professionals to serve as leaders and mentors lets them nurture those new to the field. A focus on team building forges a group with the right mix to transform your original great idea into the digital venture you always wanted. But now you own an agency and you’re able to repeat this process over and over. Using your team for both incubating new startups and client work limits their downtime. It also takes advantage of the growing market for outsourcing services.
Launch Many Versus Just One: Use Your Profits To Fund New Startups
I’m not trying to convince you to abandon your initial business venture and steer completely into agency services. A profitable digital venture studio also serves as a reliable funding source for new startup ideas. Following this business model essentially creates a feedback loop that spins off new companies as an output. As your organization scales and builds new efficiencies, your engineering team also expands, allowing you to take on more projects.
In the end, this approach greatly reduces risk while increasing the chances of profitability. Instead of building only one startup, use that spark of a business idea to forge an evolving organization able to transform multiple ideas into successful businesses. Creating a digital venture agency ultimately provides a greater chance for unparalleled success.