The Significance of Venture Studios Building Their Own Products

Venture studios are redefining the landscape of entrepreneurship by blending resources, expertise, and strategic vision into a powerful model for building startups. Unlike traditional incubators or accelerators, many venture studios take a more hands-on approach by creating their own products and ventures internally. This strategy has profound implications for the startup ecosystem and offers unique advantages.

One compelling strategy that some studios adopt is to build and scale their own products in-house. This approach leverages the studio’s core strengths, ensures greater control over the development process. Ultimately creates a robust foundation for both the studio’s and the startups’ success.

In this blog, we'll explore the significance of venture studios building their own products and highlight real-world examples of studios that successfully implemented this strategy to create impactful businesses.

Expertise and Experience

Venture studios are equipped with a wealth of domain knowledge. Thanks to teams of seasoned entrepreneurs, business analysts, and product experts. This concentration of expertise enables studios to identify market gaps and develop products that are well-aligned with current demands and trends. Established processes for ideation, prototyping, and scaling to streamline product development, reducing failure risk and boosting success chances.

Studios like Atomic have thrived by leveraging their internal expertise; they identified a market opportunity in men's wellness and built Hims, a successful product that went public in 2021.

Resource Efficiency and Capability Enhancement

Venture studios often utilize shared resources—such as technology, marketing, legal, and administrative support—across multiple projects. This shared infrastructure optimizes cost efficiency and ensures that all projects benefit from high-quality resources. By building their own products, studios not only refine their internal capabilities but also enhance them. This allows the studio to extend these capabilities to external founders. The continuous improvement cycle means that as the studio becomes better at product development, it becomes a more valuable partner for entrepreneurs, thus creating a win-win scenario.

Speed to Market

One of the primary advantages of venture studios building their own products is the speed with which they can bring ideas to market. Studios can quickly prototype and test concepts, allowing for rapid iterations and faster product-market fit validation. This agility significantly reduces time-to-market, giving products a competitive edge. An in-house marketing team helps studios align product development with launch strategies for a synchronized and impactful market entry.

For example, eFounders developed Front internally before co-founding with external entrepreneurs, streamlining its market entry and success.

Controlled Execution and Vision Alignment

When studios build their own products, they maintain full ownership and control over execution, quality, and strategic direction. This autonomy ensures products align with the studio's vision and goals, avoiding compromises from external dependencies. By focusing on their long-term objectives, venture studios can nurture products that align with their broader market positioning. Unlike typical startups that might pivot under pressure for short-term survival.

Risk mitigation

Building multiple products internally allows venture studios to diversify their portfolio, effectively spreading risk across various ventures. Success in one product can offset the shortcomings of others, creating a balanced risk-reward profile. Moreover, the rigorous validation process typical of venture studios minimizes the risk of pursuing unviable ideas. This approach enhances the likelihood of market success and provides a safety net for the studio’s overall operations. 

Scalability and Replicability

Once a venture studio develops a successful product model, it can scale and replicate this model across different markets or industries using its existing infrastructure and expertise. This replicability is powered by operational playbooks that outline processes for scaling successful products, making it easier to streamline operations for future ventures. This not only accelerates the studio's growth but also ensures consistent quality and performance across all projects.

Continuous Learning and Improvement

Each product built internally serves as a learning experience for the studio, enhancing its overall capabilities.Building, launching, and scaling products internally gives studios a deeper understanding of what works and what doesn’t. This continuous feedback loop allows studios to refine their methodologies, improve efficiency, and develop best practices that can be applied across future projects, ultimately benefiting external entrepreneurs who engage with the studio later on.

The trend of venture studios building their own products represents a significant shift in the startup creation model. Venture studios can boost success and value by leveraging internal expertise, aligning with market trends, and controlling product development.

However, this approach is not without challenges. Scaling internally developed ventures needs substantial resources, a diverse team, and the ability to attract entrepreneurial talent. The model also faces criticism regarding resource intensity, potential tunnel vision, and equity distribution.

Despite these challenges, the success stories from venture studios like Atomic, eFounders, and others demonstrate the potential of this model. As the startup ecosystem evolves, more venture studios may adopt this approach, reshaping how products reach the market.

The future of venture studios likely lies in their ability to adapt, potentially embracing hybrid models, specializing in specific industries, and expanding globally. As with any innovative approach, the venture studio model will need to continually evolve to address its challenges and capitalize on new opportunities in the ever-changing landscape of entrepreneurship and innovation.

Whether you're an entrepreneur looking to launch your next big idea or a founder seeking to refine your product, YE Stack's Product Lab offers the perfect blend of expertise and hands-on support. Join us, and let’s build something extraordinary together. Reach out to YE Stack today to explore how our Product Lab can be your catalyst for success!