5 mistakes we made – Mamazen Startup Studio

Mistakes and failures are inevitable, but the experience of others can prevent us from making some.

This article aims to help us #startupstudios (we made several of these mistakes early on) learn from the mistakes of our “ancestors” and find our own path faster.

Farhad Alessandro Mohammadi
CEO of Mamazen Startup Studio
This article was written by Farhad Alessandro Mohammadi.
Prepared for publishing by Max Pog.
As you will see from the list of mistakes below, like gluttons in a restaurant, we ordered a good part of the menu:

  • Lack of focus on portfolio construction → our first mistake
  • Lack of Studio focus → our second mistake
  • "Idea-centric" vs. "team-centric" → luckily is not one of our mistakes
  • Lack of Capital → luckily, we had enough funds to cover early-stage expenses and to build the first batch of 3 startups we launched
  • Underestimating the importance of Marketing → in the very beginning, we made this mistake

So, what are the mistakes to avoid in an emerging Startup Studio?
Lack of focus in portfolio construction
Many Startup Studios are born agnostic (not focused on a specific Industry). The idea that you can build a business spanning any industry as long as there is a product-market fit, I admit, is very mouthwatering, and we have fallen for it, too.

This approach has often proven to be high-risk (lack of specialization, difficulty attracting talent in so many areas). Moreover, given current trends, in 5 years, the studio market will be saturated. There will be studios highly specialized in specific Industries, and these will be able to attract talent precisely because of the high specialization.

It is better to be the best at something than mediocre at many things.
Mamazen, for example, specializes in digital services aimed at the microenterprise market.

Being focused allows the Studio to assemble a management team, partners, advisors, mentors, and experts in a specific field, contributing to rapid growth. Being an expert in a field allows you to attract founders interested in the Industry.
Lack of Studio Focus
Many emerging Venture Builders are too busy seizing opportunities and filling their bellies only to be left high and dry. One who wants everything may lose it all.

Many emerging Studios offer Corporate Venture Building, incubation, and acceleration services. At Mamazen, we started by proposing both Corporate Venture Building and stand-alone Venture Building. We decided that it was better to concentrate on pure venture building rather than splitting our small team among two opportunities.

Focusing all your energy on one approach and constantly improving processes is better.
Choose one path and pursue it to the end. After all, how could it be otherwise?
Idea-Centric vs. Team-Centric
Many VCs are skeptical of the Startup Studio model because they fear that a founder who comes on board with someone else's idea is more likely to throw in the towel when things go wrong.

It is important to be committed, and that can happen in different ways. Certainly, a model that treats the founder as a "manager" has little chance of success. However you feel about it, one thing is sure – it is essential that the founder is not a manager but a true parent.

My question is, doesn't someone who adopts a child feel equally parental to the child? Is someone who has had a child in a "natural" way necessarily a better parent?

There are many cases of successful startup studios generating ideas internally. Certainly, much of their success stems from the fact that the Founders of these Studios are "celebrities," which is undoubtedly true of Science, who founded Dollar Shave Club (sold 5 years later for $1B to Unilever). The same is true of Betaworks.

Whether you decide on one or the other approach, it is critical to choose the people with whom you co-found your startups. The team is everything. Luckily we avoid indulging in such a mistake.
Lack of Capital
Creating a Venture Builder is an undertaking that requires muscle and capital. The annual Budget for a studio is about €700K for an emerging one and €3M for an experienced one.

In short, it is essential to raise enough capital to support your operation for at least 5 years, considering the cost to launch each Startup of about €250K. The minimum capital if you want to support the Studio and have pre-seed money for the startups you are launching is €10M.

You must also take into account that, for at least 5 years (this is the game we play), there will be no returns, so if you do not raise enough, you will need to raise again before the end of the 5 years. Harvesting again when results have not yet been brought in, as you imagine, will be difficult.
Underestimating the importance of Marketing
We live in an age when content matters. Few studios have embraced this opportunity (as the good Arnold Schwarzenegger says, “Work your ass off and then advertise it”).

Many Startup Studios decide to operate "in the shadow of darkness". I believe this approach is detrimental.
I hope this article is helpful to some "fellow travelers" leading a Studio like me in their own journey. I wish you all the best of luck and hope the wind is on your side.

Author: Farhad Alessandro Mohammadi, CEO of Mamazen Startup Studio

Hi, this is Max Pog, we've recorded a podcast with Farhad about the startup studio model. Watch it:

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