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eFounders Letter #8: Scaling the Startup Studio Model

Thibaud Elziere
Thibaud is the founder of Hexa. An entrepreneur at heart, Thibaud has co-founded over 30 companies through Hexa, many of which have become huge successes. He knows what makes a good idea and how to kickstart it. Previous to Hexa, Thibaud exited his first company Fotolia to Adobe.

The eFounders’ way of working has remained relatively untouched in the last 9 years. We come up with our own ideas and partner with…

The eFounders’ way of working has remained relatively untouched in the last 9 years. We come up with our own ideas and partner with entrepreneurs to transform these ideas into independent companies. The eFounders core team works hand in hand with founders for 12–18 months with the goal of making the company independent from the studio. In short, we have a little bit more than a year to gather a team of around 10 people, build a first version of the product, and get small traction. If it all looks good, we incorporate the company and raise a seed round from a few investors. The company becomes completely independent and leaves the studio.

We’ve done this 27 times since 2011.

Back in the early days, we were only a team of 3 and didn’t have the resources to launch more than a venture a year. Today, we are launching around 4 new startups every year. It’s a decent number considering the amount of energy and resources it takes to get a venture off the ground. Looking ahead, we’ll continue to focus on our core mission: to build businesses from scratch. But we’ll also look into investing human and financial capital in existing businesses. That’s what we did with Yousign in 2018 and it turned out to be pretty successful. We bought a few of their investors back and significantly helped the current founders and team prepare the company for the future.

Scaling Companies

Finding ideas and building companies from scratch is our core business and passion at eFounders. But when addressing a specific market, sometimes it makes more sense to look into existing companies rather than starting purely from scratch. The tech market is becoming more and more mature and is a fertile ground for healthy companies. In this industry, there are two types of companies worth being considered.

The first type is young companies (3–5 years old) that haven’t followed the hyper-growth trajectory and that are evolving in a huge market. These companies are usually little financed, generally by family, friends, business angels and/or regional incubators and investors. In this category lies Yousign, the company we have invested in two years ago.

The second one is older companies (between 5–10 years), most of the time VC funded, that have lost their momentum. After a few years, the founders, the team, and even the investors (arriving at the end of a cycle) have lost their energy and passion. And so it might be worth giving them a second breath.

There are a lot of moving parts when it comes to turning around these companies. On the business’ side, it requires the consent of the managing or founding team and an agreement on the price to buy the investors out. On eFounders’ side, it requires financial capital to purchase shares and/or invest in the companies, as well as human resources to get involved in the transition. We can count on future exits for the financial part but for the human part, we should increase our pool of talents. In the following months and years, we will try to dive deeper into this new way of building companies.

Scaling People.

The core team at eFounders has always been relatively small. That’s because we’ve always made a point of recruiting talent directly within the project’s team. The core team supports our startups at the very beginning so that they’re able to deliver fast from day 1, but our goal is to quickly disappear in favor of internal recruitment. Launching a project is not about building a product within the eFounders team, but about gathering a team to build it themselves.

To keep our agility, we’ll remain small but we’re thinking of slightly increasing our size to respond to the growing demand. We just jumped from 10 to 13 people and we could be a bit more in the next months.

Attracting the best founders is certainly our most important job. Every year, we discuss with around 250 entrepreneurs. And until very recently, they were only a handful of structures for founders looking for a co-founder. But this is changing rapidly with the emergence of new programs like “Entrepreneur First”, or more recently “On Deck”. They advertise themselves as a week/month-long program where the best talents can meet to build a startup. They are not competing with us directly but they are targeting the same pool of scarce talents: formidable founders.

We must keep our eyes peeled and be careful as to not lose out on too many great entrepreneurs down the road.

From the inception of a project to the time it spins off from eFounders, we assemble a team of 6–10 people, which subsequently makes the startup independent from our studio. Hiring the best people to complete the founding team is also our most essential mission at eFounders. In the last ten years, we’ve succeeded in building a brand identity that allows us to hire the best talents. It is without a doubt the biggest asset we’ve created so far.

All the while, the pool of experienced talent in the tech industry is getting bigger and bigger with the maturity of the ecosystem. However, the demand for skilled operators is growing even faster. To fill this gap, we are increasingly thinking of teaching talents internally through dedicated programs or via in-residence positions. We’re currently starting this off with a group of designers in residence. Increasing the size of our talent pool will undoubtedly affect the way we work internally at eFounders. And as a result, we’re thinking over the role of the office and the consequences of remote work — today, more than ever.

Scaling Ideas

It would be impossible to write a letter this year without mentioning what has been happening this year. Covid and the ensuing confinement have deeply changed our habits, and most notably our working ones. This has had a direct impact on the future of work as it continues to open up a range of new opportunities. Our mission though — as stated in eFounders Letter #7 — remains unchanged but might look a bit brighter today:

“We are building software that supports our vision of the work of tomorrow. Teams are being spread in time and space creating more flexibility at work and less rigidity. Home office, remote work, globalization, time difference all have a big impact on communication, hiring, operation, shared knowledge, decision-making. It creates a lot of opportunities for an entire new category of software”.

The 5 companies that made up our previous batch eF19 (Bonjour, Cycle, Swan, Once, Folk), as well as this year’s new eF20 batch (Kairn, Canyon, Collective and Crew), completely support this vision.

Looking ahead, we will continue to surf the new wave of productivity tools by building software that adapts to employees’ new ways of working: more distributed, more collaborative and more creative. It started with Slite (eF17), followed by Folk (eF19), now with Kairn (eF20), and we’re already working on reinventing Excel and the file system.

We will keep on equipping every company’s teams with modern tools to boost productivity, avoid painful and redundant chores and free up time for creativity and high-value tasks. As Cycle (eF19) and Bonjour (eF19) have helped Product and Sales team enter the modern era, Crew (eF20) and Canyon (eF20) will equip Legal teams and HR teams.

And we are convinced that these deep changes will not only influence the tools we are using but the job market as a whole. Collective (eF20) is our first attempt to help build the future of the job market. A world where individuals will have more freedom and flexibility but will continue to work together to build great adventures.

On the portfolio side, our independent companies have favorably been impacted by the current events — in the short term at least. Indeed, we build software that helps companies digitalize and that enables employees to be less dependant on the physical office. But at the same time, some of our companies’ clients are part of the more traditional economy, whether that’s hospitality, travel, retail, which will be strongly impacted in the long-term. We’re pretty optimistic but it’s difficult to estimate the long-term economic impact of the current crisis. All in all, we will continue to build companies at the same pace. By the start of next year, we should reach the symbolic milestone of 30 companies launched. Right on time to celebrate our 10th anniversary and to keep on scaling. 🎂 🚀