Why Do We Need a Guide to Venture Building?

Every successful entrepreneur secretly dreams the same thing: What if I could do this again? What if I could build multiple companies simultaneously?

Creating several companies simultaneously, in bulk, is a dream that all successful entrepreneurs secretly harbor in their hearts. When you’ve found the keys to success, the instinct is to apply those keys to new opportunities: exponentially increasing your impact, accelerating creation, building faster and smarter. It’s a natural ambition.

But venture building is brutally difficult. Creating one company is hard. Creating many companies simultaneously? Exponentially harder. And most importantly: the rules are different. The way you manage a venture builder is not the same as how you manage a single startup.

You can’t manage what you don’t understand. This is the root of most venture builder failures. Management teams try to run builders without understanding what their actual job is; the key activities, the performance metrics, the rules of engagement that make this model work.

It’s hard to do your job well if you don’t know what your job is.

This guide provides clear insights into the essential activities and decisions that should structure venture building management. How involved should management be in entrepreneurial activities? What success indicators actually matter? How do you evaluate performance (both of the builder and the individual startups)?

Think of venture building as a game with specific rules. Established companies and independent entrepreneurs come together to create new businesses. Some players win, some lose. Understanding the rules doesn’t guarantee victory, but ignoring them guarantees failure. This guide lays out those rules.

Origins of this book

I’m somewhat ashamed to say that the first notes that gave rise to this book feel more like a letter of help than a business book. In truth, it has been a process of several years of trial and error, as stimulating as tortuous, the culmination of which is this guide for venture building that you are now reading.

The risk of doing something innovative is there are no references to build on. No playbook. No best practices. Just you, trying to figure it out.

I compiled hundreds of emails with legal and tax advisors, hours of calls with experts, brainstorming sessions with partners, and endless trial and error. Eventually, the chaos gave rise to clarity: a model, a methodology for the systematic creation of companies. This model has proven to work, not just for me, but for institutions and companies around the world.

In my case, the first successful company I created was launched in 2014. Before this company, I had a long series of failures or small successes. But in 2015 I established a company that after one year already had a turnover of more than one million and whose success took me to a new dimension of business activity.

Immediately, I felt an urgency to find new ways to exploit the resources I was accumulating and to replicate the patterns that had led me to success. As a result of my activity, I met with clients, distributors and investors and these interactions presented new ideas, new opportunities that I wanted to pursue and that I felt qualified to undertake successfully.

However, I didn’t have time to pursue these opportunities, because the day-to-day running of my company captured all my attention. On the other hand, I didn’t know which was the fairest and smartest way to create these new companies: whether the capital to finance the new businesses should come from my assets or from the company’s cash flow. Furthermore, it was not clear how to compartmentalize the fruits of the activity of each business unit.

The solution I found in 2016 was the creation of independent teams, dedicated exclusively to pursuing new business opportunities. These teams were not employees of the existing partnership, but rather co-founders who would become partners in the future legal entity. In this way, I ensured that the focus of each team’s attention was not distracted by the problems of my first company and that these people were as motivated as I was.

Following this scheme, while I was running my company as CEO, we co-founded another startup in 2016 with two entrepreneurs who had nothing to do with the first company. The following year, we founded a second. Then a third. Each with independent teams. In every case, ownership was distributed between a parent company (holding majority) and the entrepreneurial partners driving day-to-day operations.

My partners and I weren’t just investing. We were co-founding. That distinction matters enormously.

The venture builder is a co-founder in the startup, not an investor or an accelerator. The builder is a partner who’s involved in all areas of the business and evolves with the company as it grows. Not a detached investor writing checks. Not a time-limited program offering mentorship. A co-founder.

However, despite enjoying independence, these new companies draw on the legal and financial resources of the first company, as well as the clientele, technology and distribution channels gained over time. Thus, the new startups took advantage of our resources. They could also delegate menial tasks, such as accounting and payroll, which we handled centrally; while the independent team focused on the creation of the new product and the business development.

In the course of this process, I ran into all kinds of problems. On the one hand, I faced numerous legal headaches related to owning interests in many companies. Additionally, I had to resolve troubling situations related to the flow of money between the different companies. Additionally, it was necessary to protect and compartmentalize the intellectual property generated by these businesses. And of course, I wanted to establish mechanisms to maximize synergies between the new companies and the parent company, so that the group could benefit from the efficiencies.

This book is, to a large extent, a compendium of all the knowledge extracted during this process. It contains the solutions to all the dilemmas and challenges of venture building.