I have known Rohit Singal for a while though we never met in person until last month, to talk about Sourcebits’ new initiative – its innovative Product Studios model.
Sourcebits is one of those rare service companies in India, who can churn out beautifully designed products backed by an equally high calibre of engineering. Their primary focus is in mobile strategy, design & development.
Sourcebits has done work for giants like GE, SAP, Intel, MIT, P&G, Hershey’s and Coca-Cola, as well as emerging technology companies such as Skyfire, Knocking, Peel, TwitPic, CloudOn and Sling Media since 2006.
In May, 2011, Sourcebits raised $10M from Sequoia Capital and IDG Ventures. They are currently head-quartered in San Francisco with design and development centers in Bangalore (India), Niigata (Japan) and Mexico.
Product Studios is a new business model of how Sourcebits works with clients. They are onto something pretty interesting – building more than just products, they focus on building companies for people with interesting ideas. In exchange for building a talented team and working at cost, Sourcebits receives vested interest in the company.
Product Studios is a program for entrepreneurs with exciting ideas for a product, that want a technical partner to help with refining the idea, developing the product, bringing it to launch and updating as needed. It is a bridge for entrepreneurs to the booming world of Startups.
The Product Studios division of Sourcebits partners with up to 9 companies a year to help them launch a product, hire staff and even find investors. Sourcebits, in return, takes 20% equity, including the team working on the project sharing 5%.
A Product Studios candidate first starts with a one-day innovation strategy workshop at Sourcebits’ headquarters. The workshop costs $25,000, which goes toward the cost of a project if it moves forward. One week after the workshop, Sourcebits provides high-quality materials to share the product concept with stakeholders. You have to be really serious about your product to get into this agreement.
Go ahead and APPLY for the open slots.
Let’s ask Rohit more about Sourcebits’ Product Studios.
As a service company, Sourcebits is an exceptional company when it comes to Client’s work. What were the reasons to move to a product development strategy?
Rohit – We still offer our design and development services to companies in a more traditional model, and enjoy working with clients of all sizes. But after more than 7 years in the industry, and 500+ projects, we want to invest in the success of our Product Studios partners and help them bring their innovative ideas to life. It’s incredibly exciting to work with talented people on projects with tremendous potential. We’re involved through the entire life cycle – from idea through launch and update.
One of the few concerns clients have when a service company starts building their own products is Intellectual Property and Idea proliferation into your own products. Is this something of your concern? If yes, how do you justify your decisions?
Rohit – The companies we work with are looking for a partner that knows how to make successful products. We walk the talk at Sourcebits, and we haven’t had concerns from our clients.
How do you differentiate Product Studios from the generally known accelerators of the world? Of course, there is the money component and a higher equity but besides that, how do you justify a sum of $25,000 for the application and a 20% equity in the product?
Rohit – The Product Studios model at Sourcebits isn’t an accelerator. It’s a new, partner-focused business model for developing innovative products and building companies around them. The one-day workshop offers entrepreneurs valuable feedback on their idea from a team of experts at Sourcebits, and I participate in every one of those workshops. By the end of the day, the founders have a clear concept and the scope to create it, and everyone has a sense of how it feels to work together.
If an application is rejected, do you return back their $25,000? How does this work?
Rohit – The one-day workshop fee serves as a downpayment for working with Sourcebits. If the team doesn’t see a fit for the Product Studios model, we’re still happy to work with a company to build their product and the workshop cost goes to that work.
Besides the $25,000, are there any other payments involved?
Rohit – The $25,000 includes a one-day workshop with our team, as well as high-quality materials outlining the clarified concept that results. Every company also receives a project scope and estimate, which varies depending on the nature of the product and the development model Sourcebits recommends.
What happens after launch? What are your future plans for the product? How long will Sourcebits continue to be involved? Are there additional costs involved after the one year period?
Rohit – With a Product Studios partner, we invest in your success – which doesn’t end after one year. We outline the first year, which brings the product to launch and includes a post-launch update. But successful products require ongoing care and effort. As a partner in the company and the builder of the product team, Sourcebits continues working to ensure the product’s success.
Can anybody from anywhere apply to the Product Studios? Are there any restrictions in terms of country, age, occupation, etc?
Rohit – We’re happy to hold a one-day innovation workshop with anyone that has a great idea, is looking to build a company and wants a partner that’s as passionate about the product as they are. But we do require the workshop takes place in our San Francisco office, and includes the core member(s) of the company.
Anything else you want to add to make it clearer for prospective applicants to the Product Studios?
Rohit – When we accept a company into the Product Studios division, we build a US-based team with the specific skills needed for the product. They operate within Sourcebits, but they’re dedicated entirely to the Product Studio project. They also all have a stake in the company – so they’re highly motivated for your success.
If you’re an entrepreneur, in need of a proven technical team and willing to bet it together with Sourcebits, you should apply to the Product Studios.