What is an R&D product studio?
An R&D product studio studies real business problems, validates which ones deserve software, and builds its own products around them. Nobody hands it a brief, and it does not exist to spin out startups.
“Product studio” is used loosely. Agencies use it to sound less like agencies, investors use it for company builders, and large firms use it for innovation teams. The label matters less than three plain questions: who chooses the problem, who pays for the work, and who owns what gets built.
In brief
- A product studio builds and owns its own products. A software agency builds what a client specifies. A venture studio builds new companies.
- An R&D product studio puts research first: it builds only after a problem has been observed, studied and validated.
- Some well-known products began inside working businesses: Basecamp at a web design firm, and Tally in a family business that needed its books managed.
- SETITUP LABS is the R&D and product studio of SETITUP. It studies how small and medium businesses in India run, and has not shipped a product yet.
This note answers those questions for the main models, and uses SETITUP LABS, the R&D and product studio of SETITUP, as the worked example.
What is an R&D product studio?
An R&D product studio is a team that finds business problems, researches and validates them, and builds its own software products around the ones that hold up. Three things set it apart.
- It picks its own problems. There is no client brief. The studio decides what is worth building, and can decide that nothing is.
- Research comes before code. A problem has to be observed more than once, understood in its workflow and economics, and validated with the people who have it before engineering starts.
- It owns the result. What gets built is the studio’s own product, sold to many businesses, not a project delivered to one.
Product studio vs software agency vs venture studio
The models overlap in skills and differ in who is in charge. A venture studio, also called a startup studio or company builder, builds several startup companies in succession, and unlike incubators and accelerators it generally does not take applications: its ideas come from inside its own team or close network (Wikipedia).
| Aspect | Software agency | R&D product studio | Venture studio | Incubator or accelerator |
|---|---|---|---|---|
| Who picks the problem | The client | The studio, from research | The studio, from its own ideas | Founders who apply |
| What it produces | Software built to a specification | Products it owns and sells | New companies | Support for startups it did not start |
| Who owns the result | The client | The studio | The new company, with the studio as a major shareholder | The founders, usually with the programme holding a small stake |
| How it is funded | Client fees | Its parent company or its products | Studio capital and outside investors | Programme funds, often in return for equity |
| Main risk | Building the wrong thing well | Researching without shipping | Spreading one team across too many companies | Backing the wrong founders |
| Right choice when | You know exactly what you need built | A problem recurs across many businesses | You want to start companies repeatedly | You back founders rather than ideas |
Where the model comes from
Building companies from a central lab is not new. Idealab, founded by Bill Gross in 1996, was one of the first to bring the incubator model to technology startups (Wikipedia). Venture studios work in a similar way: ideas are generated inside, and the promising ones are spun out as companies.
The R&D product studio has a different lineage: products that began as a working business’s own problem.
- Basecamp. 37signals was founded in 1999 as a web design company. It began work on Basecamp, a project management tool, in 2003 and launched it in 2004. In 2014 the company renamed itself Basecamp to focus on that one product (Wikipedia).
- Tally. In India, Tally began in 1986 as Peutronics Financial Accountant. Shyam Sundar Goenka, whose company supplied raw materials and machine parts to textile mills, could not find software to manage his books, so his son Bharat Goenka wrote it (Wikipedia). Tally now describes itself as trusted by more than 2.5 million businesses (Tally Solutions).
Neither began as a studio. Both began with a problem the builders lived with every day, which is the part an R&D product studio tries to make repeatable.
Why put a product studio inside a services company?
Because the services work is where the problems come from. A company that builds systems for many businesses sees the same friction again and again: the spreadsheet that runs the stockroom, the sales pipeline on WhatsApp, the payments nobody is chasing. A studio attached to that work gets three advantages.
- A steady supply of real problems, observed in context rather than guessed at from outside.
- Access for validation, through businesses that can say whether a solution would actually be used.
- Patience. Research does not have to pay for itself in its first quarter.
The risk runs the other way as well. Client work is urgent and product research is not, so a studio inside a services firm has to protect its time, or it quietly turns back into an agency.
How SETITUP LABS works
SETITUP builds custom business systems, including operations platforms, internal ERP, workflow automation, sales tracking and dashboards, that connect the spreadsheets, chats and apps a business already runs on. SETITUP LABS is its R&D and product studio.
The lab works in five stages, and a problem only moves forward when the stage before it holds. It observes the problems that recur across real businesses, researches the workflow, the people, the market and the economics, validates its assumptions with real users and evidence, builds prototypes and then production software, and scales what works into a product a business can rely on.
Its research territories are business operations, inventory, sales, finance operations, workforce, and industry software for markets that larger vendors have skipped. The lab has not shipped a product yet. These research notes are the public record of the work so far, including why spreadsheets still win inventory, why sales run on WhatsApp and why MSMEs wait to get paid.
How to tell a product studio from a relabelled agency
- Does it own and sell products, or only deliver projects?
- Does it publish what it learns, including what it decided not to build?
- Does it have a validation step that can stop an idea before engineering starts?
- Does it measure outcomes for users, rather than hours billed?
- Can it say no to a client who wants something built?
Frequently asked questions
What is the difference between a product studio and a software agency?
A software agency builds what a client specifies and hands it over, and the client owns the result. A product studio chooses its own problems and builds products it owns and sells to many customers. An R&D product studio adds a research and validation stage before any building starts.
What is a venture studio?
A venture studio, also called a startup studio or company builder, creates new startups in succession from ideas generated inside its own team, then staffs and funds them as separate companies. Unlike incubators and accelerators, it generally does not take applications from outside founders.
What is SETITUP LABS?
SETITUP LABS is the R&D and product studio of SETITUP, based in India. It studies how small and medium businesses run, including inventory, sales, finance operations and workforce, validates which problems deserve software, and builds products around the ones that hold up.
Is SETITUP LABS a software agency?
No. SETITUP LABS does not build to client briefs. Its parent company, SETITUP, builds custom systems for businesses, and the lab takes the problems that recur in that work and researches whether they deserve a product of their own.
How can a business work with SETITUP LABS?
By describing a problem it lives with: what breaks, how often, and what it costs. Problems can be sent through the contact form on setituplabs.in or to hello@setitup.in. If a problem fits the lab’s research, it may become the starting point for a product.
Sources
- Wikipedia, “Startup studio”.
- Wikipedia, “37signals”.
- Wikipedia, “Tally Solutions”.
- Tally Solutions, “About Tally”.
- SETITUP, setitup.in, the lab’s parent company.