Venture Design

They teach you in business school that any venture worth doing needs to be scalable. You must at some point be able to get exponential returns from an existing set of assets in order to be successful. Rebelling against the so-called head-count model (additional sales require additional manpower), new design firms and marketing consultancies like MNML and Fuseproject are now increasingly doing equity-based deals that Anomaly made famous. Deals like these give agencies a financial stake in projects they undertake, allowing them to make real money throughout the life of a co-created product or service rather than just at the pre-launch. In this month’s issue of I.D., Mitch Pergola, Fuseproject’s business strategist (more firms may need one of these in the future), describes the process:

There’s a lot of due diligence required. It’s very similar to a venture fund. Some clients will come to us with an idea and say there’s an opportunity now, and so we’ll load that in terms of royalties, for short-term ROI. But another project might require a lot of R&D, in which case we’d focus more on equity, for long-term ROI.

One interesting implication of this trend is that it democratizes accessibility to top tier design talent. Since most of the compensation for these firms will not be up-front and will be percentage based (and thus can be baked into the retail price), small businesses or even young entrepreneurs will be able to afford them. Expect to see more pretty things at competitive prices all over the world because of this.