Monday, May 1, 2017

When Businesses Became Start Ups

These days, everyone wants a startup of their own.

Okay, so maybe that's too generalized. Not everyone wants a startup of their own. But a lot of millennials do.

Before further discussion, this is how Wikipedia defines startups:

startup company (startup or start-up) is an entrepreneurial venture which is typically a newly emerged, fast-growing business that aims to meet a marketplace need by developing or offering an innovative product, process or service. A startup is usually a company such as a small business, a partnership or an organization designed to rapidly develop a scalable business model.

Now, I don't mind start-ups, even though I don't have the inclination or ability to start one. My problem is with the fact that today, startups are being presented to us a solution to all our problems. In an age when all things Internet are the definition of cool and a generation whose heroes are Mark Zuckerberg and Elon Musk, startups have become the generational dream. You just start a business on the Internet, code like a boss to set up the site, and suddenly you're the next big thing and maybe you're helping people and decreasing unemployment. Startups peddle the hipster-y image in which offices are relaxed, bosses are cool and hey, every day is casual Saturday. It's hip, it's cool, it's fun and it makes money. Startups feel like the next big thing that's pull us out of....I don't even know what, and a lot of people are buying into this dream.

It's time I tell you why I have a problem with this startup craze and bear with me here while I, a non-economist and non-sociologist, explain why the 'startup dream' is problematic. I guess that clarifies that I have an issue with the startup dream and not the basic idea of startups, or even the great startups that went on to make a difference in my life.

A few months ago, I met an old friend after having no contact with her for 8 years. During all the catching up conversations we kept running into the 'what are you planning to do with your life' topic. I explained to her that even though I haven't thought too seriously about it, having a small architecture firm of my own would be nice. She looked at me and said, "So,,,like a startup?" And I didn't know why she needed to bring the term into a discussion about good old fashioned architecture firm. Is that the term one would use for a new law firm or a medical practice? I am guessing not. So I assumed that the problem with her understanding lay either in her idea of a startup or her limited knowledge of service-providers and businesses that have been operating for decades in this world without the need for a special name.

See, I believe that we've been led to believe that startups are something new and different when in reality, they entrepreneurial ventures just like all the entrepreneurial ventures that came before. The basic idea is still to do business, right? B-U-S-I-N-E-S-S with a capital B. But that's not how startups are being presented to us. Instead, they are being presented to us as an alternative lifestyle, an alternative to cold hard business sometimes. Startups are more commonly associated with the tech space. From the outside, it looks like startups are all about coming up with creative concepts and coding and changing lives, but it's also about balance sheets and profit margins and customer acquisition costs and marketing budgets. But how many people actually think about all that while dreaming up their next-big-thing internet startup? How many times do the Gates' and Zuckerbergs and Musks of the world lay off on the all the philosophical speeches and talk about this aspect of their work?

Another problem with people' interpretation of a startup is that the term has become associated with youth, which means that everyone is in a hurry to start. In my observation what that has done is that it has limited people's ability to actually come up with ideas that will help people when implemented on the suggested platform. Any invention or business is about innovation. A semester of classes in Entrepreneurship has taught me that any kind of entrepreneurial activity is all about innovation. But the key to innovation is to observe the needs and difficulties of people around us, and coming up with a solution that can be implemented to reach and be accepted by a reasonably large target market. This can't happen if you've already decided to go the startup route or have had that dream for a long time, before coming up with an innovative idea. What that does is cause people to develop a cool product or idea, and then try to find a market for it, which (apart from a few exceptional case) is the backwards way of going about it. A lot of people take a few personal experiences and work on a startup around those experiences, without thinking about all the stakeholders.

If you're thinking about a startup, or have already started one. have you thought about the following things:

1. Who will be your direct competitors?
2. Who are all the stakeholders?
3. What is the target market?
4. Who could potentially be your investors?
5. Do you have any competitive advantages?
6. How big is the gap in the market that you are aspiring to fill?

Have you honestly answered these questions yet? Without cheating on the answers to convince yourself that your startup will work? If yes, good. You're probably on the right track. If no, think about these questions, be brutally honest while answering them and if you can't find the answers maybe you have a little bit more work to or maybe you don't like the business aspect of things, in which case you'll at the very least need a strategic partner who really is thinking about financial success.

Let's not ignore the fact that startups, more often than not, fail. It's a fact that can evade us is we're too focused on the success stories, but it's the most important fact to keep in mind. You can't let 'startup' be the keyword of your dream plan and then feel like a failure if it doesn't work out.

So that's my take on the startup craze. But I sincerely do hope that if 's your dream, I hope it works out, and a startup ends up being everything you thought it would be. If there are any stories you'd like to share, the comments section is open...