What is a startup?-Get your concepts cleared
A startup is a company that is in its earliest stages of formation and operations, often bootstrapped (i.e., funded by their founders), as they endeavor to create a product or service designed to fill a market need or demand.(Source: The Startup dictionary).Further we can understand that a startup is a young company that is just beginning to develop. Startups are usually small and initially financed and operated by a handful of founders or one individual. These companies offer a product or service that is not currently being offered elsewhere in the market, or that the founders believe is being offered in an inferior manner and can be improvised further or innovated in a better way.
“Startup is a state of mind,” says Adora Cheung, cofounder and CEO of Homejoy, one of the Hottest U.S. Startups of 2013. “It’s when people join your company and are still making the explicit decision to forgo stability in exchange for the promise of tremendous growth and the excitement of making immediate impact.”
One thing we can all agree on: the key attribute of a startup is its ability to grow. A startup is a company designed to scale very quickly. It is this focus on growth unconstrained by geography which differentiates startups from small businesses and already existing businesses. Essentially a startup can be seen as a series of tests designed for proving or disproving hypotheses to validate an idea.
For an example : Uber
Idea: Crowd source taxi (originally UberCab)
Hypotheses: Would people trust individuals to pick them in with their personal car? Could it be priced cheaper by using an App instead of call center? Are there incentives to get people sharing it with their friends? Can we incorporate carpooling? Are there legal issues with picking people up with the airport? etc.
Is Failure a stop point for a startup?
Keep in mind for every successful startup, there are many others that have failed using the exact same formula. But the good news is, that is not necessarily bad news to fail! Trying to "fail better" is a fundamental practice for many successful startups. It is almost on record that every highly successful startup today underwent through the period of failure and what kept them going was the belief in their idea and product being offered by them. Hence failure can’t be the measurement for any startup to stop or to start rather how much sure you are about the offering of your startup decided the fact of growing, maturity of decline period of any startup.
Most of the entrepreneurs aren’t successful at their first attempt itself. It takes immense hard work, passion, perseverance and dedication to succeed after failing, and that’s the most important quality of an entrepreneur. The failure of a start-up is not viewed as negatively (today) as it used to be 10 years ago from a socio-economic perspective. If you’ve tried hard and then failed, it’s not seen as a bad thing by investors.
This story is inscribed in the history- Ratan Tata while building Tata Motors-
In 2008, Ford’s Jaguar-Land Rover was a terrible loss. Guess, who came to save them from going bankrupt. Yes, it was none other than Mr. Ratan Tata. He bought JLR division of Ford. JLR made a loss of 1800 crore that year and because of that Tata had to bear a loss of 2500 crore. This time, Ford’s words were-
“You are doing us a favour by buying our company.”
In 2014, Tata Motors made a profit of 2.33 Lakh Crore and JLR’s share in it was off 1.90 Lakh Crore, around 82%. Need I say more.
Shared by Praveen Kadle, CEO of Tata Capital. ( Source: Quora )
“Build, Measure, Learn”- the keys to any startup.
One of the best defining methodologies that separates startups from enterprises is that you should be agile, and able to quickly adapt when something works or, more importantly, doesn't work. This is the idea that you can "pivot" and revise your product, messaging, pricing, and other defining characteristics. Once a startup is built on the correct and strong pillar
Example: Amazon was an online book store and now we know how it has captured all of the online market.
“Not Always Small”-Wrong perception!
Some larger businesses have also adopted the startup mentality by creating incubators where they basically fund a project to let them quickly iterate and validate an idea. This eliminates a lot of risk of an enterprise trying to pivot their entire infrastructure by testing the waters before jumping into the deep end head first.
Example: Flight by Canto (startup within a tech company)
Startup ideas basically consist of four categories: purpose, product, customers and teams:
The best businesses aren’t profit-driven or even product-driven; they’re purpose driven, and are about the need to make an impact, not just an IPO; about doing good and not just being fast. Founders should repeatedly ask themselves a series of questions. Why are we here? If we disappeared, who would miss us and why? What business are we really in? What are we willing to sacrifice? How can we experiment better?
Enthusiasm of the creators and usability of the product are the twin ideals behind great product development. First try to get one product right, then think about a portfolio or range. Great product creators are not just makers but curators of great user experiences. The iterative process is as important as the prototypes and products.
Startups need to earn customer trust and loyalty the hard and long way, through commitment, service, conversation and authenticity, even in the face of mistakes. Hear your users talking...listen. Listen no matter how much it slows you down. Invite your customers into your story.
Leading The Team:
The leader’s job is to help everyone around them do their job better. Servant leadership is the only sane way to run a company. Create a culture of trust via transparency, share information, allow for open feedback, have regular meetings online and offline. Remember that creative employees are driven by passion, by integrity, and by quality. As the company scales, direction and clarity need to be spelt out via effective communication, otherwise time is lost. Company cultures need to have a good combination of “nudge” and “push” via distributed decision making.
A startup is all about: Purpose, Product, Customer and Team. However, don’t wait for the perfect moment to prepare your perfect product and launch to the perfect audience, because:
''If you wait until you are ready, it is almost certainly too late''~Seth Godin