Startup Success

Developing a Novel, Scalable Business: Key Points

• Startups are companies or projects undertaken by entrepreneurs to seek, develop, and validate a scalable business model.

• Startups usually begin with a founder (solo-founder) or co-founders who have a way to solve a problem.

• Startups use many heuristics and exhibit biases in their startup actions due to the lack of information and high uncertainty they face.

• Mentoring offers direction for entrepreneurs to enhance their knowledge of how to sustain their assets relating to their status and identity and strengthen their real-time skills.

• Lean startup is a clear set of principles to create and design startups under limited resources and tremendous uncertainty to build their ventures more flexibly and at a lower cost.

• A key principle of startup is to validate the market need before providing a customer-centric product or service to avoid business ideas with weak demand.

• Startups need to align their internal features, such as management style and products, with the market situation to become attractive to other businesses.

• Founders can design a business model with the key learnings from market validation, design thinking, and lean startup.

• Self-efficacy refers to the confidence an individual has to create a new business or startup and has a strong relation with startup actions.

• The failure rate of startup companies is very high, with lack of consumer interest, funding or cash problems, personnel or staffing problems, competition from rival companies, and problems with pricing as common factors.

• Failed entrepreneurs, or restarters, who after some time restart in the same sector with more or less the same activities, have an increased chance of becoming a better entrepreneur.

• Many institutions and universities provide training on startups, including entrepreneurship courses that deal with the topic of startups specifically dedicated to startups.Overview of Startup Ecosystem, Investing, and Internal Startups

• Startup training programs need to have both business and psychological components to help entrepreneurs grow and succeed.

• The startup ecosystem includes individuals, institutions, organizations, incubators, accelerators, and top-performing entrepreneurial firms that create a "strong" startup environment.

• Silicon Valley, Boston, and Berlin are some of the most famous startup ecosystems that create stimulating startup environments.

• Startup funding can come from revenue-based financing lenders, venture capital firms, angel investors, and crowdfunding platforms.

• Timing is often the most important factor for the biggest startup successes, but it is also one of the hardest things to master.

• Startup investing generally involves six stages, from seed round to Series A, B, C, D, and Initial Public Offering (IPO).

• The first known investment-based crowdfunding platform for startups was launched in February 2010 by Grow VC, followed by SeedInvest and CircleUp.

• Internal startups are a form of corporate entrepreneurship that allows large or established companies to promote innovation by setting up new business divisions that operate at arm's length from the rest of the company.

• Some startups become unicorns, privately held startup companies valued at over US$1 billion.

• The largest unicorns include Ant Financial, ByteDance, DiDi, Uber, Xiaomi, and Airbnb, and they are concentrated in a few countries, such as the USA, China, India, and the UK.

• The start-up model has been criticized for reflecting a move toward values of liberty, autonomy, and authenticity, and away from the values of stability, security, and solidarity associated with post-World War II capitalism.

• Some entrepreneurs have founded successful businesses for almost no capital, including the founders of MailChimp, Shopify, and ShutterStock.The Dark Side of Start-Ups

• The start-up model is based on a "solutionist" logic that seeks technical solutions rather than addressing root causes of problems.

• The non-hierarchical organization of start-ups means all employees bear equal responsibility for their running smoothly.

• The organizational model of start-ups is based on voluntary commitment and internalized behavioral norms rather than formal hierarchical constraints.

• Employees are expected to give of themselves without counting the cost, to be always reachable and available, without asking for compensation commensurate with their professional commitment.

• Start-up employees often exceed overtime limits, and professional and personal life often blend in this highly connected environment.

• The employment contracts of start-up employees are often precarious since the company itself is not completely stable.

• Public policies that encourage start-ups lead people to create marginal businesses that are more likely to fail, have little economic impact, and generate a very limited number of jobs.

• Start-ups are criticized for not addressing the root causes of problems but rather finding quick technical solutions.

• The start-up model is based on the Fordist emphasis on solidarity, economic security, and equality.

• Awareness is growing about the negative aspects of the start-up model, especially in terms of its non-hierarchical organization.

• The start-up model encourages employees to place the general interest of the organization before their personal interest.

• Former start-up employees criticize the organizational model of start-ups in terms of their non-hierarchical organization, voluntary commitment, and internalized behavioral norms.