4 THINGS ABOUT STARTUPS (ALMOST) EVERYONE SEEMS TO GET WRONG An article by Haim Dror
With so much buzz and more important, so much public and private investments in startups and startupists through accelerator programs, boot camps, hubs, lean-training and tax benefits, we need to have a look at the many wrong, and sometimes even destructive assumptions underlying these initiatives.
#1 Startups are a new phenomenon. No, startups aren’t a new thing. If we look at the majority of definitions of ‘startup’, we see that many commercial giants today started as one many decades ago (think about Microsoft, Google and Apple for example).
#2 Startups are successful. Though startups still have an air of blue ocean about them, a recent research of Deloitte of 400.000 startups worldwide, shows how the chances for a startup to grow to a ‘scale-up’ of more than $10 million by their 5th year of revenue, is only 0.5%. That is: for startups that still exist after 5 years! Considering that about 50% fail before their 5th year, the actual number of reaching this ‘scale-up’ success is much lower.
#3 Startupists are young. The same research describes how founders of unicorns (more than $1 billion after the 5th year) are likely to be in their fourties and to have twice as much work experience as the founders of scale-ups. Yet, if you look at most startup programs and boot camps, a fourty-year-old with an idea might not even be accepted to the program, as the focus mostly seems to be on young students, without any or little business experience.
#4 Startups are great job-creators. Startups are often praised for their creation of jobs, but not all of them do. In fact, some of the ones used as inspiring examples in those boot camps, such as Airbnb and Uber, created only a relatively small internal team of workers, especially when you compare it with the market value of these companies.
Nevertheless, even though we clearly need to set some things straight in the startup-discourse, I do believe that governments, but also companies, can play a valuable role in supporting startups, and by doing so, the economy as a whole. But for that the focus needs to change, and to be directed to one essential factor: the ability of startupists to find reliable relevant information. For that, they should not have to solely depend on the experiences of an older team member, bootcampcoach or even worse, on information provided by competing startups (which is often stimulated in these programs through collaboration and sharing exercises). Instead, provide them with training in how to identify and collect reliable information and how to use that for building the right solution or strategy. This skill will not only improve their decision-making, but consequently save them time. And also for startups, perhaps more than for anyone else, time is money.
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