A startup is a fascinating word, and today, everybody seems to be talking about this. But, what is a Startup?
As per Wikipedia, A startup or startup is a company or project undertaken by an entrepreneur to seek, develop, and validate a scalable business model. Startups typically begin with a founder (solo-founder) or co-founders who have a way to solve a problem.
Basically, Startup is a young company (generally less than five years) that is started by a solo-founder or co-founders who want to develop a product or service to solve a problem that exists in the market.
In the words of Neil Blumenthal, the co-founder of “Warby Parker”- “A startup is a company working to solve a problem where the solution is not obvious, and success is not guaranteed.”
Features/Characteristics Of A Startup
Before you start a startup, it’s important to understand the features of a startup.
Following are the features of a Startup-
- Age- A startup is a new company in its early stage. It is a company that is generally less than five years old.
- Solving a Problem- A Startup identifies a problem that a lot of people are facing. In fact, all successful startups have identified a problem and solved it with their excellent services or products.
As per Paul Graham – “The way to get startup ideas is not to try to think of startup ideas. It’s to look for problems, preferably problems you have yourself.”
It’s also not necessarily that a startup only works on a unique idea. For example, it can solve a problem that some competitors are already solving, but you solve it better.
There are thousands of problems around us; we need to identify them and find out their viability.
In the forthcoming chapters, we will learn a systematic approach to identifying a business idea and how to validate it properly before building the startup.
- Business Model- A startup does not have a fixed business model initially as it explores the possibilities to achieve a scalable and repeatable business model. However, it is true that a Startup can not become a unicorn if it does not have a scalable business model. So as a founder, you need to identify the scalable business model for your startup as fast as possible. Investors also like to invest in a startup that has a scalable business model.
- Growth– A Startup goal is to grow fast and be designed for the same. It is one of the points that distinguished startup a small business.
Startups are businesses that are intended to grow and scale fast, and this focus on growth and rapid scaling sets them apart from small enterprises. As a result, startups often have huge burn rates.
As per Paul Graham- A startup is a company designed to grow fast. Being newly founded does not in itself make a company a startup. Nor is it necessary for a startup to work on technology, take venture funding, or have some sort of “exit.” The only essential thing is growth. Everything else we associate with startups follows from growth.
- Structure– Most of the Startups are unstructured in the beginning. They may not have a defined hierarchy of employees and managers and their roles. But as the business grows, it is of utmost need to have a clear structure and defined roles in the startup.
- Limited Resources– Startups generally function with limited resources. In the beginning, the startup should manage with minimum resources and focus on increasing the traction.
Most of the successful startups started with minimum resources and managed to scale with limited resources.
- High Risk- Due to an unstable Business model, limited resources, lack of experience, there is a high risk of failure. Most startups are at high risk in the beginning until they find a stable business model, focusing on building & marketing the right product for the right people.
So these are the common elements of a startup you should be aware of.