8 Mar 2018
The business term du jour that everyone it seems is bandying about – but have we bothered to find out what a startup is? What differentiates it from a small business? Why is it such a popular business model, especially among millennials? What types of startups are out there? What do they need in terms of applicants?
Let’s find out, shall we?
As defined by Investopedia, a startup is a young company that is usually just starting out. Typically small and initially financed and operated by a handful of founders or one individual. These companies offer a product or a service that is not being provided elsewhere in the market, or that the founders believe is being delivered in an inferior manner.
What makes a new business a startup? First and foremost, the model should be scalable – and the high rates of failure are also quite particular to this type of business. It is generally accepted that 90% of all startups fail. Here are the top five reasons why:
42% Lack of consumer interest in product or service
29% Funding or cash problems
23% Personnel or staffing problems
18% Pricing Issues
As you may be able to ascertain from these numbers, most startups fail because of a combination of obstacles. It is an entrepreneurial approach to consumerism, and therefore the pitfalls of the small business plague startup founders as well as staffers.
Perhaps because of the high probability of failure, startups cultivate their own specific culture to stay afloat as long as possible. New graduates or other candidates with limited work experience gravitate towards startups through a combination of personal development, personal freedom, and what they imagine to be a “great culture”.
Popular media paints startups as playgrounds for millennials – free sushi, bean bags, Friday beers, standing meetings, sleeping pods, and hacky sacks – but in reality, things are usually entirely different.
Most startups are run with a “bootstrap” mentality, meaning that to stand on their own two feet, the companies figuratively pull themselves up with the littlest possible amount of help and expenditure. It is difficult therefore to justify the perks portrayed in popular media if they don’t necessarily help the company break even in the early stages.
Furthermore, in this sort of mentality, employees are asked to “wear many hats”, meaning their job descriptions are somewhat loose in order to enable staff to answer for new responsibilities as they may arise.
There are six types of startup, as per Steve Blank, Silicon Valley pioneer and syndicated columnist for the Wall Street Journal. These are Lifestyle, Small Business, Scalable, Buyable, Social, and those Inside large companies.
Lifestyle startups provide products and services which are meant to enhance a particular lifestyle – such as those which produce foldable bicycles or online marketplaces. Small Business startups are just your typical small business, with low capitalization and a very controlled strategy for growth and expansion.
Scalable startups are those whose models can be scaled upwards if demand should call for it; ideally what works for a small market should also be applicable for a nationwide, or even worldwide market. Buyable startups are those that have been running smoothly and growing organically for over two years and have the potential to break into the market hugely.
Social startups are those whose primary purpose for business is not necessarily profit but sustainability and social consciousness. Finally, startups that start inside large companies (like Google and Android, for example) are meant to dedicate resources to pursuing a new stream of revenue.
The most popular industries with startup businesses these days are tech and fintech – meaning those who develop technology or apps, especially when it comes to developing new technology for finance.
What are startups looking for in terms of an applicant? Skills and qualifications differ from company to company, but generally, if you fit the profile below, you might want to consider throwing your hat in the ring and apply for a startup that can use someone like you:
Self-starter can work with minimal supervision
Excellent communication skills, can explain things succinctly and interestingly to all sorts of audiences
If you or anyone you know is in need of a change or a job and fits this psychographic, do head on over to the Angel List. It contains the most extensive database of startups all over the world and is a great place to start your startup career.