ANY BUSINESS YOU START IS NOT A STARTUP !

Ramesh
Ramesh Raja Co-founder & CSO August 09, 2017 19:00 10 min read

EARLY 2016: 

During the establishment of Digiryte in the UK, my investor Bosskey (Baskar Raju) and I had an opportunity for a meet up with my alumni friends and batch mates from the University of Manchester. While discussing various topics in general, as expected we ended up spending significant time on our ‘career options’. Amongst us, a few were investment bankers, some self-employed, a few business owners and a few (claimed to be) startup founders and eventually, this led to a debate over the scenario of the global startup ecosystem.

The first question that I posed to my bunch of friends was “What is a startup?”

There were instant replies like starting a new business, trying out something in a known domain and a few more answers in the same traits as above. My investor had a puzzled look as same as me since we had completely different understanding of the word “STARTUP”.

I seriously believe there is something awfully wrong with the perception about startup among this group and my guess is that this misconception about the term “STARTUP” is likely prevailing across the globe. 

There is a drastic difference between setting up a new business and starting up. The sooner we realise this, the better innovation will be. In order to understand what startup is, people need to have a clear view about the difference between a business and self-employment. 

BIG BUSINESS VS SELF EMPLOYMENT: 

"The best way to build and protect assets is by building businesses"

If a business is not building assets, then you are self-employed and self-employment can never ever be a startup. Big business is about building a system, then building people who run the system by making your business to run in an auto-pilot mode. 

"Big business is not all about earning money but it's all about building assets"

If someone invests their full time into running a business for a prolonged period of time, then they are bewildered into a linear level of thought by ignoring the higher level of business consciousness. To make it bit more clear, unlike self-employment, if someone builds a business with a robust system in place and with no further active involvement thereon and still achieve profits, that would qualify as a business.

Considering a particular business as big business or self-employment is not actually dependent on the amount of money they earn but depends on the kind of business system which they have built by automating it using information systems, so the intensity of the work done by people who run the system will be halved. 

“Being a self-employed and assuming it as a business is a cardinal sin”

STARTUP VS NEW BUSINESS: 

The first step towards building a startup is realising that they aren’t self-employed or owning a copycat business. Any business which has an established business model and generating revenue is not a startup. 

“A startup is a temporary organisation formed to search for a repeatable and scalable business model”

If you are able to define your business model precisely during the inception of your business, that alone may not qualify to be called as startup as per the above definition. Change is the only constant in this universe. Startups make use of the changes and evolve utilising it as a great opportunity. Five out of every ten new businesses fail in the first five years. The other four will fail in the next ten years. The one that sustains shall thrive along by searching for an innovative business and revenue model. 

Competitions between startups is not all about fight between new business owners - it's a fight between innovators

Startups are businesses that outrun every other traditional business with the help of continuous innovation and development. Startup founders will definitely commit painstaking trial and errors before finding a right business model or a PMF (Product Market Fit). Aftermath effect of finding the business model may result in building a big business. 

“Any new Business requires managers to manage the organisation but startups are equipped by leaders to lead the organisation with innovation.”

Startup owners are people who don’t manage the change but they are the leaders who lead the progress in a right way through various strategies and business decisions. The majority of the new businesses fail because of the inability to make prompt decisions. One of the outstanding qualities needed for the startups is the habit of reaching decisions quickly, definitely and changing them slowly.

STARTUP EMBRACES DISRUPTIVE INNOVATION: 

The startup is an organisation that makes disruptive innovations happen. Every organisation that made global disruptions across domain were startups initially and paved way for continuous innovation. Some of the disruptors were Ford, General Electric, AT&T, Apple, Amazon, Facebook, Google and much more. Those were the startups (though the term “startup” was coined in the recent decade) of the past that eventually grew into a giant organisation by nurturing innovations during initial stages. They shaped up an entirely new domain of opportunities and values to the world. 

Change favours local maxima, but innovation favours global disruptions

But people these days term every new business on the horizon as a startup. Any business that comes as a substitute for anything is not a startup but it needs to be alternative and disruptive to be a category leader. Flipkart is an India based electronic commerce company headquartered in Bangalore (known as Silicon Valley of India) established in the year 2007 is considered as a startup by the masses, the online marketplace is a well-established business model and that never ever searched for the business model. Flipkart is not a startup right from the inception. They have not innovated anything even in the operations side of it to become a startup.

“Considering well-established business model as a startup is a cardinal sin”

Instagram, the photo sharing app started out in the name of Burbn chose out to focus on mobile photography pinned over locations on the map. Soon, Burbn turned out to be more similar to FourSquare and it had gone too long before the founders realised. Then the founders decided to pivot by keenly measuring the usage of the app. Upon measurement, it was found that the filters were the thing of excitement for the users with high engagement rate. It was then Instagram branched out of Burbn, to become a unicorn and then acquired by Facebook.

“Being a startup, you should never stop searching for a business model. Once you stop, ignorance sets in and the innovation goes in vain making you a yet another traditional business which lacks global disruption.”

A Startup is not about contesting on a level play field. It’s about building a system, measuring the system and continually learning from it. Most of the startups will iterate through various models based on the customer experience and feedback to arrive at a final business model. They change their business model multiple times before scaling up. Adaptability is the defining aspect of a startup turned successful organisations. Uber, world’s largest ride-sharing app was an innovation of its kind. It aimed at booking a taxi at one click of a button. Uber aimed at disrupting the taxi industry with innovation and evolved up to a way for shared economy. The team focused on building a robust model and turned up to be a great organisation. Though the tech giant faced many difficulties during the early stages, it kept innovation its top priority to grab the market across the globe. The innovation run startup has scaled up to become the fastest startup to reach $60+ Billion valuations. 

SOMETIMES THE WAY YOU OPERATE YOUR CONVENTIONAL BUSINESS MAKES IT A STARTUP

A business in an existing domain can also be termed as a “STARTUP” by uniquely differentiating the way in which it is operated. The companies shine out of the night with enriched customer experience, employee experience, innovative ways of handling teams, delivery and internal managements. Traditional business like hotels, salons, retail and mom pop stores can also be developed as a startup by innovative ways of handling operations. McDonald, the famous fast-food and restaurant chain evolved up as a startup. For the customers, when starting up McDonald was yet another restaurant in the neighbourhood. But it’s differentiated from the rest by innovative kitchen system thereby reducing the turnaround time of the order. This way they revolutionised the customer experience and had a hockey stick growth. 

New or established business will rely on conventional financial accounting but startup will rely on innovation accounting

Traditional established business without much traction can evolve into a remarkable organisation by employing a scale of innovative changes. Businesses should be self-aware than being a repetitious one. The business owner who is ready to invest in radical innovations and take risks shall change the trajectory of the business thereby leading to stupendous growth. The best example of an established business turned startup is the world famous pizza chain Dominos. Patrick Doyle was appointed as the CEO of Dominos in 2010 after some troubled years when the company’s growth was slow and the stock price was stuck. Doyle was determined to transform Dominos into a most favourite brand. He emphasised on being a tech business rather than a pizza-making business. Dominos organisation was restructured with major preference on technology and analytics thereby placing customers at first place to ensure innovation takes place at every level. Soon the stock prices of Dominos went high and outperformed the stocks of major tech giants in recent years.

Thus startups are businesses that dance to the rhythm of the technology radically adapting to the environment and the customer satisfaction by continuous innovation.

A startup is not all about fat monetary benefits but it's all about the intensity of the problem you solve with continuous development and innovation!

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Business
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