What is a Startup Company?
When an entrepreneur launches a business project to find developing growth and a valid scalable model, as we know that entrepreneurship means self-employment and a new business that never plans to become legal and registered, but startup business always aims to go beyond, become big, and have more founders.
Some of the start-ups are worth over 1 billion US dollars. Here are some of the functions that a startup should performs;
- Offer the idea, image and vision of the product with its characteristics.
- Create and visualize various business models that how they would deal with customer, suppliers, distribution, finances of the company.
- Understand that how to choose the right business model for his market and customers.
According to the definition of Eric Ries “A startup is a human institution designed to deliver a new product or service under conditions of extreme uncertainty”
Historical Background of Startup
If you’re thinking about the growth and high scalability of tech startup companies, then you should look at the history first.
For instance, we can say that the General Electric Company of Edison was the first start-up company in history. The way it had to face a challenging path, and then led victorious is more like a startup company. Nokia also used to be the start up in the beginning.
But if we look at the current status of these companies, then they are far from being a start up ventures.
If we look at the tech companies after the 2000s like, Facebook, Twitter, LinkedIn, Uber, Tesla, Dropbox, and Airbnb. These companies made over 1 billion US dollars in the initial few years of their launching. It’s the internet and technology that has made possible such a tremendous growth and progress in a very short time.
These tech companies have unique characteristics like Facebook has as many content creators as are its users, but doesn’t have a single content creator on its payroll. Both Uber (taxi Cab Company) and Airbnb (world’s chain hotel company) don’t own a single taxi or hotel. But they’re running a global business and managing hundreds of cabs and hotels. It is the perfect implementations of such unique ideas have gained growth worldwide.
Today’s Startup Companies
The notion of startup companies today isn’t just limited to the US only. The fact of the matter is that startup has become a fully developed phenomenon and it has developed growing centers worldwide like London, Stockholm, Berlin, Beijing, Tokyo, Singapore, Tel Aviv, and Helsinki. Even the developing countries also have accelerators and incubation centers for the growth and development of unique ideas.
An important thing to mention here that all the startup centers are different from the changing social environment and circumstances, but their purpose is growth, progress, and impact on the world. Even since the 1970 and Silicon Valley, the whole concept and functionality of startup hub centers have changed, but it’s constantly growing and developing. There’ll be more unique startup hub centers and more startup ventures in the future, solely based on the intellectual powers rather than one’s background.
Characteristics of Startup Company
Although every startup company is different because of different circumstances and fields, but it does have some common characteristics. They are as follows;
Startup companies don’t intend to stay in one place and achieve a particular status. They plan to keep growing their business. Their growth is often quick, and it keeps on growing consistently. That’s what differentiates a startup from other business.
Their growth can be expanded into the different markets and go beyond borders, and acquisition of other small companies. It could also be an affiliation with other brands for more exposure; the purpose is never-ending growth.
The very foundation of a startup company is innovation and creativity. It doesn’t mean the process stops after the establishment of the company. Instead, it’s the beginning of the innovative approaches. If you compare the old interface of Facebook with a new current app, then you’d see the huge difference. But it didn’t happen overnight. They have been experimenting and adding one option after another. If they haven’t adopted the innovative approaches, then some other company would have their place.
One of the main differences between entrepreneurship and startup is a team. Entrepreneurship is all about the work of one person. Startup, on the other hand, requires highly skilled, talented and speedy individuals who have an understanding with one another. They’re willing to work together collectively as a team by sharing responsibilities.
Working as a team also means that everyone would consider the startup company as one’s own, rather than being an employee of the company and only care about the pay.
Startup companies are usually tech-oriented, and their founders are also highly technically skilled people. The question is why tech. It’s because tech is the only industry that doesn’t care about manner, behavior, dressing codes, or wealthy background. It only requires extraordinary skill and unique ideas. If you have both qualities, test and launch it. If it’s good, then you’ll acquire the market share very quickly whether it’s paid or ads. Bigger market share would attract new investors, and the expansion process continues.
Having discussed earlier the tech nature of startup companies, therefore, they don’t require the conventional and traditional economic and physical resources. All they require is the investor and financial resources to carry out different operations.
Tech startup companies usually have limited resources in the beginning. Therefore, they either partner up with other skilled personals to get things done or they hire some third party. For instance, the reason for alliances and partnerships is building a website or an online platform, software creation, or development of an android application.
Investment in the startup companies is usually very risky because they have a very high failure rate. The reason for having a failure rate is because they rely heavily on the external factors.
Having the tech nature of startup companies, they’re very susceptible to environmental changes. Therefore, they have to be highly adaptive to the changing market trends. If they ignore it, then they’d lose the market share gradually.
Types of Startup Company
Here are the 6 types of startup companies with examples
Scalable startups usually look for the new repeating business model. If they find it, then they would offer boost services to the other businesses and ventures. Scalable startups usually hire the best and intellectually brightest candidates for their team.
Google, Twitter, Facebook, and Uber fall in the category of the scalable startup. They think that they’ll have a changing impact on the world, they also usually join up other innovative startup ventures like Boston, Israel, Shanghai, and Silicon Valley.
Examples: Uber, Stripe, Airbnb and Pinterest.
Lifestyle startups usually comprise of passionate web developers and freelance coders who prefer to work for themselves. Instead of working for anyone, such startups individuals love their work. They live a life of their choice.
Examples: Self Employers, Freelancers
Small Business Startups
Small business startups comprise of skilled individuals who launch their business and offer services there. Like travel agent, electrician, grocery store, hairdresser, carpenter, etc. The purpose of such a startup is to earn living and make both ends meet, such ventures aren’t scalable.
Examples: Yogibo LLC
Large Company Startups
Large companies’ startups are usually very profitable and susceptible to the environment as well. Their lifespan is limited due to the changing marketing trends, customers’ choices, legal and other issues, and competitors. If they don’t change their structure and functionality on time, then the new trend and competitor would kick them out of the market.
Example: Google and Android
Buyable startups have been seen in recent times where their founders work on the unique idea and develop something new and innovative. The startup would get acquire a great market share when they launch it. When it gets the attention of market leaders, then they sell it to the bigger bidder for money. The purpose of buyable startups is to cash out, instead of sticking to it and keep working on it.
Examples: Divshot and Wit.ai
The driving force behind social startup is mission and idea. They want to make an impact on the world. The purpose of such startups isn’t to make money, but to change the landscape of the world with their ideas.
Example: Charity Water
Other types of a Startup
Internal startups usually work within the organization. They have the full autonomy and resources of the company to work on unique ideas. They’re directly answerable to the CEO of the company.
If a startup is well established in the market, it has a big chunk of market share and its market worth is around 1 billion US dollars. Then it would be a unicorn startup. Unicorn symbolizes a rare and uniqueness.
Startup Company Examples
Zappos is an online store deals with clothing and shoes. The culture of the company is very innovative and creative. CEO of the company said that all the employees are working here because they want to be here, not because of the salary or pay.
Dropbox is an American online file hosting Startup Company that offers various services like data storage, file synchronization, and personal client.
Uber is also an American startup company that offers the taxi cab and delivery services to its customers around the world. The company doesn’t own a single cab but offers cab service worldwide.
After going the whole article, you must have acquired a clear knowledge and concept about startup companies. How they work, their different types, characteristics and how they differ from then entrepreneurship and other companies.