Startups seem to be everywhere nowadays. Be it online, on the TV, or in the papers, ‘startup’ seems to be the buzzwords of 2016. However, startups have became so over-hyped that I roll my eyes almost every time I hear a or reference to anything startup related on Facebook, on mainstream media and even by family and friends.
With the crazy valuations of huge-ass ‘startups’ like Uber, Airbnb and Snapchat, as well as the chic offices of behemoths like Google and Facebook, it is easy for us to lose sight of what startups essentially are.
It is easy for us to view startups as a new world order we shouldn’t miss out , even if it means blindly following. It is easy for us to view startups as a golden ticket to our own story of getting from rags to riches. After all, it’s all about having one genius idea, raising some money from angel investors, venture capitalists or just some rich dude, and we’re pretty much set right?
Well yes, the pervasiveness and ability of tech to solve many consumer and enterprise problems will indeed see an increasingly large role of tech startups in our lives. In the midst of doing so, many unicorns could be born, but many more would crash and burn. Finally yes, it’s getting easier for people to set up a business and have a shot at changing the world.
But at the same time, we’ve got to go back to basics and see the true nature of startups. Startups are essentially businesses. They are not a new kid on the block, but something that has been here for a long time.
If you’d like to build a unicorn (or a very big and successful company, in common terms), we’ve got to keep 3 things in mind and we have an actual chance at getting there. Or else, we’re just being wantrepreneurs, taking in only the sexy parts of owning a business without building something practical and logical that adds value to the world.
And here you go, to build a successful business, we’d have to help people:
- Save money
- Save time
- Do something 10x better
When you’re building a business, you’re essentially giving your customers a reason to give you money. And why would people give you money, and keep giving you money? That’s only when you’re able to do the 3 things above.
Most enterprise solutions are great examples of sustainable and successful businesses. That’s because they operate on a SAAS model, which means healthy, recurring and scalable revenue. That’s how many small and un-sexy enterprise startups scale slowly but surely to become big tech giants that bring in real cash.
Let’s look at Alibaba. With its original UVP, by bringing both buyers and sellers around the world together on a reliable platform, Alibaba helps many companies save lots of money. It helps buyers source for good, cheap and reliable sellers, and helps sellers reach out to the world for more revenue. As you can see, both sides save and even earn more money from using Alibaba’s platform, so that’s why people are willing to keep using Alibaba, keep recommending Alibaba and keep paying Alibaba.
Let’s look at Shopify. Shopify helps almost everyone set up an online store and sell things online just like that. While this definitely saves its users time from setting up the online store, it helps them tap onto the potential of e-commerce and generate more revenue. And when Shopify enables users to bring in revenue, users rely heavily on Shopify, resulting in a loop of using, recommending and paying Shopify for its services.
Those are just two of many other companies that help their users save or earn money. Imagine this. You’re a business (not a startup), like 99% of the businesses out there. You’re here to earn a good living, and make some profits at the end of the day. Think about it. Is there any better reason that would make you pay some other company money? Chances are if it brings you money or saves you money, there ain’t that many reasons why you’d pay for the product.
So, lesson learnt: Build something that earns someone else money, and you’ll get your fair share too.
Time is the scarcest resource there is out there. Everyone wants more time in their lives, so time is more valuable than money. That’s why if you want a product that people will love and keep paying money for, make sure you build something that saves people time. If it saves people so much time that it’s worth exchanging some money for it, you’ve got a pretty legit business going right there.
Let’s look at IFTTT and Zapier. They connect applications and softwares and build automated workflows, so you don’t have to do the manual work. Just use their service, hook both apps up and you just saved yourself the time and mental bandwith for day-to-day menial tasks. While I’m not very sure about profitability and valuations, these products are a life saver, so much that I’m willing (and I think many others are as well) to exchange money for these time and mental bandwith.
Let’s look at Mailchimp. The chimp that’s pretty much on most of our emails. From designing, sending to tracking emails, Mailchimp is one of the best solutions out there for marketers & entrepreneurs. As the drag-and-drop user interface and email interface saves us a whole lot of time and makes the whole email marketing experience 10x better, Mailchimp has managed to build itself a profitable business without receiving external funding.
I think you see some kind of trend here — automation. Indeed, if our product or service is able to take over time spent on carrying out simple tasks, it’s not hard to see why people would exchange money for more time. Perhaps, that’s why artificial intelligence is so hot right now. If people would give you money for ‘simple’ things to skip a step or two in your workflows (like IFTTT & Zapier), what more about more complex tasks?
So, lesson learnt: If your product or service’s core product is time and mental bandwith, it’s easy to get your users to be hooked and paying users of your product.
Do something 10x better
Finally, this is the grey area where all delusional and crazy startup ideas fall in. Think Uber or Airbnb for <insert super-specific use case here> or a marketplace for <insert similarly specific use case here>. That’s why it is important to filter out the bullshit and look at what it actually means to do something 10x better.
More often than not, it’s saving users money or time (No surprise here). That’s because for most things we do, speed and cost are what we prioritise the most. What’s left is when we can make a process:
- More reliable
If we make things easier, users exchange money for less stress and more time (it appears again). If we make things more reliable, users exchange money for less stress, uncertainty and a ease of mind. Of course, you can easily deceive yourself into thinking that your products is easier and more reliable than current solutions. That too, has to go through the bullshit test.
To make things easier, it has to be more than just reducing a step or two in the current way of doing things. If you’re able to cut down the steps required, stress involved by more than 25–50%, you’ve got yourself a life-saver there.
To make things more reliable, the end goal or product your consumer desires has to be delivered in shorter time, with less hiccups and delays, and with as little stress as possible. If the consumer doesn’t have to worry about any uncertainties regarding the delivery of your product or service, then it’s likely they’ll make a complete switch from current alternatives. That’s when they’ll pay you money.
So, let’s take a look at one of my favourite services.
Uber. For most, it’s a transportation company. To me, it’s a company that does all three. With cheaper and fixed rates than local taxis, I get an Uber only when it’s a fair price for me. Because I don’t have to spend any time waiting for my commute and traveling by public transit, I save a lot of time and mental bandwith on tings that matter. Finally, getting an Uber is 10x better than a taxi. I no longer have to worry about not getting a cab. I can take my time to do my things & get ready for my day till my Uber arrives at my doorstep. Uber drivers provide a much more friendly service than cab drivers. And of course, I save money. That’s why I use them so frequently.
And that’s how you build a successful business
Well, many of my favourite apps do at least one of the three for me and that’s why I use them on a day-to-day basis. Look at the apps, products and services you use everyday. Pay attention to those that you can’t live without, and chances are you’ll see one of the three objectives I’ve mentioned above.
So, let us filter out all the bullshit about startups and think about how we can actually help people out there save time, save money and do things in life 10x better. That way, we build something more valuable for the people around us, and something more sustainable and profitable for ourselves. Remember, startups are businesses that have to add value to peoples’ lives, not a new organism that just lives off venture funding and cheap ideas.