I was invited some days back to give a lecture on 'STARTUP' and so I have decided to post the lecture here 'as is' for does who missed the class.
Can we have 2 or 3 people tell us what they understand by this word/topic/concept?
no wrong answer, just share whatever comes to your mind.
In my own words, startup is a concept that is derived from the conventional 'small business/company' but with a little variation. The variation can be explained as follows:
When someone recognizes a problem and then feels he/she will have to start a company to solve that problem then that becomes a startup.
For example, if we decide to establish a financial institution (let say EBB Bank) that will operate the same way banks operate, the that is starting a conventional business/company.
However, if we decide to start something that has not been done before to solve some sort of problem or make life easier then that becomes a startup.
I hope we are together?
I know the topic somewhat feels good and everyone might now be like I need to have a startup.
There are millions of problems to solve, especially in emerging markets like Africa, however this concept is not well understood yet by many within.
Emerged markets currently are the ones in vogue with the startup concept and I believe this will get more popular in Africa in a short while hence the need to get positioned.
But wait a minute. The only way to solving a problem is not through having a startup. So if you do not really have a reason to have one please do not.
Although a STARTUP could be in any area but technology today has made it to be more common in the ICT sector putting the world as now 'global village' concept in view, according to Michal Ugor (2015), assuming we talk startups (high growth, usually tech. ventures) not small business the most comprehensive analysis to date is Startup Genome
Report Extra on Premature Scaling - a project coauthored by Berkeley & Stanford faculty members with Steve Blank and 10 startup accelerators as contributors. The report analyzed 3,200 high growth web/mobile startups.
Within 3 years, *92% of startups failed.* Of those who failed 74%, failed due to premature scaling.
A startup should be well planned and organised before it is ventured into, taking note of the different events within the life cycle.
Scaling is the ability and or maintain a startup through out its life cycle irrespective of external, internal and unforseen forces. Including spiritual 💀😀
All these have to be done at the appropriate times, taking scaling in the first instance, Premature scaling means spending money on marketing, hiring etc. either before you found a working business model (you acquire users for less than the revenue they bring) or in general spending too fast while failing to secure further financing.
An example is a Sacco recently that was to convert to a bank and due to the requirement went for a loan of a million dollars to purchase the required banking software and infrastructure. Only to be told in the cause of the implementation that the country wont be issuing a banking license till further notice.
As far as I know, tech. startups have highest rate of failure among all industries mainly due to number of uncertainties that come with launching something new/innovative to the market.
Well, tonight teaching is not to scare anyone, but to get us prepared in case we have anyone who really wants to go against all odds, to start not a small or conventional business but a *STARTUP*
This would lead me to the two main points I want to share tonight that will be useful for you either you are planning your startup or even a small business.
1. Lean Startup concept
2. Exit Strategy
I have just decided to talk briefly about what the starting point and probable end point of a startup should look like and although there are still a lot of stuff locked in between, time would not permit us to go into that tonight.
The lean strategy simply means starting in your room with little or no resources and then scaling gradually as things become clearer and the feasibility become more evident.
Permission to go on?
it means starting up a business in chunks in such a way that bits and pieces are put together and scaled overtime as the need arises. Before now one will usually find people having a very big business plan and then going for funding (through loans and VCs ) to build the big thing. This could be very risky.
1. The idea might eventually turn out to be unrealistic.
2. One might over invest and find it difficult to match the ROI appropriately
3. Environmental factors might change of which there is little or no control
possible from the entrepreneur.
I am going to quickly move to the next point 🕰.
Every business will eventually end but the time and the way by which it will end can be controlled.
I have been opportune to run 2 startups and 1 small business. Failed in 1 startup, sold the other startup and still on the small business. But the failure was duly with a very strong and great exit strategy...
From what I have seen, usually many entrepreneurs typically build startups to sell. And so when building a startup or small business, it is very important to plan the exit of the business by asking the following questions.
1. How do I want this business to finally end?
Is it by selling off completely or by building to be able to run in transition.
2. If something goes wrong, how do I exit as if nothing happened
As seen in some cases when a business fails and the owner feels like committing suicide.
these points should be given a great so that the purpose starting in the first place will not be messed up.
Some other good examples of startups built and sold are whatsap, IG and a host of others.
In conclusion tonight, the bedrock of everything i believe is still knowledge.
Founders that learn are more successful: Startups that have helpful mentors, track metrics effectively, and learn from startup thought leaders raise 7x more money and have 3.5x better user growth.
It is on that note that I leave the floor open for contributions from all.