Do start-ups have the edge on success? Language does lose its way from time to time. We all knew that Uber wasn’t a start-up; well, it was a start-up but it isn’t one now, even if the tag has stuck. Sifted, the well respected group of journalists backed by the Financial Times to report on start-ups, lists a load of firms they give this tag to, but the average of the top ten on their list has been going nearly seven years, has raised over €600m and has a valuation of over €2bn. Oh, and Deliveroo, Revolut and Babylon Health all have thousands of employees! These don’t look anything like what I think of as a start-up.
Start-ups are small teams, early in the life of their venture, driven to achieve, against the odds, by a strong belief and a refusal to take no for an answer. They’re stressed with the desperate race between achievement and reality: can they, will they, do enough and achieve enough before their cash runs out, or a competitor beats them, or before changing circumstances or some other challenge drags them down? Sometimes, the challenge they have to beat is success, itself. They make a big impact, customers crowd in, and they have to scale fast. A good problem to have but still a big problem.
Start-ups are doing what it says on the tin: they are starting up, and are trying to build a beachhead of stability in the face of expected challenges and unexpected hurdles and issues.
Real start-ups do have big advantages over established companies at scale, like Uber, Revolut, Deliveroo and the rest, besides having the obvious disadvantages of lack of resources and limited market awareness. Small teams in early stage firms can be much more nimble, and their lack of scale means that they can make changes quickly.
Young, fast moving start-ups running hard to succeed must use their nimbleness because it’s a key competitive advantage against bigger firms who’re more weighty and stiff, but that nimbleness must be sure footed, not just mindless ducking and diving in an effort to avoid the crossfire. Thinking ahead carefully is crucial to being able to leverage nimbleness to overcome the unexpected as well as the inevitable rough and tumble of today’s competitive, fast changing world.
Astute thinking also has a fundamental role in deploying the second, big advantage that young start-ups have over more developed firms besides nimbleness. Start-ups have no legacy, few commitments have been made, the strategy is still wide open. Start-up have yet to make choices about lots of things, and that means they have freedom where others don’t. As soon as they make choices they start to acquire legacy, and the astute tech start-up will make those choices very carefully with eyes wide open to the implications for the future.
So often, for tech start-ups, technology strategy and business strategy are heavily interdependent. Choices made about technology early on, cast long shadows on the business long into the future. Technology architecture can be very hard to change later if circumstances change. Concentrating limited resources where they create the most value is vital. Avoiding the business traps so often hidden inside technologies and where dependencies lie, is a must for every early stage tech team as it makes choices on the journey from concept, through development and test, and into scale-up with customers.
The teams that approach these things with pragmatism, insight and astute judgement are the ones that have an edge on success. They are more likely to make wise choices that are right for tomorrow as well as today, and be able to be flexible in execution in response to the opportunities and challenges that always comes as scaling and momentum build.
Take a look at our Horizon Scan series of videos in which we talk to a number of CEOs running start-ups.
Peter Osborn is founder and chairman of Flexiion MSP and has a number of other business interests. (c) 2021, Peter Osborn
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