Focus on Writing Epitaph on Startup Mortality?

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Offline farzanaSadia

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Focus on Writing Epitaph on Startup Mortality?
« on: November 16, 2017, 07:33:12 PM »
Startup basically stands for the entrepreneurial initiative of taking technology centric ideas to market. These are ideas of products, whether goods or services, to be better alternative to existing products. This is about brining better substitution to market to cause disruption to incumbent industry. Despite the underlying strength of ideas and technology base, it’s a tough journey. And such reality has been the case of high mortality rate in the startup landscape. As high as 90 percent startups suffer death within first three years; or becoming “zombies”—remain afloat with seeming lifelessness. In India, 1,000 startups died in 2016 alone, half of whom were incubated during 2013 and 2014. And adequate epitaph yet to be written on failed startups to understand the cause for finding remedies.  Although we arrange colorful events and promote competition among creative minds to undertake startup initiative, but why don’t we focus on doing postmortem on high mortality?  Due to high mortality, it’s quite important to dissect the journey of failed startups to detect and share patterns to reduce the mortality rate.

    After originating in research based university ecosystems of the USA, startup craze has diffused even in developing countries like India and Bangladesh. Starting from political leaders to academics, startup is being projected as the new vehicle of wealth creation—pursuing disruptive innovation.  Globally, over US$ 125 Bn private equity was invested in the startup world in 2015. This number does not take into account of (i) all the money that employees have “invested” through all the salaries and wages that have not been paid to them, (ii) the billions of dollars of investments made by founders, their friends and family as well as their angel investors, and (iii) also the billions of dollars that has been “invested” by suppliers who did not recover their money from the company that went belly up. If statistics were available, the total amount would be quite large—virtually wasted to pursue ideas. But success of startups is the key to bring better alternative to existing products—for offering better quality products at lower cost to serve our purpose better.

It’s quite ironic that despite such high-mortality rate and loss of so much capital, people often prefer quiet burial. Startup journey could be considered as the process of succeeding in disruptive innovation. It’s about bringing substitute products around new technology core to cause disruption to the exiting industry. For example, the idea could of smartphone based handheld ultrasound machine to cause disruption to existing desktop counterparts. Irrespective of the strength of the idea and underlying new technology, the initial product likely shows up as a primitive alternative to target incumbent products. Such primitive products create a very little wiliness to pay. Suitable customers should be targeted for this primitive product. Additional ideas should be added to complement the first great idea to rapidly improve the quality and reduce the cost of the early primitive offering. Such rapid progress is essential to create new market, and also to cause the disruption to incumbent product’s exiting industry. Both scale and scope advantage (preferable around software), and also the benefit of network externality (by leveraging the ubiquitous connectivity) should be exploited to empower the great idea to succeed. Such disruptive innovation journey is a long one, and moreover, initial great ideas need to be complemented by thousands of additional ideas.