What is a Start-up?

A start-up is typically a relatively new company that has not established itself as a dominant player in the market. They may or may not be in a high-tech industry, although since the dot-com bubble a lot of people have treated start-up as synonymous with a new high-tech company.

Through out history start-ups have revolutionized industries. Just think about Google. Failure rates can be high, but when success comes it comes large.

Typically, these start-ups will have most of their value in their intellectual property through either copyrights, patents, or trademarks. In established businesses, they don’t rely on intellectual property as much to obtain value.

Bad Economy For Start-ups?

What better alternate choice to talk about? Start-ups have defined the past two decades and helped contribute to the boom and the bust. We rise fast, we fall hard. But is it still an attractive option for a Generation X & Y’ers? Why do people do it?

With all this talk about the economy, many otherwise extremely entrepreneurial people are running for the hills. However, can anyone remember when Apple and Microsoft were created? 1976 and 1975, respectively.

The 70’s, aka the time period that is looked at as one of the worst performing decades in the past century, was when two of the most powerful technology companies were founded. Through stagflation and oil crisis, two bright minds rose from the ashes and made their place in history. I am sure more start-ups were formed, but those are two that ring a bell. How could this be?

Technology, often times, works as a deterrent to economic decline. New technology often gives the economy new efficiencies in which to grow.

The typical financial life cycle of a start-up, shown above, can give you some insight into the financing of a dream. As you can see, the “valley of death” is what scares people away. And I hate to be cliche, but the old saying “you have to spend money to make money” comes into play here. If you are certain that what you are doing has value, then you will take that loss without thinking twice. After that the financing takes off through the venture capitalists, alliances, IPOs, and public offerings. But as mentioned before, this is for a start-up that creates value. If you do NOT create value, you most likely will fail horribly.

The People Make the Business

One thing we all need to recognize, though, is that the key factor that distinguishes a winning start-up from a losing start-up is people. Not the technology being formed even though that is important… but people. Who is the founder? Who is employed? No matter when a start-up is created it will fail if these two are overlooked. Everything else can be copied regardless of trademarks. A company is only as good as the people behind it.

If you have faith in yourself and you have an idea, onward, seize what is yours*. If you are telling yourself that you need to wait for the economy to recover before you create your start-up… you may not be the right person for the job**.

*Just don’t do what boo.com did and spend $135 million (yes, $135,000,000) in 18 months.

**I am obviously writing this more towards technology start-ups. If you are considering starting a pizza shop, then yes, the economy is a good indicator to look at!

Any Ideas?

Anyone out there looking at starting the next big technology revolution? Any ideas of something that could be successful even if you don’t have the technical know-how to follow through?