When I was asked to write about startups as an outsider, I thought about how well the premise fit me. Unfortunately, it fit me too well, I realized as I scratched my head and wondered what a startup was and how I would go about writing an article titled “Startup Industry Explained”. With the ironclad confidence of the completely ignorant, I accepted the offer to write the article.
First, I needed to learn the difference between a startup and a new business. I contacted my top informant, my most-frequented source of information, but unfortunately, Mother could not explain the difference either. So, off I went to switch on the PC. In theory, the technology of today placed information of the entire world and its history at my fingertips. Just as Mankind reached the moon, I would reach page 2 of my searches on Google before calling it a day. I found most comparisons between startups and businesses to consider the latter as profit-oriented from the get-go. Businesses are usually “safer” and financially reliable, offering low-risk products and setting their sights on showing a profit as soon as possible. Startups, on the other hand, initially focus on growth and expanding their reach, hoping to convert popularity into profit down the line. As such, they face a high chance of failure, but their success can mean sky-high profits. “Unreliable,” “financial drain,” and “usually a failure” are not just phrases I would use to describe myself, but also to paraphrase the fate of most startups. Unlike myself, however, a few startups have managed to be successful. One of the quintessential examples here in Pakistan is Rozee, which aggregates job offers from across the country in a handy website, thus allowing more options than ever before to reject you! There have been other success stories, especially in niches (the music site Patari and the tourist app FindMyAdventure come to mind), but by and large, startups show high rates of failures. Interestingly enough, according to Fortune’s website, startup owners most commonly cite a lack of market for their products as the reason behind their failed startups. But hey, World, don’t let that stop you from continuing to romanticize “believing in oneself” instead of “doing market research!”
Now that I had learnt what a startup was and had overcome my shyness in claiming myself an expert on the topic, it was time to familiarize myself with startup culture’s language. Every subculture has its own lingo that sounds alien to those outside it. For instance, in some places, “Quick, turn off the lights and pretend we’re not home” is lingo for my friends letting each other know that I’ve come to visit. And so, I checked up glossaries of common terms used in the startup industry.
Some of the more familiar terms included
An elevator pitch is usually a 60 second or less presentation of a startup that tries to pique the interest of potential investors. My recommendation to fit your elevator pitches within 60 seconds is to assemble a team of three: first person handles computer equipment, second gives the presentation, and the third keeps a hand on the back of the room’s clock, pushing the longest needle back every time it nears 12.
In a freemium service, you give away a product and make money by selling complements, improvements, and maintenance fees to it. Imagine gifting me a puppy. Then selling me dog food. I get curious and taste it, only to find myself enjoying the dog food. Congratulations, you have landed two new long-term customers!
The end-game for most startup owners, an “exit” is their method of converting their efforts into money, such as by selling their startup to a bigger fish. Funnily enough, despite no formal education in business, exits come to me naturally, as I intuitively create an exit strategy in most things I do. Although perhaps “thinking up excuses to give up and quit” is the more apt descriptor of my used type of exit.
Barrier to Entry
Refers to the hindrances a startup faces in becoming competitive in the market. Examples include the costs in getting the ball rolling, technical knowledge needed to make necessary products, and the effort associated with marketing. Oh, how I snickered at the thought of needing effort to market: how hard could it be to achieve a wide reach in today’s globalized world? The answer, I realized, is “very,” considering most of the people living next door don’t even know me.
That said, not every term in the glossary was so straight-forward. I came across a few phrases which I had not heard before in the context of startups
Disruptive technology changes the way a market or a society works. The perfect example is Amazon, which changed how shopping works by making online deliveries commonplace. Its ramifications don’t stop there either: when I was a kid, I’d be overjoyed to have a teacher draw a star on my cheek. But now, how do you think I would feel in receiving a one star rating on my face?
One of the more technical terms, this refers to placing a cap on notes for investors. Practically, it means that when the startup has its next round of funding, investors will own a percentage of the company that is relative to the cap set up. For startup founders, it is more beneficial to leave notes uncapped if they can get away with it. I know I would always agree with a preference for uncapped notes, as a “hats” person myself. Finally, a couple of the terms showed the startup industry getting creative:
A home run is when a startup exits with an amount of money equal or greater to 20 times the initial investment. Can this explain, the businessman within me ponders, the rarity of highly successful Pakistani startups in the global market? Is our obsession with Cricket making us settle for aiming only for 4 times and 6 times the amounts of initial investment?
Me, in the morning. Also, a company that is still functioning but will never be successful, thus finding itself caught in a limbo it cannot be exited from. Having familiarized myself with a plethora of new terms that I could slip into incorrect contexts, I felt ready to try my hand at entering the world of startups. To inspire you all and show how easy success is, I came up with my own ideas for startups!
Counseling Through Smart Devices
My first pitch is of a startup that makes apps for various smart devices, through which users will receive advice on their problems. Some of you will scoff, dear Readers, but when I close my eyes, I envision a world where I return home from university and ask my refrigerator for advice on how to deal with my classmates making fun of me, and in this world, my refrigerator laughs and tells me that it wants to hang out with my classmates.
A business inspired by the likes of Foodpanda and Couchpotato, but in my version, our promised service is us picking any and all delivered items (such as mail and laundry) for busy people. The tiny fine print in our app’s description tab advertises us keeping the items for ourselves and never contacting you again. The fine print uses white font on a white background. This startup idea is self-sustaining.
Cardboard box sellers:
The idea: Selling empty cardboard boxes for cash. Pros: Elevator pitch fits comfortably within 60 seconds. Cons: Why would I sell away empty cardboard boxes instead of building a giant fort out of them?
Medical search engine
An app to let people find doctors all across the country, along with the rate they charge per session, their work hours, and certifications. But this is not a health app. This app’s target audience will be traditional parents looking to find “a nice doctor boy/girl” for you to marry. Of course, it’s easy to throw out random ideas, but how many of them actually hold potential? I tested them on an audience. To my joy, every one of my pitches turned out a resounding success! Was my audience of imaginary sock puppets unrealistically accepting compared to real investors? Maybe. But I think the amount of wool threads and lint they pledged to invest still accounts for something. (Editor’s Note: We are entitled to 30% of those threads and lint) Thus, my journey from being an outsider of the startup industry to having an over inflated ego came to an end. Notes jotted down from a few searches on Google, a refusal to admit when I am wrong, and a willingness to throw out buzzwords to confuse readers: it appears I now meet the checklist required to pen my own self-help book!