What is the difference between a startup and a regular business?
Startup as it is
Sergey Smirnov, "Science and Life"
Startup – today we quite often meet this word, and not only in the media, but also in everyday conversations. However, not everyone understands what kind of "beast" this is.
To dispel the fog shrouding the concept of "startup", decided "four brave", of those who deal with it every day. These are Ivan Bakhcheev, an employee of the RIA Novosti media laboratory; Alexander Ostrovsky, founder of the Invitro independent laboratory, CEO of 3D Bioprinting Solutions; Sergey Novoselov, Doctor of Biological Sciences, author of works in the field of biochemistry and biomedicine, molecular and cellular biology; Alexander Baulin, chief editor of IT and Telecom-RIA Novosti project.
From the very first minutes – and it was quite logical – experts proposed the definition of a "startup". This is a developing company whose business is based on an innovative idea or a newly emerging technology. Startups can arise in any sphere of human activity. It just so happens that today the most famous startups are in the field of intelligent technologies (IT). However, this does not mean that they cannot be in other sectors of the economy. A startup is a new business, a new entrepreneurial experience, the implementation of a new idea, but this idea does not have to be high–tech. If you recall Michael Dell, he did not invent and produce the most powerful computer. But he came up with the idea of sending equipment by mail, which allowed him to save significant funds on the maintenance of stores and establish his own company without large expenses. So Dell was created, a startup that entered the IPO stage (initial public offering on the stock exchange).
Another question: which of the well–known projects – social networks - is a startup in the classical sense of the term: "Odnoklassniki", "VKontakte" or "Facebook"? The correct answer is "Facebook". Yes, let's say VKontakte is a big and very "loud" project. But he borrowed many features from Facebook, which was the first in this niche, and for startups, the primacy of invention, the freshness of an idea is very important, this is one of the main criteria for classifying projects as startups.
The creator of the startup is a person who decided to change the world for the better, Ivan Bakhcheev believes. If we talk about the primacy of the idea in relation to social networks, the same "Facebook" would not be able to withstand the load if all Russian Internet users "knocked" there. Therefore, social media clones were created, and there is nothing wrong with that.
In general, a startup, so to speak, rests on three "whales". The first "whale" is the creator of a startup that wants to change the world. The second is the consumer, who, no matter how hedonistic it sounds, wants to live better. The third "whale" is an investor who wants to multiply the profit from investments.
Here are some examples. Among the famous startups, in addition to Facebook, you can include Youtube and Whatsapp. The first one was invented when people couldn't find a convenient video player on the Internet. Whatsapp is less well-known in our country, but now it is gaining more popularity: this is a service that replaces SMS communication. You just need to install this application, and you will be able to exchange messages with friends almost for free.
The above projects have clones. "Youtube" has "Rutube", "Whatsapp" has "iMessage" and others. Another example of a startup is the Kofegliano project, which appeared about a year ago. It grew out of the need for people to get coffee to take away – and now cars with coffee machines are driving around the cities. If you know the route of such cars, then you can, roughly speaking, take a coffee on your way to work and go your own way. There was a "Coffee maker" in the USA. Now it is also in Russia (a little earlier this project came to Ukraine).
What is the difference between a startup and a regular business? A startup is a business, but not every business can be recognized as a startup. A business, as a rule, uses a ready-made business model, gets a loan to take the first steps, then returns the money. Perhaps he takes another loan to expand the business, and so on. At the same time, the person or group of people who organized the business remains its owners. In a startup, investments are attracted with the help of "funding rounds", and with each round the owner's share is eroded. Thus, it turns out that the owner pays for future excess profits with his share.
Experts also gave advice to journalists: what should you pay attention to when talking about startups in the media. We can talk about the team working on the startup, its idea, the amount of money raised, funding rounds. However, the most important thing when describing a startup is how much it has changed the world. For example, Whatsapp – how much does it change the world? In Moscow, the cost of SMS is about 1 to 10 cents. If you take unlimited Internet, take the size of the maximum SMS for 160 bytes and divide, say, 2 gigabytes of Internet traffic into these 160 bytes, it turns out that the difference between the cost of sent SMS and transmitted data is about a thousand times. Thus, the user can spend a thousand times less on communication – it does not need comments.
During its "life" a startup goes through several stages. The first is the seeding stage, when the idea is tested for viability. The second is the "startup stage", that is, the stage of launch and the initial period of its operation. The third is the growth stage: the startup occupies a stable position in the market and is confidently moving towards the conquest of the niche that was outlined at the stage of writing a business plan. The fourth is the expansion stage: the startup has already completed, or has approached the implementation of the business plan in the primary target market and is beginning to expand its boundaries by conquering other markets. A company can do this either alone or by acquiring other enterprises. And finally, the fifth stage is the exit stage, which means the exit from the project – partially or completely – of business angels and venture investors who previously participated in the financing of the project. There is also, Sergey Novoselov adds, a "zombie" stage when a startup stops working, but there are already patents and there is still hope that it will still work.
And who are business angels? To answer this question, it is necessary to list the sources of funding for startups. There are usually four of them. The first one is FFF (from the English words family, friends, fools – literally "family", "friends" and, sorry, "fools") – money given by relatives, friends and those who, as they say, "don't feel sorry". The second is business angels. These are people who invest relatively little money in projects, but can help with connections – to introduce those who will contribute to the promotion of a startup. The third is venture funds – companies that attract finance, evaluate the possible success of the project and invest money in it. And the fourth is crowdfunding, when a certain group of people is "dumped" with money or even things for the benefit of some project, without much hope of return.
The excursion to the "kingdom of startups" ended with a curious example from the life of Alexander Ostrovsky. In the early 90s, when he had a desire to open his own business, he did not have the means for this, but he was lucky: friends gave Alexander 30 thousand dollars. At that time, it was an astronomical, unrealistic amount for him, which helped him a lot. It was a gift of fate – no more, no less. "However, later I returned everything," admits A. Ostrovsky.
Portal "Eternal youth" http://vechnayamolodost.ru14.10.2013