When Frank recently set up a social network for startups and investors, he provided the capital of tens of thousands himself. The computing power was available cheaply on the internet, the software was largely open source and the services of the two developers were required only for a limited time thanks to today’s advanced software frameworks. The website was up and running in a matter of weeks, compared to the six months and $8 million it took to launch his first venture in the 90’s!
With digital tools becoming ubiquitous and inexpensive and the funding requirements gradually reducing, there has been an explosion of tech startups in recent times. The familiar Uber, airbnb and Dropbox form the top 3 most valuable startups, cumulatively valued at $38 billion. These ventures look at existing platforms and discern the various ways in which they can be improved or further automated. It is through this ‘innovative tinkering’ that the startup boom has taken shape—riding on the back of information technology.
Highly interconnected ecosystems & falling connectivity costs have propelled startups to not only mushroom in major cities such as Berlin, London & Singapore but also in small towns globally such as Indore in India or Wyoming & Salt Lake City in the US.
The cloud provides a cheap, flexible and scalable platform to startups for storage and development. Additionally, App stores and social networks simplify the process of taking the product to market. Venture capital funding has also complimented the startup scene along with other alternatives such as angel funding, accelerators and the increasingly popular option —crowdfunding.
With freely and cheaply available tools, the central question has changed from ‘can it happen?’ to ‘is it worth it?’
With startups able to bypass the barriers to entry in an industry, there is a disruption in the way that business today is being conducted. The grip that large firms once held on both market share and reach is being significantly challenged. For example, airbnb.com, a community website that helps connect private homeowners looking to rent their free space with travelers. Since its 2007 launch, the startup has seen more than 11 million guests use its services and is currently valued at $10 billion. Naturally, the traditional hospitality industry has taken a major hit losing out to new-age customers who prefer the convenience and cost-savings of private homes over the prestige and luxury of top hotels.
While the paradigm shift that many industries are undergoing may make certain areas obsolete, it is also opening up many new opportunities particularly for the 21st century entrepreneur. Those leveraging the readily available packaged ingredients for starting their own business could easily outpace established firms and challenge the very fabric of a traditional business model.
How else are startups impacting businesses? Share your thoughts with us in the section below.
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