Startups have become one of the hottest things to be involved with in the business world with governments, businesses and investors all clamouring to be part of the next Uber, Canva or Stripe. I get it. There’s a lot of money to be made for the very few that make it into the stratosphere, not to mention the prestige and kudos for being the genius who came up with the idea, or investor who saw the opportunity. The scale of these businesses is so huge and the potential so big they are dazzling. Investors are throwing their chequebooks at them.
The media supply a continuous flow of hero stories of entrepreneurs who started with nothing and are now millionaires or billionaires. Making it sound like almost no work was involved along the way, they fuel the notion that just an amazing idea was all it took.
In fact, the term ‘startup’ has been hijacked to describe only businesses that fit into this high-potential, investor driven category, many of whom are technology based. This has created a dynamic business environment where innovation is currency and people are having big, brave ideas.
But I have a few problems with it.
Last week I went to a pitch night for a business accelerator, who promoted their success at the start of the event. We were told of how many businesses had been through the program and how much capital was raised. It intrigued me that the measure of success is about making money from investors not actual customers - like that is an afterthought. To the thousands of small businesses we work with their profit is not an afterthought, it’s survival. It’s easy to spruik your genius in a pitch and convince us all how big the market is, but the hard slog of getting the market to agree with the founder’s genius is another thing altogether. Creating a viable, profitable business takes more than a great idea. With Uber losing hundreds of millions, one has to wonder why business fundamentals have lost importance.
Let’s not lose sight of the rest of the ‘startup’ world that isn’t in the spotlight. It would be easy to think that the new ‘startup’ culture is our economic saviour. Meanwhile, millions of small businesses are starting up, getting on with their daily trade, paying taxes, employing people and quietly growing. The small manufacturers, food producers, farms, cafes and trades that make our society function. Not as sexy, I know. Not as great for the newspaper articles, LinkedIn profiles and social media worshippers, but collectively making a bigger impact on our economy and doing things we all need.
Whilst some are swept up in the rush to be riding on the next unicorn in a blaze of glory, the rest of the small business world keeps starting businesses and achieving great things. They are also startups and many of their owners risk all they have to make it happen. Let’s not forget that these businesses need attention and kudos too.
By: Dr. Warren Harmer