A few months ago, I had a chance to work with several people around the world and discuss how startups succeed or fail in their local enviroment. They all came with local or local-went-global startups so we can investigate and find some common factors thus will give us some helpful hints to pay attention to.
Here are the startups examined;
Scalado, Yemeksepeti, PlusOneMinusOne, 9gag, WeddingSnap, Shapeways, Phokatcopy, Evisos, Kosmix, SoftWin
By the help of the commonality matrix, applicability of specific success factors were counted to determine the most common success factors between the startups. 50% of the investigated startups (5 of 10) succeeded because:
- they had good timing for market penetration,
- they manage to reach customers,
- they have great teams and HR Performance,
- their brand name is good enough to be remembered
- and they believe in innovation.
40% of the investigated startups (4 of 10) succeeded because they have:
- enough persistence and determination,
- unique business model,
- low capital/costs based production,
- and scalable business structure.
Success factors’ applicability may be found in figure 1 below.
Then we all voted on the success factors which we believe is the most important for each of us and finally came to an agreement. Let ‘s take a closer look
Many startups gain success through identifying an opportunity in the market, which only exist during a limited time. The change, which generated the opportunity can come from a change in society, when new technology emerging or other circumstances.
Scalado identified the need for software to manage and transform large image files in equipment with relatively weak hardware performance at the same time as mobile phones with integrated, megapixel cameras started emerging. They entered the market in an early phase of the mobile devices market. They were between the pioneers providing an SDK to build image capture and processing applications for small mobile devices (in combination with photo camera).
Shapeways is in the 3D printing technology business which is a very popular technology trend recently. As people everywhere are eager to learn and experiment with 3D printing, they welcome a service that can provide a 3D object from a sketch, description, specification or idea. This service has potential for being a major success story, if/when it is launched to other markets (EU, US or Asia).
PlusOneMinusOne is currently growing next to ITU (Istanbul Technical University) and using the advantage of high technology specialists with the potential to offer this kind of services. Turkish industry is experiencing a significant expansion phase and therefore this kind of services is welcome.
Softwin found a niche on the market by using heuristics algorithms and a well suited customer services.
Most successful startups bring innovation to the market, although this can come in different forms. It can be through a new business model, such as PhokatCopy which, in effect, merged two business models by providing low cost copying-service by printing the copies with advertisements on the back-side. Through this they created double revenue streams (copy service and advertisements) and reduced the prices for the customers using the copy service. Innovation can also come in the form of providing novel technology, such as the imaging software from Scalado. 9gag.com also innovated by aggregating user generated contents to be rated by the public where the most popular content became the their main content.
The customer is the product itself when you provide free content or free services. Or most probably they are the main source of revenue. In each case, all successful startups care about their customers, listen and interact with them, for example they use social media to collect feedback and adjust their services. This is necessary to build and sustain a loyal relationship. Customer lifetime value increases as long as you satisfy their needs and keep the quality at a desired level.
Each of the examples shows customer orientation for their market segment. They show realistic knowledge of target customer needs and they adapted their products/services to fulfill them.
Scalado – focuses to customers that needs to easily capture, organize and process photos on mobile devices mainly smart phones. They adapted their products to provide best user experience and high technology.
Yemeksepeti.com – endeavor to provide food delivery at a fair price and as fast as possible, that is inline to customers expectation. They are aware that their customers are people who are hungry and don’t like to wait. That’s why they only let the restaurants who can meet their KPIs and if one fails, they don’t work with that restaurant anymore. They make the customer happy by delivering food fast and on time. Their call center is manned with 80 customer service agents, who listen to their customer’s problems and solve them as soon as possible.
PlusOneMinusOne – provides services for B2B segment. They closely follow the customers business processes and provide solutions for optimizing them.
SoftWin – targets home PC users. Their solutions for securing PCs use heuristics. Because their market consists of people eager to learn and try different computer tricks, this way of providing security captured attention and brought them to the top of their market segment.
Some companies were not the first identifying a certain customer need but they looked at that need from a different perspective than their competitors and that helped to provide services more suited to what customer expects. For instance 9gag.com, provides a similar service as youtube, but it focuses on funny content and provide more flexibility in the manner how content can be personalized. SoftWin competes with Kaspersky, Norton antivirus and other security solutions but they win by using heuristics and a well formed customer support center.
A good plan is always useful, but execution is deadly important. To be able to do that, you need to gather talented people around you. Successfull startups provide a good environment where employees can take responsibility, make progress, interact with community, feel respected and feel like they’re doing something good.
A business model is a promise and a path to follow. It’s obvious that you cannot plan things perfectly right at the beginning, but if you form a clear, flexible business model and measure your startup, this will help to execute efficiently and to improve the product. Most successful startups are able to change and improve thanks to their business models.