Fearless, inventive and insanely ambitious, startups bristle with virtues and lessons worth learning. Here are ten startup tips companies of all sizes can gain from
1. Start from scratch
How would you design your company if it didn’t exist? Startups get to create everything from scratch. It means they can be creative with revenue models, infrastructure and organisational structure. British banks are currently being forced to go through this process, forced to by a wave of startup banks. Atom, Mondo and Secco are mobile-app-first banks, challenging the high street incumbents with new business models. One challenger bank even accepts World of Warcraft gold. Chris Gledhill, founder of pre-launch Secco Bank, describes his model as the result of “designing a bank with a blank sheet of paper”. Big firms need to recapture that mindset.
2. Fund to scale
Startups use funding to accelerate growth. They use angel investment, crowd-funding, bank loans, venture capital and bonds. The cash means they beat organic growth. And when they see the results, they often return for more. Video conferencing service Blue Jeans just closed its fifth round raising $76.5 million to a total of $175 million. The money will fund expansion in Europe, Asia and Australia, plus research and development. “With this investment we are fuelling up our tanks and preparing to step on the gas,” says boss Krish Ramakrishnan. Established firms can do the same.
3. Ask for help
The old insult about management consultants is that they borrow your watch then tell you the time. It’s absurd. Startups have no hang-ups talking to advisers. Investors act as non-execs (well, the good ones). Banks help startups with the right structure, strategy advice and cash-flow modelling. Startups in accelerators, such as Barclay’s FinTech Accelerator, get mentoring from entrepreneurs and share ideas with other startups. Big firms need to quit being so shy.
Small UK firms export more than larger ones. FedEx’s second annual Great British Export Report shows the average small and medium-sized enterprise (SME) exports more than it imports, and 72 per cent believe international revenues will increase over five years. Trevor Hoyle, vice president of FedEx Express, says: “The report shows that SMEs recognise how lucrative exporting can be for their business and as result more are going global, actively helping to reduce the deficit.” Artisan chocolate brand Choc on Choc exports to ten countries including Japan and Qatar, and recently founder Flo Broughton has added Malaysia. Can you match that?
5. Think social
Facebook and Instagram are dangerously addictive, which is why they make great business tools. Startups often include a social strategy at the heart of their business model because the founders grew up with social media and they can’t afford traditional corporate communications channels. Yoni Assia built his stock trading platform eToro into a global giant by thinking social. All trades are viewable on eToro’s social platform, so investors can copy the best performers. It was radical, different and proved to be a winning selling point. Social is the future of marketing.
6. Be fun
Eric Ries, author of The Lean Startup, points to a paradox. Employees at startups work “under conditions of extreme uncertainty”, yet enjoy greater job satisfaction. So what’s going on? Office hours at startups are more flexible, career paths less rigid, access to the boss is more direct and the culture is more human. In large firms, human resources teams attempt to codify good practice. The result is bureaucracy. So why not copy the ethos of a startup? Currency exchange business TransferWise has a sauna in its Clerkenwell office as a nod to the Estonian origins of the founders. Innocent Drinks installed AstroTurf artificial grass and picnic tables. Better to be zany than boring.
7. Think big
“Stay hungry. Stay foolish.” Steve Jobs’ advice comes in two parts, the second bit being the hardest. Startups are foolish because they don’t know any better. They may launch daft products, they experiment and take risks. When Jobs launched the iPhone, the review in the UK tech website The Register said: “Why the Apple phone will fail and fail badly.” The iPad? From The Inquirer: “We can’t gauge what the actual target market is.” Jobs never lost that startup appetite for experimentation. He stayed foolish and prospered.
8. Use technology
A lot has happened in the past five years. The cloud is now cheaper and more reliable than on-premises storage. The internet of things (IoT) is here. By 2020 there will be 25 billion connected devices, according to Gartner. There is wearable tech, such as Apple Watch, Samsung Gear and Fitbit. Alternative payments have taken off, from Apple Pay to Droplet. Mobile apps are ubiquitous and can be made via codeless platforms. Startups have the luxury of building their infrastructure using the latest tech. For example, AdhereTech is making internet-connected medicine bottles, which report usage patterns and trigger reminders if patients forget. It’s an IoT and cloud combination with huge potential. Neither service was viable just a few years ago. A technology review will reveal what tech you could be using.
9. Promote from within
Startups promote from within for two reasons. First because they can’t afford hotshot candidates. And second because they develop esoteric habits which outsiders don’t get. Promoting from within encourages staff to believe they can reach the top. It preserves the culture of the company. Google is a perfect example. The company is dominated by early employees. Number 15 Joan Braddi became vice-president of search. The current chief legal officer was Google’s first lawyer, first meeting founders Larry Page and Sergey Brin in 1998, the year it incorporated. The current chief business officer joined a year later. Susan Wojcicki was employee number 16. She’s now head of YouTube, owned by Google. Amazingly, the original YouTube founders rented her garage as their first office.
10. Form partnerships
Startups are a source of energy, fresh thinking and talent. Making friends with startups will let you benefit too. Samsung’s latest “secret ingredient” is its Open Innovation platform, where it forges partnerships with startups. Samsung runs accelerators in New York and San Francisco. It takes equity stakes in startups. It also announced plans to increase efforts to help startups in its native South Korea. “The future is about the thoughtful integration of hardware and software. And that means startups,” says David Eun, vice president of Samsung’s Global Innovation Center. No reason why your firm can’t do the same.