3 WAYS TO GET YOUR
STARTUP OUT OF THE
STARTUPS
32 | BIZPRENEUR MIDDLE EAST March 2021
VALLEY OF DEATH
BY CRAIG FERNANDES
Entrepreneurs are the rock stars of the 21st century. From the early trend setters (Jobs, Gates) to the internet 2.0 superstars (Zuckerberg, Dorsey) and finally to the new kids on the block (Kalanick, Spiegel), society today reveres those who dare to dream bigger and farther than the rest of humanity. Make no mistake - these people are the Elvis and Lennon of our age.
This quest for fame and fortune has led to unprecedented numbers of undergrads and young adults throwing their hat in the ring in the hopes of winning their golden lottery ticket, only to soon discover that start-up life is not quite what it is made out to be by TechCrunch and Wired. The mortality rates for young start-ups are astronomical, and I’d venture to guess that at least a few of those aforementioned dreamers would have opted for the LinkedIn Jobs search over the path of entrepreneurship if these figures were better known. According to Investopedia, a third of startups do not live to see their first birthday. Half will not see their second. If 1000 start-ups launched today, statistically speaking 900 would declare bankruptcy within 10 years. Most of those who survive will likely become lifestyle businesses - companies that exist solely to support the lifestyles of their owners, in much the same vein as barber shops and groceries.
A start-up goes through 4 distinct phases - (1) initial euphoria, which is characterized by the early excitement and enthusiasm that causes its founders to see everything through rose tinted glasses, (2) the valley of death, where reality begins to set in as the founders realise the difficulty of the task ahead of them, (3) product market fit, where the start-up finally begins to see some actual (i.e sizable) revenue, and (4) growth and scale, which in the start-up world is where legends are made.
As you’ve probably guessed from the name, most start-ups do not make it past Phase 2 - the Valley of Death.
Why? It’s simple - there are little to no barriers to entry in tech (Facebook copying new Snapchat features every quarter is a prime example of this) so something new and trendsetting is almost instantaneously replicated, and consumers have been spoilt into expecting everything to be handed to them on a silver platter for free.