It’s a given, 9 out of 10 startups are doomed to fail.
Despite this incredibly high failure rate, the startup industry is still flourishing.
According GEM Global Report, 11,000 startups are launched every hour. And in the U.S. alone, a whopping $1,532 is being invested every second in venture capital, which comes to $48.3bn per year.
Do you wish to start a start-up this year? If yes, then it’s a good decision. But then, make sure you have a clear understanding of these few startup dilemmas that could make or mar your business.
Here are the 5 startup dilemmas you need to build a clear perspective on before you venture into kind of uncertain, unfamiliar domain. Getting a handle over them beforehand will make sure you have it a bit easier on the startup road ahead.
Startup Dilemma #1 – Money VS Followers
Well, only if your followers were your funders…
Systems like Patreon could have been a saving grace for lots of startups — a system wherein the followers aka fans fund your startup projects.
But then, such things don’t happen in the real world. So, the big question that’s making the first-time entrepreneurs lose their sleep is over the fact that whether they should run after money first, or should they give importance to followers first?
Difficult question, right?
Not surprisingly, every startup out there is trying to find an answer to this question, but then, are not really sure of which way is the ideal way–because some go after money, while for some building followers come first, inspired by Facebook and Twitter’s success stories.
In fact, the spectacular success of brands such as Facebook and Twitter have inspired startups to go after followers first. Say, for instance, the founders of 500 px (a website that helps professional photographers set up their own portfolio pages and interact with a community of like-minded photographers) Evgeny Tchebotarev and Oleg Gutsol followed the Facebook model by focusing on users first. But then, when they ran out of funds, U.S. investors came calling at the nick of time.
Even Springpad chose the same path – developed a quality product and then built a user base for the same. But then, Springpad was not as lucky as 500 px people. Their strategy backfired as the company was forced to wind down due to lack of funds.
As Springpad’s cofounder Jeff Janer said,“We built a heck of a product, but we didn’t build the business.”
At every stage tech startups face several polarizing choices–whether to take up the acquisition offer or go on their own? Whether to focus on money or followers? Whether to shift headquarters or to stay put?
Even PlayCafe got it all wrong and had to shut shop. As one of its co-founders Mark Goldenson mentioned in a VentureBeat post that one of the foremost lessons learnt from his failed startup was that they should have gone for quick money first.
Key takeaway : Startups should think money first. Facebook was one off case. Times have changed. Markets have changed. Map out your growth plans, accordingly.