We Are Not a Startup
With the influx of media surrounding startups and popular TV shows like Silicon Valley, it’s no surprise that more people are gravitating towards a career in startup land. However, this doesn’t mean that anyone who works at a computer is involved in a startup.
I work at a computer. In fact, our whole company does. But, we are not a startup, we’re a small business — there’s a difference.
Startups are often founded on the potential to disrupt an industry with their product. They, for the most part, rely heavily on external funding to get their idea off of the ground. Often, these ‘ideas’ solve a problem or provide a service, but have no solid business model behind them. The thought process being: get as many daily active users as possible, then figure out how to monetize later.
This thinking has led to the formation, and subsequent dissolution of many well known companies. There are varying reports, but somewhere between 75–95 percent of startups fail.
Not having a real business is only one of the reasons startups fail. Startups are usually fueled through external capital raised in a series of rounds (seed, Series A, Series B, etc.). These financing rounds give startups a few valuable resources, (i) capital and (ii) guidance from investors. Resources can be abundant and still mismanaged. Investors pushing product direction without sufficient knowledge or context of the business can be a major blow to early-stage companies. Also, the battle for recruiting top talent leads many early-stage startups to spend money on lavish offices, ping-pong tables and nap rooms in hopes of getting great employees on board. Though this is a method that’s worked for some companies, it’s also a great way to accelerate burn rate (how fast the company is running out of capital). Aesthetics are a small part of the pie, really, acquiring and retaining top talent comes down to having a strong company vision, leadership and getting people behind that. These stresses can divert the founder’s attention away from developing their business and towards raising their next round of funds.
Startups reliance on hyper-growth, and external funding is what makes their ecosystem different than ours.
We’re a small business. This means we need to have a steady cash-flow to keep our operation going, and growing. Our growth model is also curtailed quite a bit from the startups you read in TechCrunch; sure I’d like to have 150 employees, $20 million in the bank and a fancy app for you to download. But I don’t want it at the expense of business equity. In our model, we own 100% of our agency — there’s no pressure from investors, only from ourselves. The crash and burn nature of startup land requires companies to make moves and fast, not knowing if it will be what makes or breaks them. With running a small service based business we’re able to make decisions, without external pressure from investors or an ungodly burn rate over our heads.
We’re playing a slower game, but it’s the game we want to play. Building a business with no funding is one of the hardest things you can do; however, it’s also one of the most rewarding after it’s established. Running a business means starting by monetizing your idea, then figuring out growth afterwards. Whether it’s a pizza shop, a carpenter or an advertising agency like us, the game is the same. It requires patience and a long-term vision.
For most small business owners there is no planned ‘exit’ like our startup counterparts.
Our business is our baby, and ultimately our legacy.