The Great Advantage of Every Startup Company

A conference with the CEOs of AccorHotels and Stripe at Viva Technology made me realise one obvious thing. Not only startup companies are often the results of the problems or imperfections of our society but they all have one big advantage. Like every other advantage, it is compared to other players, in this case compared to all mature or old companies, often medium-sized or large corporations.

This could be obvious when you try to make a comparison, but with today’s world it is becoming a bigger advantage. Every startup company has the ability to start from scratch. Create an entirely new business model, hire a new motivated team, adapt to today’s needs or values and be more prepared to the transformation of the current society.

Business Models

“I wished we could have invested and created Airbnb, we simply missed it.” Sébastien Bazin, CEO of AccorHotels (7th largest hotel group in the world)

When you start your company, most of the time it’s because a problem you experienced, a solution you found or a better model you want to develop. So when it comes to startup companies, they are often the result of consumers needs, expectations or new technologies of today. But old companies are the result of expectations 20, 40, or more than 50 years ago. These large companies clearly have experience but sometimes there are times when it comes to new needs, disruptions and they have to design an entirely new business model.

Airbnb disrupted the hotel industry. Netflix is transforming the movie industry. Amazon is changing the retail industry. Uber is reforming the taxi business. There have always been disruptions, but these always threaten the mature companies, sometimes based on an opposite business model.

Large and old companies can probably have experience or financial resources but sometimes change management can be very difficult, especially when it comes to employees.

Digital Transformation

“I have a third of my employees who are extremely good and want to participate in the digital transformation. I have a third of my employees, they understand the need of the transformation, they don’t know how to do it but they will be happy to be trained. And I have a third of my employees who are permanently resistant in any changes, in denial and don’t want to be trained.[…] I need to find a solution and not put these people on the street. ” Sébastien Bazin, CEO of AccorHotels

Digital transformation is one of the biggest topics of today. We are seeing that many companies are in this transition. The automotive industry moves further and further into the digital era, with revolutionary entrants such as Tesla, but also more traditional incumbents like BMW. Target’s CEO Brian Cornell has announced plans to invest $7 billion in the digital-first initiatives over the next 3 years. Examples could go on, but I wanted to state that every industry is facing digital transformation today.

“I think large companies, in a way, get bad luck when it comes to digital transformation” John Collison, President and Co-founder of Stripe

But this digital transformation takes several steps in companies and again change management can be complicated in traditional companies. Businesses that are in a digital transformation often have to disrupt their own business, kill some existing business units. A new company will only have to build itself around it and thus do not face loyal employees who are in denial, unaware of this required change or not trained about this topic.

Business Culture & Diversity

One final thing: Diversity and Culture. Nowadays, creating an attractive corporate culture has been an important point for companies in order to either be seen as socially responsible or to attract new talents.

Some traditional and old companies succeeded in this, but others have shown difficulties. Again, change management has to be implemented in some cases to really modernize the values of the company and its culture to today’s expectations. However, 70% of all change initiatives fail. Changing an organization’s culture is one of the most difficult leadership challenges. This challenge is not necessarily faced in an early stage company as you are creating the culture of your business at this moment.

Even harder when it comes to diversity. Just a concrete and simple example, a large old company with 80% of men among 20 000 employees will have a lot more difficulties to reach a male-female parity than a new company. Obviously, don’t fire people to just get to an equilibrium, but some large companies have to be more careful about diversity in the long-term and be patient to finally obtain what we expect more and more today, that is to say a diverse workforce.

“The big difference between him and me is agility. He can start on a blank paper. He constructs something. He doesn’t have any norms, standards, history or personnel.” AccorHotels’ CEO comparing his company to Stripe’s President.

This doesn’t mean that startup companies are better than traditional or large companies, not at all. And there are many exceptions to this case with big old players like SAP and IBM. But one thing that every entrepreneur has to understand is that they have the capabilities and a better agility to design a whole new business, and their success will rely on how they do it. You have the power to easily construct a responsible, sustainable and amazing company. So embrace it!

This is also why large companies are now investing and working with entrepreneurs more and more. Collaboration and most of all respect has to be established between startups and large companies.

By the way, entrepreneurship is a French word 🇫🇷

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