Tag Archives: Circular 331

Lifecycle of a Startup

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startup process

Discovery
In the first phase as an entrepreneur, identify a meaningful problem and come up with a solution that people would be interested in. During this phase, learn about the lean startup methodology, assess the market, conduct interviews with potential consumers, figure out the most compelling value proposition of the product, and put together a founding team.

Validation & Product development
The startup’s product goes from being a hypothetical solution to minimum viable product created with minimal resources. Have early organic users test it out and get their feedback. Iterate your idea to adapt to the feedback received and test again. Use the learnings and iteration to obtain Product Market Fit (PMF). During this phase, hire key team members, refine your pitching skills, and join an accelerator or start attracting investors.

Efficiency
Once the product is PMF and ready for full-blown product development, refine all core features of the product, fix the leaky product, and start with studying product marketing. Learn the best channels and methods to acquire customers and start obtaining the first paying customers. The aim is to increase the customer base in the most effective way. Focus on activation and retention. Be prepared for the scaling phase.

Scale
It’s time to prove that the startup has the capacity to grow in a sustainable manner while keeping costs down. It is time for the larger fundraising rounds. Consider if you want to grow within the market via new product lines and/or research new markets for strategic expansion. Build a solid infrastructure, grow the team and create the company culture.

Mature
With the support of large fundraising rounds, you managed to scale. Now is not the time to click on cruise control and admire what you have done. Problems may arise at this phase that you can’t afford to put on the back burner. In order to increase the longevity of your business and to sustain profits or grow, tackle the problems instantly. The startup should have significant revenue at this phase; plan how you want to further expand with product lines and/or market expansions. Start planning the exit strategy and future growth of the company.

Exit or renew
The business model is working and credible. The funding is available to expand and you have succeeded. You have two choices at this phase, either to exit by selling the startup or to go public.

The startup life cycle is crucial to how one can acquire the resources for what the brand will require to grow, renew, and constantly reinvent itself in the vigorous market.

The Startup Explosion

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global startup

Most big cities, from Madrid to Singapore and Beirut, now have sizeable startup ecosystems. They are home to thousands of VCs, accelerators, and caffeinated startup founders and their teams. Every year, millions of hopefuls take a stab at their dream venture launching an astounding 100 million businesses annually, just around 3 businesses per second. Unfortunately, 90 percent of these startups fail, yet an impressive amount of money is still being invested in them. Furthermore, according to the 2015 edition of the Global Entrepreneurship Index, the fastest growth of entrepreneurship is taking place in the MENA region despite political turmoil.

The main reason for this startup explosion is that startups may be built for thousands, rather than millions of dollars, as they did in the past. Cloud computing and coding have become so abundant and cheap as well as the Internet itself, which is much faster than it was, is universal and wireless. Today’s lean startups can outsource most of what they do, and no longer have to operate their own servers.

Since it does not cost as much to produce a startup, we’ve seen new types of investors come about such as angels, micro-VCs, and accelerators. Many startups don’t need a large amount of seed funding, so these investors can invest in a big number of smaller companies rather than pump millions into one company.

Another factor in the startup explosion is a cultural shift in attitude. Parents used to consider that getting a traditional job was a safer bet, discouraging young people from starting up their own ventures. With the rise in youth unemployment in many countries today, entrepreneurship is being promoted to create jobs for the growing youth population.

With the cost of entry-level for startups at an all-time low, funding for early-stage startups more available than ever, the world becoming a single market, and baby-boomers creating job opportunities, it seems rather unlikely that the startup movement will die out soon.

 

Disruptive Innovation

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disruptive innovation

We constantly hear about disruptive startups and the most disruptive ideas there are. What is disruptive innovation?

Clayton Christensen introduced the ‘disruptive innovation’ theory in 1995 in an article defining it as a product or service designed for a new set of customers. The theory was aimed at well managed companies and managing executives who overlooked researching the community. Clayton believed that disruptive innovation companies could hurt successful companies by focusing on the customer and tapping into a market the successful companies had ignored.

Clayton distinguished between ‘low-end disruption’ that targets customers who do not need the full performance that high-end customers would look for, and ‘new-market disruption’, which targets a previously unserved customer base.

A classic example of ‘low-end disruption’ is the personal computer. Prior to personal computers, minicomputers and mainframes were the dominant products in the computing industry that required engineering experience to operate. In the late 1970s Apple began selling computers as a toy for children. Their products were not good enough to compete with the minicomputers, however, since the mass could not afford or know how to use the expensive minicomputers, they did not care since the inferior Apple computers were much better than their alternative. Gradually, Apple improved their innovation, and within a few years their computers were able to do the work of the much more expensive minicomputers. Apple created a huge new market making personal computers attainable to the mass and ultimately eliminated the existing industry.

An example of ‘new-market disruption’ is when Ford introduced Model T in 1908 changing the transportation market. The introduction of automobiles prior to the Ford Model T were expensive and a luxury item that did not disrupt the horse-drawn vehicles market. Through Ford’s innovative production method, he was able to mass-produce automobiles which inevitably replaced horse-drawn vehicles.

A product does not have to eliminate industries but it can improve an existing market or adopt new business models. For instance, Netflix adapted by changing their business model which was sending out rental DVDs by post to streaming on-demand video to its customers. Most disruptive innovations find their customers at the bottom of the market with unpolished products that incumbents often fail to recognize as a threat. The disruptive innovation companies tend to refine their products and start stealing customers or reshaping industries, as Skype did with long distance calls and Craiglist did with classified ads.

The more technology advances and global knowledge is shared, we may witness several new disruptive innovations pop up. We might see 3D printing evolve further and disrupt manufacturing industries, or Amazon deliver to your door using drones, or anything else for that matter!

Lebanon’s Startup Ecosystem Combats Unemployment

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unemployment

With a youth unemployment rate at around 35 percent, Lebanon presents its youth with the blatant choice to either emigrate and join a brain drain, or to stay and struggle to find a job. Many of them choose to migrate for job opportunities abroad. The majority of those who stay have a secondary education or less, around 40 percent have no education.

The country has little to offer to its over-supply of educated Lebanese. To absorb the growing number of job seekers, Lebanon needs to create 23,000 jobs per year over the next decade. For several years, the government programs designed to create new jobs have resulted in creating a couple of thousand jobs annually, most of which do not lead to additional hires, and are not innovative.

Many of the educated and eager labor force have decided to stay in their homeland and start something of their own, despite all the impediments. Such young firms and startups are the job creation engines. With the support of the BDL Circular 331, which gives banks incentives to invest in knowledge economy companies, we have observed a rise in the Lebanese startup ecosystem generating additional jobs. The development of the startup ecosystem would additionally increase job wages as they are all exposed to worldwide demand.

Usually, startups get started with just a handful of people, and once the seed money starts to flow in, they scale their business and start employing more people and aim to grow further. Realistically, Lebanon’s problems are too big for one relatively new and small sector to solve on its own, however, it can lead the way.

Companies that are innovative, disruptive, and scalable can support economic recovery and are the means to creating jobs, and sometimes an entire industry. Simply creating individual jobs without any future outlook is ineffective. One glance at similar examples around the world makes it clear that entrepreneurs lead the growth and not government programs.

One might think that only large companies such as Facebook create jobs, whereas all the small to medium size startups contribute to the overall job creation. Moreover, when individuals leave their jobs and found a company, they are not only creating a job for themselves but every person they hire.

Lebanese youth represent the future of Lebanon, and the most effective actions the government, education institutions, and society can take to combat youth unemployment is to create conditions as well as the appropriate culture that support individual entrepreneurs. Entrepreneurs have the drive and vision to bring a company into existence, with civil society’s support, their collective creative output could impact the future of our youth.

Startup Branding 101

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Entrepreneurs invest a lot of time, energy and money into launching their startup. The hours are fueled with excitement and anxiety. There’s a sense of urgency to launch quickly and generate revenue before running out of seed capital. The marketplace is filled with an abundance of competition; hence setting a startup apart from the rest is crucial to its survival and success. This is where branding steps in; once the strategy and goals of the startup are well defined, companies start branding.

Branding is what distinguishes companies apart through a process of creating a unique name, logo, and the experience delivered to customers to attract them and retain their loyalty. The essence of branding is not merely a logo, slogan and a color palette; it is the psychology that is behind a business, the connection between the company and the customer, and understanding your customer and their love for your product.

Many entrepreneurs tend to fail to understand the essence and create a poor identity for their brand. It is important for them to understand that all aspects of branding are critical to their business. They sometimes tend to spend so much time creating and perfecting their startup and don’t allocate the sufficient time and resources to this important step. Some spend a vast amount of time on their beloved idea, which they fall in love with, and end up creating a brand identity based on their thoughts, emotions and visions, completely neglecting to get feedback from customers. They simply assume that customers will love the startup as they have packaged it ignoring their customers’ brand experience.

The branding process should be considered similarly to the product development process; consider customer experience in the design process, gather feedback, adapt, iterate, and repeat until the brand created will resonate with the target. Through receiving customer feedback, resources would be utilized to only improve what customers care about rather than being wasted on items the customer doesn’t care about. Focusing on brand identity while neglecting brand experience is rather pointless when the customer won’t care about the product being promoted.

By a startup improving their brand experience and tweaking flawed products/services, they will gain a clan of passionate and loyal customers who will push the company to grow and thrive. Ignoring that fact could lead to a quick diminishment of any startup.