More startups are failing more than ever. You hear a cool story of an app blowing up, and then crumbling to its inevitable end within months. Why is that?
More startups are failing more than ever. You hear a cool story of an app blowing up, and then crumbling to its inevitable end within months. Why is that? Why are over 90% of the “startups” dying out? Why are the odds so low for successful companies?
It’s really not about creating an application. It’s not about making a cool app and jump to the next cool thing. In today's day and age, you simply cannot make a clone of Facebook or Amazon and hope to be the next best/big thing. While the arena for startups may be big, the arena is filling up with a lot of enthusiastic fans. Nowaways, you got to be different—you got to stand out and be a unicorn (both literally and figuratively). So why do and are 90% of the startups failing?
The most basic answer to that because so many people are building things. The more people participating in a competition, the less likely it is that they'll come out as winner. So logically, there is a high volume of "startups" (and I mean the term loosely) that are comeptition in the landscape.
For a more thoughtful and reasonable answer, it’s because these startups are not disruptive (I hate using this buzz word, but this is the last time I'll use it). It’s the same old repetitive stuff, trying to build an “application” and marketing it. Truth be told, it’s not about creating another application because anyone can do that nowadays. You can give a MacBook to a 12-year old and he can learn how to make a Facebook clone. No biggies.
It’s not about creating an application — it’s about redefining a system.
We live and operate in a relative modern world, yet some of the systems that are defined in our society are obsolete. Instead of me listing out the examples of obsolelete systems, let's take a look at companies that you probably recognize who have done this better than others: Uber and Airbnb.
Uber, in a way, is revolutionizing the way we use public transportation. The system beforehand was painful. Hoping to find a taxi, hoping it’s not some psychopath and then paying with cash and spare change. Uber didn’t create some astonishing algorithm, they just used the technology around them to yield an experience that was seamless.
Uber redefined a system by building an experience that was pleasant. The application was only the medium to allow this possibility to take place. The Uber app encapsulated all the painful parts of using a taxi service, allowing us to have one less thing to worry about. Uber had redefined a painful and obsolete system to improve our everyday lives. It’s not the app you like, it’s the overall experience, and that’s what allowed Uber to be this successful uber fast.
Airbnb follows the same fundamentals and footprints of this model. The painful experience of booking a hotel with the atrocious cost. For the most part, that experience was annoying and cost inefficient. But Airbnb thought outside of the box to redefine the way hotel/travel industry worked instead of creating another cool way to find all the cheap hotel price. Through their own personal experience and came across a problem that millions of people were victims of (including themselves) and solved it in a creative way.
Their circumstances of living in San Francisco during 2008 economic depression allowed them to find a way for people to rent out their houses or part of houses, which would create a win-win scenario. Owners get to make money off of vacant rooms, and travelers get to live in a place that is cost efficient, but that also allows them to indulge in the culture of their visit. By creating a way to book houses ahead of time with multiple price ranges, Airbnb abstracted the painful experience and replaced it with the modern version of an older system.
The emerging pattern is obvious — it’s not the mere creation of an application that creates a successful organization, it’s redefining obsolete systems in our world that do. When you redefine a system that creates a win-win situation between the creator and the consumer, while providing a pleasant and seamless experience, that’s when you can create your changes in building a successful organization. The Ubers and Airbnbs of our world are the third wave of technology and require much more creative thoughtfulness and deliberateness than simply building a "social media app" (wave 2) or building a search engine in the infancy of the internet era.
Of course, I am not saying that it isn't impressively hard to build a search engine—it uses some really cool Linear Algebra concepts. I am not saying building a social media app that is used by ~2 billion people isn't impressive.
What I am saying, however, is that in this new wave of startups in the internet era, the default solutions are already built out and the new ones require thinking big. It's not as easy as building an app that does something, unless your intentions are to just build cool things (in which case, it's a project, not a startup). In this wave, "startups" need to be deliberate, observant, and think creatively to solve some of the biggest challenges we have right in front of us. To make that impact, don't start with an idea—start with a system you want to redefine.