Everyone wants to start the next big thing and become an overnight success. New entrepreneurs are thrilled to hear about unheard-of brands go from the basement of an old building to take the centerstage of international business.
Entrepreneurial publications are full of fascinating stories of young people, who have barely finished college and have started work on strange concepts that eventually disrupt the marketplace and attract the attention of global investors.
However, the ground reality is entirely different. Turning a startup into a highly successful company is not as easy or smooth as the success stories make them out to be.
The trials and tribulations of entrepreneurship are so intense that startups that go from an idea to gaining that enigmatic billion-dollar evaluation are named after mythical creatures that no one has ever seen – unicorns.
So, why is it that only a few startups go on to become spectacular accomplishments, while others go nowhere? Let us examine a few wildly successful startups and see if we can discover patterns of success in their journey.
Create new categories
When Uber was started in 2009, it did not try to grab market share by offering better service and lower price in the highly crowded cab-service sector. Instead, it disrupted the market with a peer-to-peer ride-sharing service platform that created a new category of its own.
The founders of Airbnb, Brian Chesky and Joe Gebbia, could have tried their hand at creating a new hotel experience in 2008, but instead they built the Airbnb community marketplace that connects people looking to rent their homes with people who are looking for accommodation. In the process, they also created a new category and a spectacularly successful brand.
The takeaway here is that your startup has a much higher chance of success if it’s able to create a new category. Forget the product you are creating and its features or benefits. If your new product or service can’t be defined as a pioneer in a newly created category, it will be difficult to achieve a leadership position.
Pass the shark tank test
One of the most common questions asked on the successful entrepreneurial TV show Shark Tank is: How much does it cost your startup to get one customer?
It often surprises entrepreneurs that they have to pay to get a customer. They assume their idea is so cool, hordes of customers will fall over themselves to buy their creation.
Smart startups know it’s crucial to figure out their customer acquisition cost and keep it well below their profit margins. A strategic marketing plan based on actual customer acquisition costs will provide you with enough cash flow to scale operations and take growth to the next level.
Use the sunflower effect
No matter where you put the sunflower in your room, it is always going to follow the sun. Similarly, you may come up with the greatest idea in the world, but if it does not follow the consumer’s need you are not going to get far ahead.
In its early days of operation, Instagram was very similar to Four Square. Users could use Instagram to check-in and share their life moments with friends. However, the founders of Instagram quickly realized that the platform’s photo-sharing activity was getting much more attention than any other feature.
Instagram simply followed the trail of their consumer’s preference and began concentrating on the photo-sharing feature, which eventually made them the top photo-sharing social network online.
If Kevin Systrom and Mike Krieger hadn’t moved with their consumer’s choice, Instagram would have been another mildly successful location-based social network.
Having a clear business plan is important for any startup, but even more important is the ability to stay nimble and evolve efficiently based on the consumer insights you gain from the marketplace.
Analyzing the journey of Uber, Airbnb and Instagram shows how massive brands can be built when innovative ideas are clubbed with strategic moves that very few entrepreneurs know of and even less apply. Using the same principles may not make your startup the next unicorn, but you greatly increase your chances of becoming successful.
Kishore Dharmarajan is the Founder of Seo Souq, the region’s first ROI based Digital Agency.