It’s a technology startup world: From rags to the next Facebook in a few years
What started as a Silicon Valley trend has now concurred much of the developed world. Technology startup companies are popping out of the ground like mushrooms. What is different about a ‘new’ technology startup from normal entrepreneurial ventures is that these companies can grow big in a matter of months. By big we are talking about multi-billion dollar big. A few examples: Facebook, valued at 31 billion US and now a public company, founded in 2008. Nest, which was taken over by Google for 3.2 billion US$ was founded in 2010. Deepmind, which was taken over by Google for 400 million US$ was founded in 2011. Mailbox, taken over by Dropbox for 180 million was founded in 2012
The question remains how a technology startup can grow from 0 to a multi-billion dollar company in a few months.
It all starts with the industry these technology startup companies find themselves in. The technology industry is a highly volatile and dynamic industry in which the right piece of software can quickly and fundamentally shift the way companies do business. That is why big companies like Apple, Google and Yahoo are always on the lookout for new killer technology that helps them gain an advantage over competitors.
Secondly, there are the low barriers of entry of the software industry. Everybody can learn how to code and the only thing you need to code is a computer. This mindset was embodied by the whole DIY garage culture that started in Silicon Valley suburbs of Palo Alto and surroundings. Apple started in a garage, Facebook started in dormitory, so “why can’t I start this way?”
Lastly, there is the global reach of the Internet. Software can go viral in a matter of weeks. User bases grow exponentially and the data that comes with these users is almost as valuable as the software itself. That is why starting a technology startup company is a hot career choice at the moment.
Does this mean that everybody should just become a tech entrepreneur and expect to have earned millions by the end of 2016?
The answer to this question is a quick and easy no. Not all of the technology startup companies become success stories. Just like normal ventures, some managerial skill is definitely needed. A striking example of how a technology startup had an excellent product and still ended making a 2 million dollar loss is Everpix.
Everpix was a Silicon Valley based digital photo archiving company. It ran a beautiful service and had a loyal user base with a customer return rate of 60% a month. They received an initial seed of $500.000, but eventually went out of business because they could not reach a sustainable user base in time. They focused so much on their product design that little to no attention was spent in increasing the amount of users that subscribed to the service. In the end, when the product was finally finished, Everpix was broke. They struggled to attract new capital as Venture Capitalists did not want to fund a Series A round because of its low user base. The hard lesson Everpix learned: Money does not grow on trees and users do not fall out of the sky, even if the product is spectacular. The total price of this lesson: $2.294.818,17
Looking at it more locally, the technology startup scene has also been developing within the Netherlands. Wired reported that Amsterdam was one of the most buzz worthy technology startup hubs in the world. Amazon recently opened an development center here. In an interview with NUtech, CTO Werner Vogels spoke of an amazing pool of technical talent here in the Netherlands. We also have our own incubators/accelerators like Rockstart and Startupbootcamp. Handing out €15.000 for the first 3 months per team, providing free office space and having access to Dutch mentors means that Dutch technology startup companies have the ability to develop their talent the same way as one might have in Silicon Valley. Also noteworthy, is that Amsterdam has launched a campaign to become Europe’s number one technology startup destination, although it has to compete with London and Berlin for that crown. Some notable Dutch technology startup companies are 22tracks, LayerGloss, Hubs and Shapeways.
In case this blog post has inspired you to start your own company, Tilburg University offers a minor and master program in entrepreneurship and has an entrepreneurs center called Starterslift, provides various services in helping you reach your dream.. It even helps you with funding. Who knows, maybe in 2 years time you will be the next Mark Zuckerberg!