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January 11, 2021
Startup Internationalization Workshops
March 2, 2021
A Startup and an SME can be newly created companies, in which an entrepreneurial character, legal, marketing, financial and capital knowledge is needed to start, a startup is not just any company at an early stage. While starting is one of the characteristics of a startup, there are a number of elements that distinguish it from a traditional company.
In the following we explain what are the characteristics of a Startup.
Innovation
It is the foundation of any startup. More than generating a need, startups seek to find a need or a problem and find a way to automate or solve it. It is important that in this process the focus is maintained in order to dedicate oneself to specifically what characterizes the startup. There are three types of innovation, some examples are:
Product
These are cases in which a product with new and/or improved characteristics is introduced to the market.
- Apply new technologies or creativity.
- Improve the qualities of existing products.
- They introduce new functions.
- Improve performance through new materials.
Candy Crush is a game that does not comprise a great innovation in technology. However, in its golden age it was a watershed in video games. The novelty can be seen when comparing it to previous cell phone games such as "snake".
Business Model:
It consists mainly of the organization creating and facilitating value for its customers.
Uber, instead of spending its capital on buying new vehicles and paying salaries as was the traditional cab model, created a platform where drivers provide their vehicle and their service while Uber gives them a platform where they can schedule their trips, have information about their customers, check their income, etc. to earn a commission. In this platform the user and driver find a safe space.
Technology:
It is the application of state-of-the-art technologies for the creation of new products or services.
Google was a technological innovation that provided answers to what people were looking for.
Another example is Apple, which brought to the market a revolutionary operating system for the time.
Geography
While an SME is a project with a traditional product and business model that relies mostly on a geographic advantage, a startup can be launched globally.
So if there is no car wash in the area where you live, you can put one that will be frequented by people who live in the surrounding area.
On the contrary, a startup makes use of telecommunications to be able to bring its products or services in an automated way to any part of the world.
Scalability or "Scale up"
This is probably the most important feature of a startup. With the same costs you can sell to one or to millions.
Scalability is to grow quickly and easily through a model in which through the use of digital technologies, you can offer more products or services without having to invest proportionally in means for their production. This will lead to exponential growth.
¡For example Whatsapp was a platform that with a handful of workers and servers could provide its service to billions of people!
In contrast, a model more similar to that of an SME would be traditional mail where in order to distribute more letters, more vehicles, more labor force and more fuel would be needed (this is also changing with automation).
In order to scale, it is best to look for internationalization strategies that provide a sufficient market to grow exponentially. In this sense, you will have to do the respective research on the regulations in the different countries where you plan to offer your product or service.
Work Teams
They are usually small but with high impact. It is a fairly horizontal model, in which the voice of each of its members counts. Decisions are made as a team in a simple and direct way.
The interaction among the members, specialists in different disciplines, provides a constant learning environment.
Challenges require creativity and their constant presence make the work in a startup difficult to repeat.
Financing
As most business models require the use of many users, they will not have enough income to be self-sufficient. Capital is limited, so it is common to turn to investment. Selling a business idea is increasingly attractive to investors because of the exponential profits it can generate.
¡Read more about the investment rounds here!
Some examples of Startups
Google,facebook, uber and airbnb are some examples of what once started as a startup, but... ¿At what point did they stop being startups?
Some examples are:
- When they were listed on the stock exchange.
- When its income equals its expenses.
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