Startups, so you want a revolution? Think ‘business’ instead
By Serguei Beloussov December 12, 2014
- IT is now ‘business as usual,’ but many do not yet understand this
- Entrepreneurs are either dreamers or businessmen; dreamers’ time running out
RECENTLY, there have been many reports of startups going under. PinMe and Displair are having difficulties, which means they will either be forced to cut a large part of their business or change their business model.
I'm not surprised. The upcoming year will probably be filled with similar stories.
Often, the cause of the collapse lies in the entrepreneur’s relation towards his or her business – getting an investment sometimes seems to be the ultimate goal and the main measurement of success, and no one really thinks about the actual business.
This type of thinking ultimately ends in failure. Hopefully, the recent unsuccessful examples will be a good reason for many entrepreneurs to ponder what they are doing.
Not very long ago, the technology industry was something advanced, the destiny of a chosen few who wanted to change the world. Virtually any technology was new, exciting and revolutionary.
But the industry has changed and continues to change. In my opinion, this is natural.
The IT industry accounts for 10% of the world's economy – a huge share. Now it is not even necessary to be revolutionary anymore.
Firstly, we need to be pragmatic: Reduce costs and increase revenues. IT has transformed into ‘business as usual,’ although many do not yet understand this. Young entrepreneurs believe that their project must first and foremost be inspiring and bold. It does not.
No one asks a person who opened, for example, а bolt manufacturing factory, why he needs one, whether he thinks it’ll be a breakthrough or the discovery of the century? What's the difference? It’s a good business, bolts are in demand, and this is profitable.
That’s the conventional businessman’s logic.
Imagine an entrepreneur from any ‘ordinary’ industry having these thoughts: “We are now earning a million a year, next year it will be three, then 10, 20, 50. But why? This is not a breakthrough, not a revelation.”
It even sounds funny. In reality, no one thinks this way. The technology industry, in this sense, is no different from others. And there are already a lot of opportunities to start a business – perhaps not revolutionary, but potentially successful.
The era of inflated capitalisation and huge investments is over, so it’s high time to think of how to make a good business.
The industry is changing. Entrepreneurs have been divided into dreamers and businessmen. The dreamers’ time is running out. I would advise you not to do ‘cool startups that change the world,’ but those which help improve something that already exists.
Today, we see many such examples.
Let’s take a look at Rocketbank. Entrepreneur Victor Lysenko used to work for Groupon and decided to simply create a convenient bank that people can enjoy.
And yet, there is no ‘revolution’ here. IT needs more ‘ordinary’ entrepreneurs like Viktor, who think about ‘normal’ businesses and who work instead of dreaming.
And they’re already here. We can see a trend of pragmatism sweeping into the technology industry. This has been experienced in any and every industry – not long ago manufacturing a car or a TV was cool, now it’s ‘just’ a business.
I’m not saying that there should be no dreamers or that you shouldn’t want to change the world – of course not!
It just needs to be understood that the visionaries account for 1% of the total number of entrepreneurs; and in any case, your thoughts shouldn’t only be about your dream, but also about profit.
This means that while the inflated capitalisation and huge investment rounds have passed, they will come back someday – but with some other trend.
So for now, it’s better to think about how to make a good business.
Serguei Beloussov has a 21-year track record in building, growing and leading high-performing, multinational high-tech companies in North America, Europe and Asia. He is currently focused on Acronis, the company he founded and now returned to as CEO, and is a senior partner at the Runa Capital venture fund, and executive chairman of Parallels. He is also into quantum technology.
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