What Exactly Is A startup, And What Does It Do?

What Is A Startup?
A startup can be a disruptor in a particular industry - Photo: Unsplash

By Azuan Muda

Startup is a popular and extremely broad term referring to a company in the early stages of operations. Startups are often founded on the basic idea of developing robust business models. Before confirming needs, startups have at least two to three years to ‘test grounds’ in building a product or service.

Structurally speaking, startups tend to have a very lean setup with several founders. They are primarily concerned with capitalising on potential demand by developing viable products and services. During the early stages, startups are typically self-funded or bootstrapped.

That said, startups are often innovative and disruptive offering unique products and services such as the likes of Facebook, Netflix, Amazon, Uber, Grab, GoJek, BukaLapak and WeWork. 

The brands listed above are considered startups because at the beginning of their life they address the inefficiencies of existing products and services. Facebook and Netflix for example created new categories and disrupted the traditional ways of doing business for entire industries. They are called “disruptors.”

On the other hand, the surge of technology has accelerated the birth of startups across industries. This encourages entrepreneurs to be daring and take risks in validating business models for which they believe there is a demand.

In most cases, many startup companies don’t have saleable products or services and that means its revenue streams are still work-in-progress in the initial stages. In short, a startup is a ‘testing ground’ of potential business models and ideas that may grow into unicorns or highly profitable businesses.

One of the distinguishing characteristics of a startup is its willingness to challenge conventional business practises and beliefs.

They challenge conventional practises and constantly test and tweak their business models until they are sustainable. As a result, it is not surprising that the vast majority of startups lose money despite experiencing significant growth in sales and good revenue intake.

There is no simple definition of a startup but in a nutshell, it is a business of inventing solutions with ingenuity against conventional ways of doing things.

Azuan Muda is co-founding and bootstrapping several media and technology startups on a local and international scale.

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