Search and Start-ups

Failure is an art, the more refined one has been with it, the more it would lead to success. Entrepreneurs learn not only by the big success they make but the even bigger craters their failures leave.
Start-ups fail where they or those managing them fail to understand the difference between search and execute. And to clarify this point, I am focusing on business looking for new models of doings things which then leads to new customers, someone setting up a business to sell tomatoes is a business owner and not an entrepreneur, they have a defined business model, known customers and are simply seeking to increase the frequency of their transactions which are well defined in terms of pricing and customer.
A Start-up operates on a search of an unknown customer, willing to use an undefined product with a not very clear pricing model. They are in search of customers, product/services and pricing models. A business on the other hand knows all these three things and is trying to find the best way to execute its known models.

Large corporations like carre-four, execute known models, their customers expect the same experience in every store and every item is generally placed in the same way across each store, the standardization is what allows the execution.

A scalable startup is looking for a business model that will fit its product and service to a customer. Its looking to create a repeatable sales model, sell X every time for KES 500. Once this scalable model is achieved then they can begin hiring managers but in the interim they must operate with people who are able to handle multiple roles in undefined models and have a key ability to search for customers, products, services and repeatable business and sales models.

Steve Blank defines a startup as a “temporary organization used to seek a scalable and repeatable business model.” A startup succeeds by taking this faith exercise and turning into fact, the inability to make this a reality is what leads to a large number of start-up failures. With a current ratio of 80% of all business fail and 20% get to make a repeatable model and out of those 20% even less grow to become big organizations.

This means if on aggregate we collected data, we would have more data on failure than success to inform both failure and success in the startup world. This coupled with the fact that success generally results from previous failures then we have a good opportunity to educate and build new startups with old data from both successful and failed startups.

This then brings out the next point, start up creators can juggle multiple things at once, they in many cases need to get training to move on to the managerial level where they will do less and mainly manage and direct. They have little or no experience working in executable models of large organizations, this means training, apprenticeships in these organizations would be a key benefit for most startup founders to learn where they eventually need to transition their business to.

A lot of founders chase funding while still in the search phase, investors look for startups that can transition to executable models these can then pay them for their investments in a defined period.

First is the search and this search falls into 5 key pillars :

Business – The business Model
Product – Product/service being offered
Legal – contractual agreements and obligations
Marketing and Communication – how are we reaching our unknown customer
Finance – Managing Money
Projects – a list of things to do to completion

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