In 2011, it was difficult to go more than one week without hearing from a new tech startup that built the latest iPhone or Android app, or that launched the newest and best way to create, manage, and measure your social media profiles. Add to that on demand television and music, and data mining, and you’ve got a pretty well-rounded look at the landscape of tech startups in 2012 and beyond.
For companies building solutions like those mentioned above, it doesn’t take much money or even that much time to launch and start proof of concept. Long gone are the days spent perfecting pitches for investors, venture capitalists, or even crowdfunding partners (although, startups that get funded during seed-stage have been shown to be more successful).
Instead, the whole product is developed, produced, and marketed before investment money is even needed. These affordable, just-in-time products and services are exactly what have shaped the recent past of the tech startup age.
But can it really sustain the future of these companies?
Learning What Works – Two Keys to Success
Sometimes – often times – startup founders are just too close to their own company’s success to actually realize it. Because outside funding is not necessarily needed for so many small tech firms, founders are not given the opportunity – or the mandate – to learn how to grow a business from the ground up from people who have been there and done that.
Key 1: Mentorship
As the author in a recent Harvard Business Review blog post pointed out, there is much more to startup success than technology itself. “Though we enjoy writing about dropout tech legends, most times their success is catalyzed by others — they came up with the ideas and the investors provided the leadership and the non-tech factors (such as pricing models, branding, and promotions, among others) that propelled them to stardom.”
It takes more than a solution, no matter how awesome the solution is, to create success for a company. Mentors can often help startup founders see the forest for the trees, because it’s both normal and expected for startup founders to become consumed with their technology, and to tune out the other critical business factors.
In fact, mentorship is often cited as a huge propeller of success for tech startups. Companies like Y Combinator – a business incubator that provides seed funding for tech startup hopefuls – exist solely to prepare startups for success. According to their website, Y Combinator has funded over 300 startups since 2005. Among them? Such uber-success story companies as Scribd, Wufoo, and Posterous.
Key 2: Long-Term Vision
One of the side benefits of mentorship is the old adage that two heads are better than one. And sometimes, another person can help tech startup founders – who often go it totally alone – with long-term vision and planning. An article published on yespartners.com suggested that recent statistic evidence shows venture capitalists are more likely to fund companies in areas with high human capital – such as New York. “Experts think that top talent can be a silver bullet for many of the problems that ail a startup, such as a disorganized long-term vision.”
With no long-term vision, these companies are like annual flowering plants with shallow roots. They are easily trampled, victims of bad weather, and die every year, only to be replaced by others just like them.
After all, that’s where the money is, anyway – in the long-term vision. Big investors don’t plan to waste any more time or money in cool ideas that don’t get very far. It’s one thing to create an app or service that is very cool and that all of your friends would pay $1 for. It’s quite another thing to turn that money into profit.
Rest Assured, There is a Future for Tech Startups
No matter what the failure rate is for tech startups, there is no reason for anyone with an excellent idea to not pursue it. Not only is there money to be made, but there are great technological innovations waiting in idea stage for someone with creativity, intelligence, and passion to bring them to life.
There’s no reason for tech startups with promising products and services to go unnoticed anymore, with all of the many resources for leadership, planning, financial support, and programs to bring great minds together to build and sustain profitable companies. The future of tech startups is indeed very bright. All they need are a few helping hands.
This guest post is written by Lior Levin, a marketing consultant for the Tel Aviv University’s department of ma in security, and who also consults for a neon sign store that provides custom neon signs.