Entrepreneurship

AUN Summer 2019 & Enterprise

Development
Certificate Course in Business
Management
Lukman Raimi, PhD, MNIM, FIFP, FIMC
Human resources management
Assistant Professor
Department of Entrepreneurship
By

BOXLESS LEADERSHIP ACADEMY

Week 3
Dr. Raimi Lukman

5-1
5-1
Development of a Startup
 Learning Outcomes
• Understand the definitions of startup,
• Know the differences between startup & small business,
• Understand the features of startup irrespective of climes,
• Appreciate the success stories of startup for rich insights,
• Appraise the development phases of startup,
• Identify entrepreneurship theories relevant to startup,
 Definition of Startup
• Startup is a human institution designed to create a new product or
service under conditions of extreme uncertainty (Ries, 2011).
• Startup is a business venture that is designed by an entrepreneur to
grow fast because it has something unique to sell to a very large
market (Landau, 2020).
• Startup is a new or early stage business initiated by its founders
around a commercially viable idea or a social problem with a
potential for significant opportunity, growth and impact. Its higher
than usual growth potential growth is largely dependents on
technology and committed founding team with shared vision
translated into reality (Startup Commons, 2020).
 Wrap-up of Definition of Startup
• The Small Business Association (SBA) explained that the word ‘startup’
goes beyond a company just getting off the ground. Rather, startup is
associated with a business that is typically technology oriented and
has high growth potential. Startups have some unique struggles
(cash-poor, expertise, networks), hence, they seek financing from
investors looking for the highest potential return on investment (ROI),
while balancing the associated risks (Landau, 2020).

• A startup could be for-profit or not-for-profit organizations, as both

operate around a vision that their products/services will uniquely solve
the pressing problems of customers in their target market.
 Areas of Business Focused by Startup
• ICT: Outreach, Plaid, Ethos Life, Drift, ThoughtSpot, Scale AI
• E-Commerce/Online Market Places – Alibaba, Amazon, Jumia, Konga
• Social Network and Networking – Instagram, Facebook, WhatsApp
• Digital Marketing Tool – HubSpot, MailChimp, Google Analytics, Evernote, Canva
• Online Learning & Training - Khan Academy, Udemy, Coursera, Allision
• Automobile – WayRay, GhostWave, Nuro, Neteera, EV Safe Charge
• Food Technology: Sugarlogix, Miraculex, Foodfully, Ocean Hugger Foods
• Fashion & Clothing: Oros Apparel, SPOKE, Unmade, Nextail, Baibu
• Creative Arts/Designs: Etsy, Instapainting, Bucketfeet, Artsy, ImageThink etc
• Online Cinema: Netfilix, Disney, CBS, HBO, Amazon
• Retailing & Services – Tesco, Walmart, Shoprite
 Features (Characteristics) of Startup
•Promising Ideas – Nest acquired by Google
•Technology-driven to reach wider markets – Facebook, Instagram
•Organisational agility – Tesla (Elon Musk), Jeff Bezos (Amazon)
•Cash-poor: Innovative funding options – VCs, Angels, Crowdfunding etc.
•Willingness to take risks – SpaceX
•Startup model traverses time and space – Fintech, Blockchain, Online Buz.
•Less legitimacy/Brand presence
•Unique Type of Team
•Growth Fast-tracked by Accelerators and Incubations
•Don’t go it alone syndrome (Rely on Social Networks)
•Innovativeness
•Lean Startup Approach
•High growth ambition and aspiration
 Successful Startup: Alibaba
•Alibaba is one of the biggest E-commerce networks in the world began as a startup in the
apartment of Jack Ma (now the richest man in China with an estimated net worth of $25
Billion). After seeing the vision in his idea, he persuading 17 of his other friends to invest and
join him in his new.
•Alibaba had not a single penny for investment, but later raised $20 Million from SoftBank and
another $5 Million from Goldman Sachs in 1999.
•Building trust among the people of China that an online system of payment and package
transfers is safe.
•Having started his first successful company at the age of 31 in China, the company grow rapidly,
expanding all across the world.
•Alibaba emerged as the dream E-commerce giant that Jack Ma envisioned. Only second to
Walmart now in terms of sales per year.

Source: Shout Me Loud (2019)

 Successful Startup: Facebook
• Idea of Facebook began in 2003, when Mark Zuckerberg created an online
programme called “Facemash”, which allowed students to objectify fellow
students by comparing photos of their faces to select the hotter on campus.
• In 2004, Zuckerberg and co-founders Eduardo Saverin, Andrew McCollum, Dustin
Moskovitz and Chris Hughes created an innovative new social media platform with
the aim of connecting Harvard students through an online community that they
named Facebook.
• 14 years later, Facebook emerged as the most influential social networks in the
world, boasting approximately 2.2 billion monthly users.
• This is 17 years, look at what a small startup ideas has become!

Source: Independent (2018)

 Successful Startup: Netflix
• Founder/CEO Reed Hastings narrated that the idea for Netflix emerged after he
paid fine of $40 for returning a movie late. TV and movie industry then beamed to
1.4 billion households as at 2017. The co-founder, Marc Randolph said Netflix
emerged in the quest to create “the Amazon.com” but settled for DVDs in 1997.
• In 1997, Netflix was created in the USA to offer movies and shows via streaming at
affordable prices. The content was produced by Netflix itself or by big studios that
were hired to produce for them exclusively.
• In 2018, Netflix became the world’s most valued entertainment company with a
networth estimated at $ 153 billion.
• Netflix success is linked to three competitive strategies: (a) reduction of its
production and sales costs, (b) Differentiated movie products with unique features
using technology, (c) Attract specific consumer segments of the audiovisual media
world in US, Europe and other regions
Source: Prof. Ricardo Britto (2020)
 Development Phase of Startup

Source: Startup Commons (2020)

 Growth Ambition-Business Model Matrix

Source: Startup Commons (2020)

 Operational Challenges Facing Startups
• Poor Access to Mentorship/Acceleration Programs
• Limited Finances for scaling up
• Poor Business Planning – Business Model, Business Plan
• Weak Marketing Research & Strategy
• Few Dedicated Team
• Fierce Competition in focused areas
• Ever-changing Technologies
• Singleton Syndrome – I-want-to-stand-alone
• Lack of Entrepreneurial Leadership
• Absence of Bottom-Up Communications
• High Overhead Cost
• Ripple-Effect of the Macro-Economic Environment
 Week 2 Tutorial: Discussion
1. Can the grocery shops that had been operating for 10 years in
different parts of Brunei be called startups? Why?

2. Are the canteens and the supermarkets on campus startups?

3. Did KFC start as a startup OR small business in the US? What is

responsible for the growth of KFC?

4. What are the entrepreneurial lessons you learn in success stories of

past startups that have scaled up such as Alibaba, Facebook, and
Netflix?