The sukip blog

You first need to understand that the game of starting companies has changed a lot in just the last few years. In particular, some important things have happened that made the startup game much easier and far more competitive at the same time. Also read my other post on “Top Challenges in the Changing Business Scenario“

#1: The key ingredients got cheaper

In the last few years the price of each of the key ingredients of starting businesses such as payroll, marketing, technology and such has simply plummeted, which in turn has significantly lowered the barriers to entry for startup companies.

#2: Technology

Software has gone open source (read: free), connectivity and hosting are dirt cheap and you c
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an buy a fully functional PC on eBay for almost Rs 10k. Even the ridiculous costs of long distance telephone service have become a thing of the past (we love you Skype!)

You can legitimately take care of all the technology startup costs for a company for about Rs 20,000. Sweet.

#3: Marketing

We can thank Google and Overture for this one. With the rise of cost-per-click and search engine marketing we saw the rise of performance-based marketing that allowed companies to pay for ads that worked, not just for ads that ran. Now a startup can begin attracting customers with a marketing budget of just Rs 10,000 and grow from there.

#4: Development Cost

The days of the HTML programmer making Rs 10 Lakhs and taking his dog to work are over. Now that work can be done for Rs 100 per hour – or less.

#5: The Internet actually happened

The promise of a billion people instantly connected to the Inter
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net sounded like a pipe dream in the mid-90’s, but guess what? It actually happened.

Today over a billion people are connected to the Internet and using it like crazy. Heck, since the Internet took off I can’t even remember the last time I visited my local bank or walked into a movie store to rent a movie. I don’t even know if real live travel agents still exist anymore thanks to MakeMyTrip.com and others…

#6: Viral Marketing

Companies like Napster, PayPal and MySpace have grown to tens of millions of users within just a few years simply by referral. That same rate of user acquisition a decade ago would have cost tens of millions of dollars and would have taken ten ye
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ars.

#7: Speed is King

If the next generation of high growth startup companies has shown us anything, it’s that “speed is king”. Companies like Google, Skype and NetFlix have shown us that it wasn’t about adding more employees and office space as quickly as possible. It was about addressing changing market conditions as quickly as possible with products that could scale big and fast.

Examples

Google

Proved to Microsoft that being the world’s largest software company was useless if you couldn’t respond quickly enough to changing market conditions, like the rise in ad-supported searches. Google is now worth almost half the price of Microsoft.

Skype

Grew to over 50 million users of its voice over IP service before big telecom could ev
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en begin to respond to the opportunity (they still really haven’t). Skype was sold to eBay for over $4 billion dollars after just 3 years in business.

Netflix

Forced Blockbuster to abandon its cash cow – movie rental late fees – to try to stay competitive while NetFlix completely changed the movie rental model on them. NetFlix is now approaching 4 million subscribers and the “dark years” of late fees are now only a horror story told to young children.

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This entry was posted on Thursday, June 14th, 2007 at 1:50 pm and is filed under Technical Learnings, Entrepreneur Journey. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.