The fast and slow in the world of Startups
Recently we have been exposed to a host of content that announces the emergence of an overwhelming number of startups .
The term unicorn is now part of the jargon of the business world. Startups that reach the extraordinary market value of over $ 1 billion have multiplied and have taken over the business news. And no less.
According to data from 100 Open Startups , the average number of new startups registered in the program per month rose from 120 in 2015 to over 330 in 2018. The volume of venture capital investment globally, in that same period, increased from about $ 1.5 billion for more than $ 5 billion.
If before 2015 there were no unicorns in the country, in 2019 there are already 10 registered. Next year there are projections for the possible announcement of two or three new deals in this size per month.
The existence of a thriving startup investment and ecosystem leads us to the rapid conclusion that confrontation between incumbent versus insurgent companies would increasingly be observed .
However, what we observe in the country is another massive phenomenon in the innovation environment : medium and large companies allying themselves with startups in a large open innovation movement .
In 2019, 100 Open Startups announced that from 2015 to date, more than 960 midsize and large companies have signed at least one partnership, hiring or investment agreement with 1,200 startups, resulting in a total of 7,800 established relationships. More than 200 open innovation programs in the market were mapped .
Admittedly, one of the great attributes of startups’ competitive advantage is their speed. But along with that speed comes its fragility.
Just as many startups come up every month, the 100 Open Startups platform disables about 180 startups every month due to inactivity. Innovation is not a phenomenon controlled only by its creators, the last stage of the innovation process is its adoption in the market. Without adoption there is no innovation.
With less to lose, as it has no legacy or previous customer base, startups’ strategy is to drive radical change. Mistaking the timing and cadence of adopting the proposed innovations can cost them dearly.
It is well known in the startup world that even reaching the unicorn mark, value attributed by investors, these new businesses do not always hit this market timing and even unicorns are subject to failure.
This dichotomy between fast and slow was well described by psychologist Daniel Kahneman , winner of the 2002 Nobel Prize in Economics in his book “Fast and Slow: Two Ways of Thinking”.
On the one hand we have a fast, intuitive and automatic thinking system. On the other a slower, reflective and analytical thought. The massive startup insurgency has created a dread effect among incumbent corporate executives and a greed effect among less experienced investors.
However, if we look a little deeper, it is recognized among professional venture capital investors that between the creation of a truly innovative startup and the creation of a sustainable business, the maturation time is around eight to 10 years. No wonder most startup investment funds have a decade-long return on capital for their investors.
Faced with a scenario where, undoubtedly, changes have been increasingly fast, the number of startups has been growing exponentially and established companies are reacting massively with open innovation movements .
So what should be the attitude of the professionals of our generation? Keep calm in your comfort zone and wait for the storm to pass wondering what days of calm will come? Immediately switch jobs looking for companies better prepared to meet the challenge of innovation? Or rush to open your startup and submit yourself to the arduous task of entrepreneurship, even knowing you will struggle with statistics among thousands of entrepreneurs looking for resources?
When we created 100 Open Startups in 2015, we anticipate and act against this scenario. We invite the mass of established entrepreneurs and business executives to work together to create a collaborative environment for innovation.
We do not exploit “fear of being left out” or greed for extraordinary profits. Our recommendation for entrepreneurs was to open their projects and plans for cooperation with established companies, reducing the risk of creating startups by pure reflex, and being able to rely on stronger structures to build real and sustainable businesses in the long run.
For established business professionals, we suggest that interacting with startups would be an alternative to identifying where, in fact, opportunities existed and what barriers to proposed innovations might be.
In four years, we have added more than 25,000 executives representing 2,400 established corporations, which are collaborating with a mass of 30,000 entrepreneurs representing 9,000 startups.
Initially, we contacted startups and executives through an application matchmaking process , exploring the affinity between startups’ proposal and executive interests. Then executives were asked to make a quick assessment of the projects that interested them. Thus, in a second moment, we could explore via face-to — face speed-dating meetings , the meeting between the startups that aroused the most interest, with the executives who had the most matches with these startups.
As entrepreneurs and executives get to know each other and establish a trusting relationship, the relationship can culminate in a business partnership, service contracting and even investment by the company that the executive represents. This information from the best performing startups in valuation and business generation with established companies also builds trust with investors, helping the program’s most attractive startups receive investment. In all, 410 startups have received $ 600 million in these last four years.
In this way, myths of dread, frantic speed, extraordinary gains fall, and a more solid and real movement arises, in which the entrepreneur ceases to be a lone hero, who builds empires on his own merits, and becomes part of networks. collaborative innovations.
In this scenario, executives of established companies come to better understand the actual pace of startup construction and can contribute to the success of their innovations.
The 100 Open Startups project is for executives to increasingly engage with the startup environment. Initially, learning about the startups that are emerging in their field and evaluating quickly, recommendable 100 projects. And in a second moment, participating in events where the speed-dating meetings are promoted to interact, ideally, with a base of 10 selected startups. And if the opportunity arises, establishing a closer relationship with perhaps a startup, with which you will contribute and learn together. www.openstartups.net