ARTICLE OF THE WEEK-The startup boom and fizzle

The startup boom and fizzle

“AskMe.com logs off operations, 4,000 employees lose their jobs”                             

 - Mint , 23rd August

Startup : this word has been intriguing the youth all over the world for over a decade now , its application intensifying over the recent years . As startups boom everywhere in the world, with ideas ranging from lifesaving categories to bizarre ones, we take a look at how these startups boom and, more importantly the reasons they tend to fizzle out.

A startup company is an entrepreneurial venture which is typically a newly emerged, fast-growing business that aims to meet a marketplace need by developing or offering an innovative product, process or service. From zomato to pepperfry ,  many of these startups try to create ergonomic and fun workspaces with no formal wear or no cubicles for open communication , making it dream workspaces for the Gen Y .

This startup craze began in 2009 in the recovery stage post recession. But while these young businesses are responsible for net job growth , only the big businesses supply the overall economic growth .

While some of these startups have blossomed into flourishing businesses like uber and whatsApp , many of these tend to fault in a lot of areas since their inception and hence tend to fail, like  Askme bazaar ,  quoted in the beginning of the article . Other examples inculdeLanghar and DonebyNone , both Gurgaon based companies.

While there are many reasons for the failure of startups ranging from not having a right team with adequate diversity in ideologies  and having flawed business models , the main two turns out to be these two:

1.    Not serving a market need

The single biggest reason for failure is that a startup will get caught up with what it wants to do instead of focusing on what the market needs . Several startups like Rupee and Patient Communicator  face this major issue of not serving a market need.

2.  Need to maintain innovation

With certain businesses that have established themselves so firmly that they have turned into necessities , like OLX and Grofers , they do not face this as a major issue . But other app based companies that do not cater to necessities of people like foodpanda, they are continually struggling to keep a constant flow of intelligence to survive and thrive in the market.

 While angel investors remain wary now of investing heavily in startups  ,  flow of innovation into businesses can never be stopped with new ones like WOW momos ,Chaayos and urban clap rapidly flourishing and thriving in our economy.

Innovation is the specific instrument of entrepreneurship. The act that endows resources with a new capacity to create wealth, so the key to the startup success is to keep customers satisfied with fresh and eclectic innovations.

 By S.Nivvedhitha and AadyaSachdeva