01 Oct TIME Magazine:Here’s How Startups Actually Start Up
by @jppullen Aug. 28, 2015
Explained in plain English
There’s a sucker born every day — or so they say. But the way startup fever has been spreading across the land, it almost feels more like there’s a Zuckerberg being born every day. And that feeling is real. According to data from the Kauffman Foundation, 2015 has marked the first year startup activity has been on the rise since the Great Recession. In fact, it’s soaring — the numbers show we’re living through the biggest upswing in new companies, products, business deals, and jobs in the past twenty years.
That makes it sound like now is the perfect time to bring your million dollar idea to market — but how is that even done?
First off, begin by casting aside any fears that you can’t make a dent in the tech universe with little computer prowess. “We’re seeing more and more people enter the tech space because the definition of tech continues to grow,” says Michele Markey, vice president of Kauffman FastTrac, a global network of advisors helping entrepreneurs launch and grow companies. She’s seen everything from medical devices to mobile apps launch from Main Street as much as Silicon Valley, and that’s a trend many expect to continue.
There are many million and billion dollar companies for a startup to model itself against, but there’s no one true formula for success. Still, the majority of buzz-worthy businesses have conducted these tried and true practices along the way.
1. Eying the competition
It may not sound as exciting as a weekend-long hackathon or a giving a flashy presentation to a bunch of investors, but the reality is that most startups live and die based on early research. Scoping out the competition is vital to understanding where there’s an opportunity to make a move. This can involve everything from dissecting competing products to improve upon their designs or simply mapping out their locations to find a new way to reach underserved customers.
And there’s always competition to scout; few successful startups create an entirely new product or service. Apple — the ultimate garage-to-giant success story — didn’t invent the personal computer, digital music player, smartphone, or tablet computer. Instead, it waited, watched, and eventually released gadgets that capitalized on the deficiencies of products already out there.
2. Finding and defining customers
Markey says startup founders also conduct research by hitting the bricks and talking to would-be customers about their ideas. “A smart entrepreneur needs to figure out where their sweet spot in the marketplace is,” she says. “Who is that customer that’s going to use the product, pay the money, and maybe be the repeat user?
Figuring out this information on a broad scale can involve hunting down perspective customers’ demographics and learning everything they can about them. This sounds like it could be an expensive proposition, but the truth is all an entrepreneur needs to get this data is a library card. ReferenceUSA, a database to which many local libraries subscribe, has historical business information dating back to 2003, making it a good place to gather demographic data.
3. Shoring up intellectual property
Padlocking your product or service with an array of patents, trademarks, or copyrights can sound terribly dull, but the truth is it’s one of the most important steps to ensuring a budding company’s success. Without these protections, a competitor can swoop in and copy an idea without having to pay a dime for all the hard work done until this point.
“Issued patents may be used to stop competitors from entering the field and to recover damages for any infringement that occurred,” writes attorney Michael Kasdan in this excellent intellectual property explainer for startups. In addition, he writes, patents can protect a startup from getting sued for patent infringement by someone else.
Trademarks, meanwhile, help protect the company’s branding, from logos to mottos, to ensure that copycats can’t use a business’s image or likeness to sell imitation wares. With knock-off products coming in from China or being replicated with 3-D printers, startups are smart to trademark their image early to fend off the phonies.
And finally, startups are also wise to copyright their reproducible works. Whether it’s an paperback, and e-book, or even an image, if it can be duplicated, it should be protected. That may sound like a publishing industry problem rather than a startup issue, but as TechCrunch noted last year, it only took four hours for copyright law to crush one particular startup’s dreams.