The Benefits of Starting a Microstartup in Today's Economy
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Chapter 1: The Future of Startups
In today’s business landscape, we frequently hear about startups securing millions in funding or being acquired by tech giants for astronomical amounts. While some of these businesses might appear straightforward, they often demand significant investment, a large team, and substantial capital expenditure before they achieve profitability.
However, most startups won't reach such heights, yet many entrepreneurs still chase these lofty valuations as their primary objective. A conversation with a friend who runs a marketing agency highlighted this trend. She shared her experience with an early-stage startup client, who was fixated on rapidly scaling through heavy spending on advertisements in hopes of increasing their valuation in the next funding round.
Her client’s aspiration was clear: they wanted to become a unicorn as quickly as possible. This mentality is all too common among founders who believe that the only route to success is through continuous funding rounds until they hit the billion-dollar mark.
Yet, there are numerous alternative paths to grow a startup. One concept gaining traction is that of a “microstartup.”
What Exactly is a Microstartup?
While there isn't a strict definition of a microstartup, they typically share certain characteristics:
- Operated by a small team of 1 to 5 people
- Requires minimal capital to launch (often bootstrapped)
- Aims to generate revenue from the outset
- Is scalable (capable of rapid growth) and manageable with minimal time investment once the product is established
Note: For those conflating small businesses with microstartups, please refer to the comments where I address this distinction in detail.
Microstartups are often designed to scale without necessitating large teams, all while generating income for their founders. They usually address specific problems that users are eager to pay to solve.
The fascinating aspect of microstartups, compared to traditional startups, is their primary focus on revenue generation. While some startups, especially those delving into innovation and deep technology, may not prioritize immediate income, microstartups are built around this very goal.
Additionally, running multiple microstartups is quite feasible. There are several entrepreneurs who exemplify this model.
The simplicity and niche focus of their ideas enable them to generate substantial revenue. Both entrepreneurs transparently share their earnings on their profiles, which adds to their credibility.
Identifying Problems Worth Solving
The key to success lies in pinpointing simple problems that people are willing to pay to resolve. As illustrated by the products showcased by the aforementioned entrepreneurs, the challenges they tackle may not be groundbreaking, but they address everyday annoyances that users are eager to pay for.
Your objective should be to create multiple income streams by solving various specific issues. This might involve subscriptions, advertising revenue, or alternative income sources. Digital solutions such as software, applications, or websites can be excellent vehicles for scaling multiple products in your portfolio.
What About Acquisitions?
Not all microstartups will generate consistent revenue. Some may even attract acquisition offers from larger companies before they have a chance to scale significantly.
For instance, Wordle, although not a traditional microstartup, was bought by The New York Times for over $1 million. While this acquisition wasn’t the initial goal, its rapid growth and popularity made it an attractive target.
Similarly, well-known tech companies have acquired products like Vine and Luma, both of which were developed by small teams and achieved success in their first year.
While generating revenue might be a key objective for some microstartups, achieving growth and visibility can also lead to acquisition opportunities, which can serve as a valid strategy for building a microstartup. However, pursuing a product that can generate recurring revenue without the pressure of an acquisition is generally a safer bet.
Do You Need Technical Skills?
While having technical skills can be beneficial for building projects, it's not a strict requirement. Many no-code and low-code tools available today enable individuals to create impressive applications without extensive technical expertise.
For example, I developed my first app using Glide, Airtable, and other no-code platforms (here’s the link if you’re interested). This accomplishment came from someone with basic technical knowledge, and I've seen others achieve similar results without any technical background.
Additionally, tools like Canva or Copy.AI can assist in creating graphics and content without delving deeply into those areas. Teaming up with a more technical friend can also enhance your chances of success. Collaborating often yields better outcomes than working solo, especially if you can find a partner with complementary skills who shares your motivation.
Finding the Right Problem
Countless problems surround us daily, prompting individuals to devise their own solutions. More often than not, we’re willing to spend a small amount each month to alleviate time-consuming tasks.
I could easily list numerous daily challenges I'm willing to invest in to save time and effort. Why not start exploring potential projects based on your current knowledge? Keep your approach simple and focused on solving problems that people are eager to pay for.
The first video titled "Should You Start A Startup? | Startup School" provides insights on the considerations one should make before embarking on a startup journey.
The second video, "Why Startup Founders Should Launch Companies Sooner Than They Think," discusses the importance of timing in launching a startup and encourages aspiring founders to act quickly.