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A startup doesn't need to be a unicorn

mattgiustwilliamson.substack.com

51–60 of 363 posts

Re: A startup doesn't need to be a unicorn

#51
post #12

I usually compare them as sharks vs bottom feeders. Either you become the predator that eats all the big fish. Or you go somewhere the big fish won't go. There's the 'crab' model, but this isn't for startups. They're old, companies like Yahoo who have a moat and can't leave it. They're at evolutionary peak or rather a local maxima. They're too difficult to change and a major change would make them too vulnerable.

An ecosystem analogy should draw attention to the fact that most biomass in most ecosystems is not in the apex predators but in the lower trophic levels. Apex predators are a useful regulatory mechanism for the ecosystem, not the be all end all of natural selection.

Re: A startup doesn't need to be a unicorn

#52
post #16
post #11

Earlier quoted context omitted.

'Be a normal person/company and do normal person/company things,' isn't talked about very often, and it can be useful to be reminded that it is a pathway that can lead to success.

It depends very much on your definition of success. Many who grew up upper middle class would define survival as failure.

Life is too short and the works is to big for that kind of mindset.

Re: A startup doesn't need to be a unicorn

#53

I live in a country (Germany) that is famous for having a lot of "mittelstand". These are basically family owned businesses. Some large German companies fall under this. Aldi and LIDL for example, which are super market chains that at this point have a global presence. And some large companies (Bosch, Siemens, VW, etc.) are actually a multitude of smaller companies. Much of the German economy is smaller and bigger sp…

I was part of mittelstand once.

I think it is very hard to compete in the market where lot of things are subsidized by VC money. The new VC backed companies have more money for marketing, subsidized sales wherein older orgs are hard to move.

Esp. for german orgs, they are very hierarchical, getting an innovation out is hard. Add union to the mix. Their margins are razor thing. It is a struggle. I can imagine back in the day, they moved the innovation needle.

Lot of these companies are often bailed out by the government as they employ alot of people.

Re: A startup doesn't need to be a unicorn

#54
post #42
post #37

Earlier quoted context omitted.

You need 25k€ to register a GmbH, but you can nowadays register a UG which only requires 1€ and can later be converted to a GmbH

Which will cost many thousands in admin per year

Can you elaborate on what you mean by that?

Annual admin costs very much depend on how complex the business is, no? The primary recurring obligation for a UG is the mandatory retention of 25% of annual net profits until the share capital reaches €25k, enabling tax-neutral conversion to a GmbH.

What I could think of for UG with idea on converting to GmbH, you could have:

- UG setup cost (fairly low compared to GmbH)

- UG/GmbH accounting & tax compliance

- Commercial register updates

- Notary fees for structural changes, and eventually the conversion process

Re: A startup doesn't need to be a unicorn

#55

Here's a model that exists in Germany, which I like: You can present a business plan to the state's investment bank and apply for several financial aides, including: * 1.5 years of universal basic income for you plus up to 2 other people. It's a tiny amount of money, but the point is to free you up to invest your actual time an money into the business. You do not have to pay this back. * up to 20k EUR in "consulting…

Good to see startup strategies which help build stable, solid middle-sized companies.

Germany has a great success story by the name of the "Mittelstand" (SME businesses), which means a big part if the market are small to middle enterprises. This is far more consumer-friendly and innovative, as more competitive as it's not relying on a few big players like in the US that might also collude with each other.

Re: A startup doesn't need to be a unicorn

#56
post #45
post #38

Earlier quoted context omitted.

Have you heard of Rocket Internet? It's one of the most successful models in the world. They may avoid the US market and such, but most of the unicorns in Malaysia are backed by Rocket. And most of the people who stay and start their own, backed by YC or whoever, are usually ex-Rocket. They hit 10% growth per week, even at unicorn sizes. I would anecdotally put Germany at #3 globally just for Rocket alone, with US an…

Isn't Rocket's reputation that they just steal ideas from other startups and create cheap clones of them? Not a terrible business to be in, but not massively inspiring or globally reproducible.

I'm not a big fan of Rocket, but I think that's an unfair way to put it. I'd say they're similar to what Bezos would be like if he had to start from Europe lol.

They take an existing model with a lot of potential and focus on implementation. They had a golden period with e-commerce because e-commerce is heavily logistics. And they do it in the hardest places, because the harder it is, the more they can sell the company for.

Back when Lazada started, Indonesia had terrible credit card penetration. Roads were not suited to delivery; heck they built their own logistics because the local logistics were not suited for e-commerce. There's a lot of complex laws on hiring, or incorporating companies there (which are nicer now).

China won't do it. They don't want to build companies in 6 different low income country with a total of 500m population or so. Normal people would just target the US or EU, which has more people and more money.

But Rocket goes into these countries. They have a lot of emphasis on leadership. They drop a scalable playbook for the locals. They grow it fast until it hits a cap before they sell it off to something like Alibaba. They do have some dark patterns as well. Whatever caricatures people have of China, Rocket does it better - they work longer hours, work people harder, build things for extreme scale, do what the Chinese won't.

It is not the funding model that GP speaks of. But it is a fairly successful model of creating and exiting startups. It's quite autocratic to my understanding. I don't have that kind of work ethic and I feel like there's a hint of envy when people call them copycats. They don't have a good presence on the English Wikipedia though.

Re: A startup doesn't need to be a unicorn

#58

Earlier quoted context omitted.

What are you looking for in particular? The model is geared towards slow, sustainable growth. And that growth might also not need to exceed a certain level. So you're unlikely to hear about many of them. Not all are in tech or software, many are focused on German-only (or DACH region) research, industrial development, etc. I think that's fine.

Presumably you'd want to see that such initiatives are increasing the number of sustainable businesses created, per capita. Is that the case? --- EDIT: Some quick searching indicates that the startup rate (per capita) in Germany is about 1.1%, while the USA is 1.5%. Not a huge difference, but the USA doesn't have any of those initiatives afaik. Just wondering what actually moves the needle and how to better create a…

> Some quick searching indicates that the startup rate (per capita) in Germany is about 1.1%, while the USA is 1.5%. Not a huge difference, but the USA doesn't have any of those initiatives afaik.

It sounds like these are small businesses and not startups. The US has 10% small businesses per capita.

Re: A startup doesn't need to be a unicorn

#59
A VC will build a portfolio of startups that each have the potential to do massively well. After that they don’t care which of the portfolio companies lives or dies, as long as one explodes and compensates for the others.

As a founder you care very much which of your companies succeeds, as you only have one.

Re: A startup doesn't need to be a unicorn

#60
post #51
post #12

I usually compare them as sharks vs bottom feeders. Either you become the predator that eats all the big fish. Or you go somewhere the big fish won't go. There's the 'crab' model, but this isn't for startups. They're old, companies like Yahoo who have a moat and can't leave it. They're at evolutionary peak or rather a local maxima. They're too difficult to change and a major change would make them too vulnerable.

An ecosystem analogy should draw attention to the fact that most biomass in most ecosystems is not in the apex predators but in the lower trophic levels. Apex predators are a useful regulatory mechanism for the ecosystem, not the be all end all of natural selection.

Yup, the analogy falls apart. Basically don't eat unicorn food.
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