Kinds of startups (platform, pain & technology)

Once you’ve decided to become an entrepreneur, the next question is how do you go about with starting something. The answer is similar to the question of how to become rich. You don’t go after the money. You focus on value creation. The money just follows.

To start a startup, the first step is to figure out your value proposition and what market can it benefit. In this sense, the startup is a result rather than the starting point.

There are multiple kinds of startups. I’ve put them in three broad categories. They are platform startups, startups driven by pain and technology startups.

Platform or route-to-market startups are ones where you create a platform and buyers and sellers populate it. This can also be a platform where users populate their information and you sell the user-information to your customers.

Platform companies include Facebook, Ebay and Amazon. They are not defined by technology leadership but by user-friendliness.

There is a very important element to keep in mind with platform companies. There’s only one winner. The stronger one platform becomes, the more irrelevant other platforms competing for the same space become. Thus, route-to-market is key to success.

Startups driven by pain are the second category. I define these are startups that arise from a pain that you may have experienced, when you’re looking for a solution that does not exist. People often see these as problems. Entrepreneurs see them as opportunities.

Airbnb is the ideal example of a startup driven by pain.

Technology startups are the final category of startups. These normally come out of research entities and universities. Tech startups are often backed by patents and are the traditional form of startups. In spite of the glamor associated with the platform startups, tech startups are the most likely to be successful.

Examples of tech startups include Cisco. Google is another example of a tech startup, although they became a platform as they scaled up.

In summary, there are three kinds of startups. These are platform startups, startups driven by pain and technology startups. In the next blog, we’ll go into more detail regarding each of these startups.

Send your questions on your challenges in your own entrepreneurial journey and I’ll try and answer them. If they’re relevant for the entire entrepreneur community, I’ll cover them in a blog post.

I wish you the very best for your own entrepreneurial journey.

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