Four reasons why a startup-to-startup economy works
Coming together can be a beautiful thing for startups. (Image via atelier.net)
As a serial entrepreneur and creator of Timez5, Nader Sabry has had his fair share of experience in the startup ecosystems around the world. Here he gives his four reasons why startups should be looking to work together.
Startups by nature are ambitious, driven by rebellion, aspiration and thrust. As part of the struggle for success most startups aim for big targets. Big customers, big suppliers, and big partners to make their big opportunities happen.
However, the really big opportunity is much smaller than you think, and much closer to home: it’s the ‘S2S (startup to startup) economy’.
Startups have a great advantage over big players and that’s agility and flexibility. However, if a startup doesn’t optimize their collaboration chain, the working of startups together, it could work against them.
Here is a list of what I see as the key advantages a startup has over a corporation when it comes to S2S:
Willingness to take action
An appreciation for urgency, accuracy, and fulfilment. The thicker the decision-making cake is at an organization, the longer and more costly it becomes to acquire any form of collaboration. Startups don’t have this barrier, and can utilize each other’s willingness to take action.
EXAMPLE: With my artificial intelligence startup, we had an engineering team based at the local university who just launched their own startup. They had been working with a few fortune 500 companies already in their labs and were willing to collaborate with us, helping add to our technology and open doors to their fortune 500 clients to help stimulate our business.
High risk tolerance
Startups are already taking a risk. This is not the case for any big collaborators. They have layers of processes, politics and systems that lower risk tolerance. Their strategies are usually incremental in nature, whereas startups are acting at every turn.
EXAMPLE: With my internet service provider startup we had an encryption startup company that was willing to implement their solution on our server vs. other providers who didn’t want to take the risk. This allowed us to provide a more competitive service to our corporate customers: real-time encryption was faster; embedding costs in pricing structure; more convenient in allowing the customer an easier solution.
Rapid decision making
Startups are learning, while large collaborators are simply managing. This fundamental culture difference means decision making is rarely aligned. Startups need to learn quickly, and doing that with another startup allows for rapid action to take place.
EXAMPLE: With my physiological prayer mat startup we collaborated with a Swedish startup of five ergonomic engineers that helped us with advance testing. While this was a costly undertaking in large testing centers these guys were willing to work with us to gain education for their own development.
Startups are squeezed for time, resources and cash. Therefore working with other startups that appreciate such a crunch, in the context of ambitious targets, are willing to explore new types of collaboration tools and formats.
EXAMPLE: A startup I’m on the board of had to launch an aggressive advertising campaign but the costs were too high. We found a startup production company willing to finance the project over a six months time frame, this allowed the campaign to be launched, the production company to gain credentials.
When I have worked with other startups the combination has been a winning collaboration. We were all willing to take action, were ready to take risks, were rapid in our learning, and collectively resourceful.
Think of it this way, when startups date other startups, you never know when the next great startup marriage might occur.