Why building a consumer tech startup today is more challenging than tomorrow
Life is tough for a tech consumer startup. Building one is 100x harder today than in the past and it will only get harder each year,
said Shailesh Lakhani, Managing Director, Sequoia Capital India, in a hard-hitting statement with implications for the young entrepreneurial community.
Shailesh specialises in seed and early stage funding and has insights into consumer, financial, internet, mobile, outsourcing and technology sectors. He attributed this brutal-and-honest statement to five key observations and market trends.
Reduced cost of building a startup: Building a startup today costs 35 percent less than what it took to build a year ago. While that seems great at one end, it also means startups which will be launched tomorrow will have the same advantage. They will build at 35 per cent less cost than what you did. This has been the trend for more than a decade. This is primarily due to technological advancements as you have newer tools that help you do things faster and better.
The concept of replication: If a business idea or a business model sees success, similar equivalents mushroom sooner than you expect, either in the same geography or different geography. That means more competition and even more challenges to create differentiation.
Too much venture funding: If you analyse the venture funding landscape in the last three years, it is seen that the money available to startups has tripled in the same period. But the economy hasn’t grown at the same speed. This means that startups of today have more money available to them than startups of yesterday, and raising capital definitely gives you the obvious edge over competition.
Faster platform evolution: When you are building a consumer technology company, you often build on someone else’s platform or technology framework. Currently, the peaks of evolution of these frameworks are shorter. You don’t know how long they will last or stay relevant, as there’s a new innovative technology that is changing the world even before you know it. And, during the platform / technology shifts, a lot of companies, big and small, get lost.
Tech disruption by a younger team: Look at some of the innovations and companies that are disrupting the market today, you will see that they are driven by young teams. This tech disruption by faster and younger teams is only likely to accelerate in the time to come.
A big shoutout to all our sponsors - Zendesk, Axis Bank, Sequoia Capital India Advisors , Digital Ocean, Microsoft, AWS, Akamai, Target, Verisign, Kerala Startup Mission, Brand Launch Centre, Tork and Blink.