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Jun 12, 2016

Idea Generation: Lowering Startup Risks, Is It Possible?

I think I don't need to convince you that "Startup" and "Risk" are inseparable. Startup is equal to entrepreneurship, which by definition contain the word "RISK" - for example an entry in Merriam Webster dictionary for entrepreneur: "a person who starts a business and is willing to risk loss in order to make money." Startup gurus also warn us that building a startup is akin to jumping off a cliff and building a plane on the way down.


Under uncertainty, there are two options - first is go with the flow and hope for the best. Unfortunately hope is not a strategy. Second is to find a way to structurally reduce risk.


How is it even possible? Here's what we think how.


Let's start by identifying the risks, and then we'll go one by one on each of them. There are four risks that every startup face:


  1. Business Model Risk

  2. Market Risk

  3. Execution Risk

  4. Technology Risk



Business Model Risk


The first thing to understand is startup should provide solutions by answering real problems of real customers - instead of chasing unicorns. But not just any solution: build a painkiller! Or better yet build an addiction.


Painkillers are characterised by: obvious need - stop the pain. Something you cannot wait. Quantifiable market. And there's a willingness to pay. And if you can make something that people can't live without, that's an addiction.


Compare this to vitamins, which only provide "feel good" solution.


Second thing to understand, which is our favourite... go Back to the Future. Remember when Biff used the Delorean Time Machine to give a Grays Sports Almanac to his younger self (time travel paradox aside). To do this we don't need a time machine... just Google: research and learn from a successful business, adopt it in Indonesia.


Lastly, remember that we are building a business - not a unicorn. So be very clear from the beginning: who are our users and who are our customer. Customer is the one paying. No customer = no revenue = no business model.



Market Risk


To tackle market risk, let us introduce you to the Law of Small.


If you are aiming at the small market, then you will have a small business. Small business means small interests. Means small employees, small partners, small investors.


Choose the right market! Select one that is growing, sustainable, and a reality (use the anti reality distortion field).


It is OK to start with one thing, but aim big!



Execution Risk


You have heard this before, and it is true:


Ideas are Cheap - Execution is Everything


There's no secret here, that your startup success will depends on you executing it. Speed is the key here, if you can do it now, do it now. Startup should operate on hyperdrive. The other ingredients for execution are: people, network, money and passion.



Technology Risk


Lastly, evaluate the technology side thoroughly. We are tech startup, right?


Questions to answer are:


  • Is there a tech to make it happen?

  • Is it easy to implement?

  • Is it scalable and can be mass-deployed?

  • Is it cost effective?


The answer should be YES for the tech that we we finally settle on.


I hope this short post give a bit of light on how to lower your startup risk and consequently increase your rate of success. I will try to update the post with more examples, to make it clearer.


Our final words: Build for Sustainability, not just for Profit.

Areas of Interest




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