But besides the often glamorised lifestyle of start-ups and entrepreneurs, the harsh reality is that nine out of 10 new business ventures are likely to fail, and while that’s off-putting enough for many, a considerable amount of those who do manage to make it to a functional and profitable business model will never truly achieve the presumed potential that first sparked that initial jump.
There are thousands of people waking up every day thinking about how they could design a product better than what they’ve seen before or create the next unique retail experience that the world would go crazy for. But It’s one thing to have a good idea. It’s another thing completely to be able to execute it. To complicate things further, there are many misconceptions and romantic notions of grandeur that can blind aspiring founders from what truly leads to success.
Defining start-up success
A start-up is difficult to define, as it’s more than just a business in its infancy. A business must have a range of characteristics to be one, such as scalability, investability, and a unique problem with a large audience experiencing it.
The gold standard of success is becoming a unicorn: a start-up that is privately owned and valued at US$1 billion or more. They’re exceptionally rare, but for many, being the next unicorn seems to scream to the world, ‘We’ve made it.’ However, it could be argued that having a profitable business model that is sustainable in terms of management and growth is the real measurement of success – unicorn or not.
Successful start-ups never lead with the product or functionality, they lead with storytelling around innovatively and creatively solving a problem they have identified. Retail tech company Brik + Clik, for example, was founded by real-estate entrepreneurs Hemant Chavan and Eric Hirani with the goal of providing online brands with a turnkey solution for physical retail, without the costs associated with opening their own stores. Brik + Clik has recognised the common barriers affecting e-commerce brands, is challenging traditional business models by accepting bitcoin, and also operates a virtual-reality online store for its participating brands, which blurs the line between physical and digital retail channels.
Another trait of successful start-ups is ensuring you build a community around an idea first, rather than building your product and expecting the community to support it or be built after the fact. The old model is pushing out a product to an audience and then building brand loyalty, investing tens of thousands of dollars in traditional advertising campaigns expecting people to buy just because it’s great/new/big. Nowadays, with social media and the numerous messages our world is bombarded with, it’s the reverse: You must build a memorable connection with the brand first, then promote the product, to avoid wasted marketing spending and over-capitalising on an idea without proper user feedback.
Bubble Tea Club, for example, was founded by 20-somethings Pam Yip and Jenny Li after they found themselves unemployed at the beginning of the Covid-19 pandemic. They validated their start-up via crowdfunding investment platform Birchal, raising $1.1 million just a year after launching – something that wouldn’t have been possible without a strong community base to spread the word. Now, they’re rapidly expanding their influence and product range, and are definitely ones to watch as the years go on.
Start-up or not, it can be useful for retail businesses to understand what it is that makes these unique businesses so successful, and figure out ways to replicate their strategic decisions on a smaller scale.
What retailers can learn from start-ups
The first and arguably most important factor is that they all lead with design. This isn’t only about aesthetics, but substance as well – a mistake still made by many in business who confuse design with ‘all the pretty stuff’.
Leading with design means constantly filtering innovation and creativity through lenses of human need and desirability, financial viability, and technological feasibility. Using design strategy and design thinking methodologies is essential to reduce risk, wastage, and misdirection. It means you instinctively put the customer at the centre of all decisions, starting with empathy, meaning understanding the users and their problems inline with the overall idea for the product.
Through this ‘human-centric lens’ you are able to identify your target audience segmentation and what makes them tick. Gymshark hit all of these marks perfectly with a combination of a focus on the best customer experience, the use of social media to document and share their business journey, and actively building an influencer community that showcased the Gymshark brand lifestyle. Recently valued at $1.9 billion, this unicorn has truly hit the big time.
The ones that don’t quite make it
There doesn’t seem to be one singular, obvious trait that connects all failed start-ups. It could be a wastage of funds or resources, or even an unbalanced approach to investment in certain areas – and a neglect of others – a range of factors lead to failure.
Many start-up founders begin blindsided by their eagerness to get their product or idea out there with an MVP, and then refine their MVP following feedback. The issue here is wastage and the result is false starts. Instead, if start-ups began with a clear design strategy, including research into customer needs and behaviours, there would be less wastage of engineering, development, time, and capital.
Arguably, the phase of discovery and design at the beginning of product development is arguably just as important to success, if not more so, as the capital it raises. Rather than rushing to get a fully functional product to market, entrepreneurs and organisations need to appreciate that empathy, creativity, and innovation must all be underpinned by design strategy before moving into production. Then, strategic functions like brand need to lead you in the way you engage your audience and tell your story.
Design and Brand strategies not only assist you in determining product-market fit, they are also integral in developing the underlying psychological cues and mindset that will inform everything from your brand to your culture.
Many hear success stories of founders and individuals of the past and fail to realise that these individuals were hard-wired design thinkers and instinctive brand strategists. They didn’t just think of technology or a product and run with it. They were constantly checking usability, adaptability, and feasibility as they developed, building their narrative both within their internal cultures and in their customer community, to ensure that everything at all levels was aligned and consistent.
They were driven by an idea – an innovative solution to an unforeseen problem – and then used their skills to develop around that. They didn’t lead with the product or the business model. That came as an afterthought. They were true believers in engagement driving monetisation, rather than the other way around.
Finally, for retailers looking to emulate the world’s biggest start-ups, remember: Don’t copy someone else’s business model or idea. Focus your energies on creating something completely new.