You would have thought that as the world exited what was one of the most severe recessions of modern times, that startups would have had a rough ride. But in the digital age, starting up can be done by literally anybody with an internet connection and a mobile phone.
What’s so exciting about technology in the modern world is how it creates huge winners. People who happen upon a good app or a product that consumers find useful do incredibly well for themselves in a way that simply wasn’t possible a couple of decades ago. Snapchat is probably the best example of this.
The ephemeral messaging app was set up a little over five years ago by a small group of app developers who wanted to reduce the risks of messaging on mobile devices. They came up with an idea to tweak the existing messaging system so that messages disappear after a set period of time to protect people’s privacy. Before long, the platform had taken off as millions of people realized the benefits. No longer did they have to worry that their messages would be stored on another person’s phone, possibly leading them to get into trouble for what they said or sent. Instead, Snapchat gave people the safety they had craved by deleting their messages after a set period of time.
But while Snapchat was a commercial success, it could never have had the success that it did without all of the other innovations occurring simultaneously in the market that brought down the costs of development. For instance, early on, the company was able to take advantage of the app marketplace, something that both Google and Apple had spent years nurturing. They were also able to take advantage of high-level programming languages, meaning it was easier than ever to make minor tweaks to a standard messaging app to deliver the features that they wanted. Finally, the company capitalised on the advertising systems that had already been built by the early internet pioneers, like Google. This allowed Snapchat to monetise their messaging service in much the same way that Facebook did soon after launch, leading to massive valuations at its IPO.
Building a business from scratch can be a daunting task. But entrepreneurs are getting help from all over the place. Today it’s possible to get millions of dollars worth of software circa 1990 for free over the internet. Just think about the cost savings of a technology like Dropbox alone. They're staggering.
There’s also been enormous progress in the prototyping of physical products. Rim moulding companies are now offering startups with super cheap ways of trialling their products in markets. Today, entrepreneurs have the luxury of testing multiple different models, rather than having to stick to one enormously expensive prototype that may or may not be accepted by customers.
Perhaps the most exciting thing about startups today is that they are fast becoming the spearhead of technology. New technologies sometimes arise from existing, establishment companies, like IBM. But the real breakthroughs are coming from startups themselves, like Deep Mind. And all this activity is only possible because technology has enabled it.
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