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What is a startup?

The term startup is referred to a company in the first stages of operations. With the support of one or more entrepreneurs who believe in the demand of developing a product or service, startups come into being. Generally, these companies start with high costs and limited revenue, requiring them to look at various sources such as venture capitalists for capital.

“Obliteration by Incorporation” of Disruptive Theory

Every innovative or close to an innovative solution started getting applied to the term disruptive startups by business people since the “Theory of Disruptive Innovation” was written by Clayton M. Christensen. It would be better to cite an example here: disruption by definition is generally supposed to target primarily non-customers or starts at the low-end market segment, but at the same time, it does not put you in a position to honestly say that Ola and Tesla are disruptive technologies in a true sense.

An alternative was provided to the people to choose an opportunity for using a more convenient, affordable and of course more sustainable transportation. It was up to the people whether they wanted to buy an electric car or get rides using Ola. It’s a fact laid bare that both these companies targeted already established mainstream markets and certainly didn’t have their origin in the low-end.

Role of Startups in Building Markets

It has already been mentioned that disruptive startup;

  • Turns non-customers into customers and help create new markets; or
  • Serves low-end customers.

Looking at audience segments that big companies or bigger industries overlook and don’t serve the simple way to build a potentially disruptive startup. Finding out why these people are not focused and why they don’t use products or services will help you tap on the chances of making something to deliver products or services to them.

For example, Amazon disrupted the DTH industry and made every DTH service provider worry with its “Fire TV Stick.” Now you can tune into YouTube, Netflix and others with its help.

Startups and the Economic Prosperity

Another general perception concerning startup is that it needs to be in a developed country, with the possibility of all the resources available. This myth needs to be debunked, as startups can begin anywhere, and the truth is that the countries with the most significant needs present the most extensive opportunities. Startups can be seen thriving in underdeveloped countries, nations in conflicts, and countries that are new to entrepreneurship. Startups can take advantage of these untapped problems and make an impact besides making a profit.

How startups win over incumbents?

It has been beautifully explained in the theory of new market disruption as to how under-resourced startups can beat powerful, competent incumbents. Some examples from recent history are a timely pointer in this context: brick and mortar retailing was disrupted by e-Commerce, laptops disrupted desktop computers and then smartphones, whereas Uber, Ola, Rapido etc., disrupted the transportation industry.

The theory puts two types of innovation before us: Sustaining Innovation and Disruptive Innovation. The more common of the two, Supporting Innovation, involves companies improving products to serve their core customers better. On the other hand, Disruptive Innovation causes new market disruption.

Startups can survive in niche markets with non-traditional products, especially with the incumbents focusing on their core consumers.