Startup typologies

There are three main types of startups:

1. Trophy idea
2. Idea borrowing
3. Renovation

Each of which has its advantages and disadvantages.

Trophy Ideas – The prize here is generally pretty big. If we nail it we get our face on the cover of magazines and get lots of free media. This is the idea we are waiting our whole life. And when it finally does come, we realise why it’s still new – it’s very hard to pull off. It usually takes lots of money, venture capital and maybe even a life time. It’s very hard because we need to create the market and or invent demand. it takes strong charismatic leadership for it to be sold to the world. Which is why it pays so high when it becomes a reality.

Idea Borrowing – The prize is smaller,  but the probability of success is much higher. Demand of the actual product or some variation of it already exists, so we just have to be a bit better than the substitutes. It doesn’t build kudos in launch phase, but it’s how most fortunes are made. (Microsoft Windows)

Renovation – Can be as lucrative as the ‘trophy idea’, but can also be gold dust. In this situation we take an existing startup which is struggling and make it better. Do it right and turn demand into profit, or turn high margin into big demand. It can be dangerous as it’s hard to know what we’re really buying and the business might be struggling because demand isn’t there or the model just can’t be worked out.

The real question for startups is to understand which one suits our personality and risk tolerance. And knowing this choose the right type for us.