7 start-up myths undergo a reality check
Start-ups are often either idealized or demonized. The truth is usually somewhere in between. We spoke with Nico Lumma and Christoph Hüning from start-up partner Next Media Accelerator about common myths.
DMEXCO: Nico, what is a start-up for you?
Nico Lumma: We define a start-up as a new company centered around technology, which can therefore scale faster and better than conventional companies.
DMEXCO: Christoph, how innovative do start-ups have to be?
Christoph Hüning: Start-ups must be above average innovators to survive. “Me-too” products in narrowly defined industries have a hard time, because established players have advantages in terms of scale and financial resources. All successful start-ups are innovative. This can be the product idea, but also the market approach. By our definition, real start-ups only emerge from new ideas. Start-ups that are not innovative will quickly fail or not even be founded in the first place.
DMEXCO: Myth No. 1: Start-ups have little in common with conventional companies. Right or wrong?
Christoph Hüning: Today’s start-ups often claim to disrupt conventional companies or industries, so there must be differences. But many conventional companies started out with an idea and a small team, so they were a kind of start-up themselves. Preserving this culture is a true challenge.
DMEXCO: How attractive is the start-up culture for employees?
Nico Lumma: Start-ups have a big advantage over established companies in that the first employees can make a difference and help shape the company. This makes the jobs very attractive for young people in particular.
DMEXCO: Myth No. 2: The start-up scene is not only regarded as young, but also as male-dominated. What role does diversity play?
Nico Lumma: There is a lot of catching up to do when it comes to diversity, because the “Old Boys Networks” are still functioning and naturally restrict perspectives. Too much homogeneity places a burden on innovation and we therefore urgently need to create better framework conditions, so that start-ups created by women or people from migrant backgrounds can gain access to faster and better investment.
DMEXCO: Myth No. 3: Working in start-ups is hip, chic and makes you happy. At least that’s what some people think. On the other hand, there is talk of “founder burnout” and that founders are particularly prone to depression. What do you think?
Christoph Hüning: There are burnouts in start-ups as well as in traditional companies, and there are also happy employees in conventional companies. But these are probably not founder personalities. Real entrepreneurs will never be happy in a permanent job. In everyday life, however, working in a start-up has nothing to do with the clichés of pool tables and fruit baskets. Most conventional companies are trying to be a bit like Google in this regard. But that often doesn’t work.
DMEXCO: Where is the start-up industry heading right now?
Nico Lumma: The start-up industry continues to grow strongly and is thus an innovation driver for the entire economy. Established companies are increasingly trying to partner with start-ups or adopt their working methods to become more agile on the market again. In general, we see the industry becoming increasingly professional and, at the same time, the hurdles for successful establishment of a start-up are becoming smaller because many basic technologies are now readily available, for example.
DMEXCO: Myth No. 4: Berlin is the Silicon Valley of the German start-up world. Correct?
Nico Lumma: No, it’s not. Berlin is the Berlin of the German start-up world. Silicon Valley is so unique that it can’t be compared. The culture of innovation established in Silicon Valley in the 1960s and consistently developed since with the support of many billions of dollars from the US defense budget for research and development is hardly replicable in Europe. Thus Berlin has created its own start-up culture, which has a completely different set of characteristics. The area of e-commerce is a perfect example of this.
DMEXCO: Myth No. 5: Compared to the USA and China, the economic conditions in this country are mediocre. How big is the problem in reality?
Christoph Hüning: We have tax disadvantages even by European standards. At the same time, the current political discussion surrounding digital issues reveals an almost frightening picture when we consider that the framework conditions are being decided on here. When it comes to large-scale financing, the USA and China are certainly one step ahead due to their size. But we have other advantages.
DMEXCO: Like what?
Nico Lumma: Heterogeneity in the domestic European digital market, for example, is an opportunity for European start-ups. A good understanding of the market offers a competitive advantage over access to capital alone. This is especially important to understand in early phases. On the long term, of course, Europe will also need to catch up with regard to the volume of financing.
DMEXCO: Which brings us to myth No. 6: Renowned investors are required to make things work well. Does this still hold true?
Christoph Hüning: As so often, it depends. Good ideas can be successful with less capital, but won’t work without any at all. Access is crucial and many largely unknown foundations or family offices can play an important role in this regard. Venture capital helps with growth and fast scaling, whereas pure bootstrapping takes a lot of patience.
DMEXCO: Last but not least, myth No. 7: Starting a company in the garage. Is this even allowed in Germany, or would it fail due to occupational health and safety regulations?
Nico Lumma: I doubt there would be any WiFi there and would therefore recommend using a café or co-working space to launch a start-up.
The bottom line:
The start-up world here is less exotic, but more pragmatic and professional than its reputation. In the days of the “New Economy”, start-ups were still regarded as alternatives to the classic economy. Today they serve as partners, trendsetters and role models for established companies. Visitors can see this for themselves at the DMEXCO Future Park.