Impact of tech startups on traditional business marketsRodrigo Verschraegen | Olivier Elewaut | Heline Jaf
Introduction
The technology we have chosen isn’t really a particular feature, but a whole other B2C or B2B market to explore. Many small traditional or even larger businesses who are dependable on other businesses through outsourcing of their services remain with the most prestigieus and most tradtional companies. This not because they are the best, but because they are best known in the market.
In this report we will give a general explenation on the general startup company and what it may offer the small or traditional company, what the more mature prestigious companies can not.
First a description of the overall startup company will follow. A start up company is like every other business a company or a partnership specialized in a certain field, most of the time in the digital world. But it is generally accepted that when talking about startups, they mean mostly venture created companies that hold some risk and don’t gearantee they will succeed in gaining a profitable share in the market. So caution is always demanded when Dealing with these companies.
The reason why associating with tech startups for regular or small businesses is promising, is because of the general corporate strategy a startup company usually has. Because of their lack of resources and lack of popularity in their market, they must strive a certain strategy in order to survive. For most startups this includes; having a very specific qualitiative product for a specific niche, and, holding their price below the normal market value maintained by their competitors. Overall this strategy is called the penetration strategy. This holds in, that the business offers its products at a lower price than the competition in order to gain the attention of the customers and slowly grab away some market share from their competitors.
When thinking of tech or any other startups, it almost always goes hand in hand with another word, namely ‘innovation’. Creating innovation truly is the main goal of these startups and is therfor closely related to the qualitative aspect their product or service must have in order to survive.
There are many innovations linked with these startups. Nowadays we have startups specialized in 3D graphic modeling, pharmacies,...
In this report we will briefly talk about the dotcom bubble in 2000, followed by the global financial crisis and how it affected the business atmosphere. Now 15 years later the tech industry is booming again with all sorts of tech startups that bring value to all of the world. Even today, some experts talk already about a new bubble, the startup bubble. Besides that we will go a bit more in depth concernig the digital market and the ease of creating these startups
After that we will discuss 4 unknown startups that might offer their services for any small business of today, promising more quality and better pricing than their traditional counterparts.
Finally, we will present the startups throughout history that had the biggest impact on our society of today. Here we immediately think about companies like facebook, linkedin, google,… Even some lesser known companies like paypal improved the business atmosphere for all sort of businesses.
Digital history
To give a better view on the rise of thse startups it is important to shed a light on the entire growth of the digital market. This involves discussing the dotcom bubble (that eventually bursted) where the first digital startups rose up. After that, the financial crisis will be briefly discussed. To finally end where we are now, the potential startup bubble.
Dotcom bubble
In the late years of the 1990’s, one of the largest increases of the NASDAQ had been known since that day. In almost a decade the NASDAQ rose from 1000 points to almost 5000 points. This was caused by a large increase of venture capital equity investments in digital companies that at the moment were recognized as the next major profitable corporation. In the beginning stages of the, then not yet recognized bubble, many corporations turned out to show large growth capabilities. But failed at creating a consistent flow of income to sustain their growth in the future. As a result the investors were dissapointed in their investments and ended up with large cap companies with almost no profit potential. Eventually the investment mentallity turned sour and the bubble bursted, making sure that many people across the world lost a lot of money.
Financial crisis
Different reasons and causes of the financial crises have been defined by already a lot of people. Some of them still aren’t sure if the plunge of the real estate market was a bubble or not. But despite these doubts there are certain things that we are certain of. The main reason for the cause of the financial crisis was the continuous rise of the prices for real estates, which was followed be a drastic drop of these prices.
Well, but why did these prices of real estate rose in the first place?
In 2005-2006 it were investors(same people who also invest in startup companies who saw a loophole for easy and quick money. Many people realized that the prices in real estate just kept rising, so people developed a strategy of very short term transactions. This meant that people bought and sold their assets after the prices eventually, and as expected, rose. This was a strategy that was used all over the country. In general terms this could be described as extrapolation of the prices. They thought that prices would rise forever and there wouldn’t come an end to it, this meant that they made their assumptions of the future prices by looking at the trends that took place in the past and neglected looking at the future. So if the prices over the last month rose with 2 % they would assume this would be the same for the next month.
Of course this trend couldn’t go on for long and the prices started to fall dramatically. According to Nicolas Barberis the causes for these sudden declines in prices were thanks to institutional and psychological problems. The institutional causes of the financial crises were easy to spot after the crisis, but it werethe psychological issues that were the most interesting to research. Many theorists describe these psychological issues as manipulation of the belief of the people; e.g. for this is for instance the phenomena cognitive dissonance.
In order to understand the link between the financial crisis of 2008 and the tech startups. It is important to understand how the financial market works and knowing how the people involved in it I think. Because honestly, there isn’t much difference between the people investing in real estate and those investing in tech startups. Their markets are all found in the public market as in the private market aswell.
Startup bubble
A few years later the market has grown out of the financial crisis and finds itself back in a rising trend. For startup companies this is a great opportunity. The mindset of the investors is again pro risk, which makes sure that a lot of money flows into private and public equity. But today it seems that some people still are a bit sceptical about the current financial trend, because the private sector of the tech companies is rising to fast. A lot of people talk about a new bubble coming up with the same characteristics of the dotcom bubble of 2001.
4 potential startup companies
In this section we will discuss 4 potential startup companies that at the moment are looking for investors and business partners to expand their business.
ZERVANT
The first company we wish to introduce is ZERVANT, which is a startup company that is specialized in helping small businesses with their accounting. They have created an online invoicing and accounting software that should help small businesses with the allocation of their duties. Al companies big or small have to do their accounting, but for small companies who don’t have that much people working. It might take up to much of their time, that they otherwise would invest in increasing their productivity.
For that reason, ZERVANT created their product to help these undermanned small businesses. They have found a way to the point that it becomes very easy for small businesses to book their invoices and incorporating it directly into their ledgers. They even have expanded their product with a time tracker, where it is easier to track the amount of time people spend on a certain project in order to make the invoicing of their services more efficient.
The other aspect that makes this site so interesting is their pricing. On their website they have presented a very structured overview of the pricing of their services.
For an exact overview visit their website: https://www.zervant.com/en/index.php
TEICOS Pharma
Our second company we want to present is TEICOS Pharma, which is specialized in the pharmaceutical industry. They have come op with a new way to inject any drug into the body, but not through the use of needles or pills. They came up with a formula to transfer any drug into a gas and making it possible for patients to inhale it. This way it will come into the circullar system of the body through the longs, because afterall, all bloodcells contain air.
The ones who can profit the most of this are the hospitals who can always profit from new ways to inject their patients. At the moment TEICOS Pharma is looking at any potential business partners and other investors.They have placed ads on all sort of venture capital, crowdfunding and angelinvestor profile websites to find the capital and the needed connections to grow further.
Maybe this company might present an opportunity for smaller hospitals to invest in this new technology while the company still doesn’t have the demand they need to increase their prices.
Further info can be found on their website: http://www.teicospharma.com/
Biz Chatbox
Our third company will be BIZ Chatbox, which is specialized in the HM department for a company and to be more specific, the customer service. Many small companies of today don’t have the means to get the right feedback from their customers that big corporations have. Therefor Biz Chatbox came up with a digital product that would make it possible for the smaller companies to gain the feedback they need to improve their services.
Their product is a multifunctional API that can be integrated into the website from any small business that wishes direct interactivity with their customers. In the API is a live chat session integrated, where it is possible for customers to get directly in contact with the customer support department of the company. Also other characteristics are included in the API. One other example is the integration of an email managing system for your feedback.
The best part of this new product is that it is completely free and easily applied on your website. For more information on this product check the promotional video of the company that can be viewed on their website: http://www.bizchatbox.com/FreeHelpDesk .
LUXEXCEL
The last company presented in this report will be LUXEXCEL, which is specialized in printing complete products in 3D. According to many sources they were the first to actually print an entire product with the use of 3D printing. Normally many 3D printing companies print different parts seperately and add them together when everything is done.
It’s a company created in 2009 and is therefor a bit more mature than the ones above But it can be seen as a clear example on what the impact of any successful startup may be. Now they are even still a growing company and are present in different kind of industries: eyewear, photonotics, autoindustry, lightning and even aerospace. Even now they state that LUXEXCEL will keep on growing into other industries.
For more information their promotional video can be seen on their main website:https://www.luxexcel.com/
Tech startup creation
as already stated before the startup market has boomed enourmously the past 5 years. So if we wish to know more about this recent development. We need to answer ourselves the question of how these startups were able to come up at this enourmous rate.
The first reason for this big increase is the way money can be poored into these startups. It has already been mentioned before, but this process is called venture capital. Basically it describes the process where startup companies present their business plan to potential investors in the hope they would invest; in exchange for a certain amount of stocks of the company. Besides that, people name it venture capital, because it bears somewhat more risk then any other investment.
Nowadays there are many venture capitalis all looking at the next facebook. Which makes sure that when someome presents their startup companywith a potential for success, it recieves the right amount of attention. This brings me to the second reason, networking.
For many entrepreneurs networking has been standing on the top of their list. Without it, it is almost impossible to maintain.
But to be honest it are startup companies that made it easier and more profitable for companies to network. This is because the main moto of startups is innovation and that is exactly what they did with networking. We don’t even need to look hard to see for evidence. The company Linkedin that everyone knows and uses as the facebook for the corporate world, was founded as a startup company. In 2002 they were founded and went through their first venture round, ending up with an investment from Sequoia Capital. Linkedin truly is one of many other startups that changed the way to do business for everyone. So not only the big companies, and the smaller ones, but also the individual gained an opportunity to increase their networking capabilities.
Another reason why the rise of future startups won’t drop anytime soon is the entrepreneurial mindset that keeps on growing. More and more people wish to be part of a company from the very beginning and changing It into a successful self suffcient business. As a result it is silicon valey who beats Wall street in the recruitment process of the best and brightest employees.
Throughout history their were created many startups that changed our society completely. Down below you will find a list of some of these companies that placed our world upside down:
· Facebook
· LinkedIn
· Paypal
· Ebay
· Alibaba
· Microsoft
· google
All of the above companies ones started as a tech startup, but changed the way to do business for all stakeholders drastically.
Conclusion
Out of this report we can conclude that not only small businesses need to keep an eye on the rising startups of tomorrow, but everyone can profit from these businesses. But the real problem here is: “how to recognize the opportunities when they arrive?” Now only the investors and other big players have the right means to be up to date with the startups of tomorrow, but there needs to be more transparency. Startups need to be able to present themselves to their potential clients in a more open way. This way both sides can profit from eachother. The startups can find it easier to reach their customers, as mentionedy above, and the small business of today can find the right startup to ooutsource their services to.
So, how could the traditional small businesses of today be up to date with the startups of tomorrow?
To gain that level of transparancy a globally recognized online platform must be created, where both parties can find each other based on certain keywords they type. For example a regular company might wish to outsource certain services like SEO, accounting, 3D modelling,… When using the advanced searchengine an entire list of possible startup companies for that particular service will appear.
But even without this transparency we can honestly say that startups can have strong impacts on the business atmosphere for all businesses, big or small. Of course these impacts can be for the good or the bad.
Referencesbizchatbox. (2015, 12 06). FreeHelpDesk. Opgehaald van bizchatbox: http://www.bizchatbox.com/FreeHelpDesk
investopedia. (2015, 12 6). dotcom bubble. Opgehaald van investopedia: http://www.investopedia.com/terms/d/dotcom-bubble.asp
linkedin. (2015, 12 06). linkedin. Opgehaald van linkedin: https://ourstory.linkedin.com/
luxexcel. (2015, 12 06). luxexcel. Opgehaald van luxexcel: https://www.luxexcel.com/
nicholasbarberis. (2015, 12 06). nicholasbarberis. Opgehaald van faculty.soms.yale: http://faculty.som.yale.edu/nicholasbarberis/cp10.pdf
slush. (2015, 12 6). startups. Opgehaald van slush: http://www.slush.org/attendees/startups/
teicospharma. (2015, 12 06). teicospharma. Opgehaald van teicospharma: https://www.zervant.com/en/index.php
venturebeat. (2015, 11 21). why wall street talent is moving to silicon valley. Opgehaald van venturebeat: http://venturebeat.com/2015/11/21/why-wall-street-talent-is-moving-to-silicon-valley/
zervant. (2015, 12 06). API. Opgehaald van webopedia: http://www.webopedia.com/TERM/A/API.html
Introduction
The technology we have chosen isn’t really a particular feature, but a whole other B2C or B2B market to explore. Many small traditional or even larger businesses who are dependable on other businesses through outsourcing of their services remain with the most prestigieus and most tradtional companies. This not because they are the best, but because they are best known in the market.
In this report we will give a general explenation on the general startup company and what it may offer the small or traditional company, what the more mature prestigious companies can not.
First a description of the overall startup company will follow. A start up company is like every other business a company or a partnership specialized in a certain field, most of the time in the digital world. But it is generally accepted that when talking about startups, they mean mostly venture created companies that hold some risk and don’t gearantee they will succeed in gaining a profitable share in the market. So caution is always demanded when Dealing with these companies.
The reason why associating with tech startups for regular or small businesses is promising, is because of the general corporate strategy a startup company usually has. Because of their lack of resources and lack of popularity in their market, they must strive a certain strategy in order to survive. For most startups this includes; having a very specific qualitiative product for a specific niche, and, holding their price below the normal market value maintained by their competitors. Overall this strategy is called the penetration strategy. This holds in, that the business offers its products at a lower price than the competition in order to gain the attention of the customers and slowly grab away some market share from their competitors.
When thinking of tech or any other startups, it almost always goes hand in hand with another word, namely ‘innovation’. Creating innovation truly is the main goal of these startups and is therfor closely related to the qualitative aspect their product or service must have in order to survive.
There are many innovations linked with these startups. Nowadays we have startups specialized in 3D graphic modeling, pharmacies,...
In this report we will briefly talk about the dotcom bubble in 2000, followed by the global financial crisis and how it affected the business atmosphere. Now 15 years later the tech industry is booming again with all sorts of tech startups that bring value to all of the world. Even today, some experts talk already about a new bubble, the startup bubble. Besides that we will go a bit more in depth concernig the digital market and the ease of creating these startups
After that we will discuss 4 unknown startups that might offer their services for any small business of today, promising more quality and better pricing than their traditional counterparts.
Finally, we will present the startups throughout history that had the biggest impact on our society of today. Here we immediately think about companies like facebook, linkedin, google,… Even some lesser known companies like paypal improved the business atmosphere for all sort of businesses.
Digital history
To give a better view on the rise of thse startups it is important to shed a light on the entire growth of the digital market. This involves discussing the dotcom bubble (that eventually bursted) where the first digital startups rose up. After that, the financial crisis will be briefly discussed. To finally end where we are now, the potential startup bubble.
Dotcom bubble
In the late years of the 1990’s, one of the largest increases of the NASDAQ had been known since that day. In almost a decade the NASDAQ rose from 1000 points to almost 5000 points. This was caused by a large increase of venture capital equity investments in digital companies that at the moment were recognized as the next major profitable corporation. In the beginning stages of the, then not yet recognized bubble, many corporations turned out to show large growth capabilities. But failed at creating a consistent flow of income to sustain their growth in the future. As a result the investors were dissapointed in their investments and ended up with large cap companies with almost no profit potential. Eventually the investment mentallity turned sour and the bubble bursted, making sure that many people across the world lost a lot of money.
Financial crisis
Different reasons and causes of the financial crises have been defined by already a lot of people. Some of them still aren’t sure if the plunge of the real estate market was a bubble or not. But despite these doubts there are certain things that we are certain of. The main reason for the cause of the financial crisis was the continuous rise of the prices for real estates, which was followed be a drastic drop of these prices.
Well, but why did these prices of real estate rose in the first place?
In 2005-2006 it were investors(same people who also invest in startup companies who saw a loophole for easy and quick money. Many people realized that the prices in real estate just kept rising, so people developed a strategy of very short term transactions. This meant that people bought and sold their assets after the prices eventually, and as expected, rose. This was a strategy that was used all over the country. In general terms this could be described as extrapolation of the prices. They thought that prices would rise forever and there wouldn’t come an end to it, this meant that they made their assumptions of the future prices by looking at the trends that took place in the past and neglected looking at the future. So if the prices over the last month rose with 2 % they would assume this would be the same for the next month.
Of course this trend couldn’t go on for long and the prices started to fall dramatically. According to Nicolas Barberis the causes for these sudden declines in prices were thanks to institutional and psychological problems. The institutional causes of the financial crises were easy to spot after the crisis, but it werethe psychological issues that were the most interesting to research. Many theorists describe these psychological issues as manipulation of the belief of the people; e.g. for this is for instance the phenomena cognitive dissonance.
In order to understand the link between the financial crisis of 2008 and the tech startups. It is important to understand how the financial market works and knowing how the people involved in it I think. Because honestly, there isn’t much difference between the people investing in real estate and those investing in tech startups. Their markets are all found in the public market as in the private market aswell.
Startup bubble
A few years later the market has grown out of the financial crisis and finds itself back in a rising trend. For startup companies this is a great opportunity. The mindset of the investors is again pro risk, which makes sure that a lot of money flows into private and public equity. But today it seems that some people still are a bit sceptical about the current financial trend, because the private sector of the tech companies is rising to fast. A lot of people talk about a new bubble coming up with the same characteristics of the dotcom bubble of 2001.
4 potential startup companies
In this section we will discuss 4 potential startup companies that at the moment are looking for investors and business partners to expand their business.
ZERVANT
The first company we wish to introduce is ZERVANT, which is a startup company that is specialized in helping small businesses with their accounting. They have created an online invoicing and accounting software that should help small businesses with the allocation of their duties. Al companies big or small have to do their accounting, but for small companies who don’t have that much people working. It might take up to much of their time, that they otherwise would invest in increasing their productivity.
For that reason, ZERVANT created their product to help these undermanned small businesses. They have found a way to the point that it becomes very easy for small businesses to book their invoices and incorporating it directly into their ledgers. They even have expanded their product with a time tracker, where it is easier to track the amount of time people spend on a certain project in order to make the invoicing of their services more efficient.
The other aspect that makes this site so interesting is their pricing. On their website they have presented a very structured overview of the pricing of their services.
For an exact overview visit their website: https://www.zervant.com/en/index.php
TEICOS Pharma
Our second company we want to present is TEICOS Pharma, which is specialized in the pharmaceutical industry. They have come op with a new way to inject any drug into the body, but not through the use of needles or pills. They came up with a formula to transfer any drug into a gas and making it possible for patients to inhale it. This way it will come into the circullar system of the body through the longs, because afterall, all bloodcells contain air.
The ones who can profit the most of this are the hospitals who can always profit from new ways to inject their patients. At the moment TEICOS Pharma is looking at any potential business partners and other investors.They have placed ads on all sort of venture capital, crowdfunding and angelinvestor profile websites to find the capital and the needed connections to grow further.
Maybe this company might present an opportunity for smaller hospitals to invest in this new technology while the company still doesn’t have the demand they need to increase their prices.
Further info can be found on their website: http://www.teicospharma.com/
Biz Chatbox
Our third company will be BIZ Chatbox, which is specialized in the HM department for a company and to be more specific, the customer service. Many small companies of today don’t have the means to get the right feedback from their customers that big corporations have. Therefor Biz Chatbox came up with a digital product that would make it possible for the smaller companies to gain the feedback they need to improve their services.
Their product is a multifunctional API that can be integrated into the website from any small business that wishes direct interactivity with their customers. In the API is a live chat session integrated, where it is possible for customers to get directly in contact with the customer support department of the company. Also other characteristics are included in the API. One other example is the integration of an email managing system for your feedback.
The best part of this new product is that it is completely free and easily applied on your website. For more information on this product check the promotional video of the company that can be viewed on their website: http://www.bizchatbox.com/FreeHelpDesk .
LUXEXCEL
The last company presented in this report will be LUXEXCEL, which is specialized in printing complete products in 3D. According to many sources they were the first to actually print an entire product with the use of 3D printing. Normally many 3D printing companies print different parts seperately and add them together when everything is done.
It’s a company created in 2009 and is therefor a bit more mature than the ones above But it can be seen as a clear example on what the impact of any successful startup may be. Now they are even still a growing company and are present in different kind of industries: eyewear, photonotics, autoindustry, lightning and even aerospace. Even now they state that LUXEXCEL will keep on growing into other industries.
For more information their promotional video can be seen on their main website:https://www.luxexcel.com/
Tech startup creation
as already stated before the startup market has boomed enourmously the past 5 years. So if we wish to know more about this recent development. We need to answer ourselves the question of how these startups were able to come up at this enourmous rate.
The first reason for this big increase is the way money can be poored into these startups. It has already been mentioned before, but this process is called venture capital. Basically it describes the process where startup companies present their business plan to potential investors in the hope they would invest; in exchange for a certain amount of stocks of the company. Besides that, people name it venture capital, because it bears somewhat more risk then any other investment.
Nowadays there are many venture capitalis all looking at the next facebook. Which makes sure that when someome presents their startup companywith a potential for success, it recieves the right amount of attention. This brings me to the second reason, networking.
For many entrepreneurs networking has been standing on the top of their list. Without it, it is almost impossible to maintain.
But to be honest it are startup companies that made it easier and more profitable for companies to network. This is because the main moto of startups is innovation and that is exactly what they did with networking. We don’t even need to look hard to see for evidence. The company Linkedin that everyone knows and uses as the facebook for the corporate world, was founded as a startup company. In 2002 they were founded and went through their first venture round, ending up with an investment from Sequoia Capital. Linkedin truly is one of many other startups that changed the way to do business for everyone. So not only the big companies, and the smaller ones, but also the individual gained an opportunity to increase their networking capabilities.
Another reason why the rise of future startups won’t drop anytime soon is the entrepreneurial mindset that keeps on growing. More and more people wish to be part of a company from the very beginning and changing It into a successful self suffcient business. As a result it is silicon valey who beats Wall street in the recruitment process of the best and brightest employees.
Throughout history their were created many startups that changed our society completely. Down below you will find a list of some of these companies that placed our world upside down:
· Paypal
· Ebay
· Alibaba
· Microsoft
All of the above companies ones started as a tech startup, but changed the way to do business for all stakeholders drastically.
Conclusion
Out of this report we can conclude that not only small businesses need to keep an eye on the rising startups of tomorrow, but everyone can profit from these businesses. But the real problem here is: “how to recognize the opportunities when they arrive?” Now only the investors and other big players have the right means to be up to date with the startups of tomorrow, but there needs to be more transparency. Startups need to be able to present themselves to their potential clients in a more open way. This way both sides can profit from eachother. The startups can find it easier to reach their customers, as mentionedy above, and the small business of today can find the right startup to ooutsource their services to.
So, how could the traditional small businesses of today be up to date with the startups of tomorrow?
To gain that level of transparancy a globally recognized online platform must be created, where both parties can find each other based on certain keywords they type. For example a regular company might wish to outsource certain services like SEO, accounting, 3D modelling,… When using the advanced searchengine an entire list of possible startup companies for that particular service will appear.
But even without this transparency we can honestly say that startups can have strong impacts on the business atmosphere for all businesses, big or small. Of course these impacts can be for the good or the bad.
Referencesbizchatbox. (2015, 12 06). FreeHelpDesk. Opgehaald van bizchatbox: http://www.bizchatbox.com/FreeHelpDesk
investopedia. (2015, 12 6). dotcom bubble. Opgehaald van investopedia: http://www.investopedia.com/terms/d/dotcom-bubble.asp
linkedin. (2015, 12 06). linkedin. Opgehaald van linkedin: https://ourstory.linkedin.com/
luxexcel. (2015, 12 06). luxexcel. Opgehaald van luxexcel: https://www.luxexcel.com/
nicholasbarberis. (2015, 12 06). nicholasbarberis. Opgehaald van faculty.soms.yale: http://faculty.som.yale.edu/nicholasbarberis/cp10.pdf
slush. (2015, 12 6). startups. Opgehaald van slush: http://www.slush.org/attendees/startups/
teicospharma. (2015, 12 06). teicospharma. Opgehaald van teicospharma: https://www.zervant.com/en/index.php
venturebeat. (2015, 11 21). why wall street talent is moving to silicon valley. Opgehaald van venturebeat: http://venturebeat.com/2015/11/21/why-wall-street-talent-is-moving-to-silicon-valley/
zervant. (2015, 12 06). API. Opgehaald van webopedia: http://www.webopedia.com/TERM/A/API.html