Company Success among German Internet Start-ups
There has been a lot of research on factors that help to explain why some start-ups become successful and their founders rich, and on the other hand why other start-ups fail terribly. Of course, starting up an enterprise is a complex activity dependent on institutional regulations, competitors, market developments and the simple recognition of the right opportunities at the right time. We know all of this, but still cannot accurately predict our chances of being successful as entrepreneur. There are some methods venture capitalists use, such as evaluating start-up teams and studying business plans. However, even after doing this, the chance of making a correct prediction is still lower than throwing a coin. Research has never been able to explain much of this complexity, but there are at least three factors that have repeatedly turned up when determining success and failure in the last few years.
The first of these factors is a result of our tremendous technological development in the past few decades, but particularly in the most recent. In nearly all young enterprises, the utilization of social media and social networks has become a vital factor for survival and success. Many research results over the last few years have yielded the conclusion that social media are by far the most important platform for marketing products and services. To put this more scientifically, the diffusion of innovation is increasingly interlinked with social media. In addition, the recognition and creation of opportunities also increasingly requires social media platforms. However, this does not mean one should operate only online, investing all of his time and energy to communicating in social networks.
The second factor concerns something that is quite obvious: money. Since the vast majority of start-ups do not have their own money or the ability to easily get a loan, obtaining financial resources is often a major problem. There are different ways to raise some money: One can ask friends and family, fool others, or even rob banks, but often the only course of action is to be financed by venture capital. But how do start-ups find the right venture capital investor, and how much does this investor intervene in the start-up’s management? All this can be answered by looking at the social networks of venture capitalists and young enterprises.
The third factor depends partially on the first. Before the development of online social media, founders may have been described as extroverted, aggressive and emotionally stable. However, within social media these characteristics often disappear to a certain degree, creating a sort of anonymity. If this is correct, we must rethink the search for personnel, the composition of a start-up’s team, and even the evaluation of start-ups in pitches. Technical development has indeed made it possible for introverted nerds to be more successful than extroverted offliners. Historically, what are considered successful characteristics has changed several times, and it is important to know whether the current technological development will again trigger such changes.
This book, presented in three essays, gathers up the threads and attempts to shed light on all three factors. As you will read, spending more time and energy in online activities does not make you more successful as entrepreneur. However, spending no time at all also does not make you more successful—spending energy and time wisely is the key. Moreover, networking has become a buzzword, but it would appear nobody actually knows how to do this, except by distributing as many business cards as possible or piling up more and more friends on social networks. This book shows how networks of investors and start-ups are structured towards success. And finally, though it may be hard to believe, we have broken down the personality traits of successful entrepreneurs. This book is one of the first to identify and explain this twist.