This has been quite a year. IPO activity has been much slower than usual, whereas M&A deals have been breaking records left and right. The Federal Reserve finally raised interest rates for the first time in almost a decade. Most real estate markets across the country are now fully functional, with just a few that are still on the mend. There continues to be plenty of buzz about the exclusive unicorn club, and both the tech and healthcare sectors are hotter than ever. All in all it seems safe to say that 2015 has been a pretty good year economically.
As far as startups, we all know that pesky rumor that ninety plus percent of them end up failing. Of course, a fair number of the lucky ten percent that do manage to stick around don’t just survive, but in many cases, thrive beyond their leaders’ and investors’ wildest dreams. On that note, here is a brief list of some of the biggest winners, as well as those that were not quite so lucky.
We’ll start with the bad news first:
The idea of turning anyone’s clever invention into an actual product seems pretty cool. Unfortunately, it doesn’t matter how neat an idea may appear, there has to be the right supply and demand for the specific good or service. After all, it is irrelevant how interesting or altruistic the endeavor is because the ultimate goal is to turn a profit, and to do that, the margins matter.
This was another great idea in theory. Surely we have all had moments where we needed an assistant to take care of administrative matters here and there and hiring the services of an actual person, albeit virtually, seems pretty handy. Unfortunately, it didn’t pan out because the numbers simply didn’t make sense. Although it is admirable that the company had such high expectations for its service that it hired plenty of able-bodied assistants to be at the ready, sometimes startups need to start slowly and then grow to ensure that the demand for their service is actually there.
This was a bit doomed from the beginning. The copyright and licensing battles over music have raged since the days of Napster (remember Napster?! - the 1999 version that is). They sort of put everyone on notice that if you want to start a company that provides a music sharing service of some sort, then your company has to go about it legitimately, i.e., in a way that would not cause the company to become embroiled in litigation. For any startups seeking to use the intellectual property of another, be sure to get the right licensing agreement first!
Now, on a more positive note:
It seems like a lot of the startups that soar do so because they provide a service that is incredibly convenient. Slack is a perfect example of this, which is a cloud collaboration tool simplifying team communication for companies all over the country. The platform allows colleagues to chat quickly instead of wasting time on email, share files and other types of content, and basically streamline the use of apps and other online tools by having it all available in one convenient and easy to use location. They are clearly onto something as their client list is in the millions, they have raked in $340 million dollars in funding, and their current valuation is $3 billion dollars.
Another startup that has been chugging along nicely this year is Stripe, the online payment service that helps any size business to accept payments via the internet. The company is valued at more than $5 billion, and the list of investors backing them is pretty impressive, as it includes some big names such as Visa and American Express, among a few others. And, the company isn’t just taking money from Visa, the two companies are actually embarking on a partnership that will allow Stripe to enter more markets globally, which of course bodes well for even more growth in the coming year.
This company certainly named itself appropriately. Uber is doing so well they probably need a new name for this type of unicorn. Perhaps they will be a leprechaun because they always manage to find gold? Or maybe a new kind of phoenix that never actually dies but has that perpetual longevity and a similar “rebirth” that for them entails becoming bigger and better? Or if there are other startups that manage to achieve what Uber has, then maybe everyone will just become an Ubercorn? Oh, the possibilities! There will surely be some new descriptive term for a startup that reaches success of this magnitude. Uber’s fundraising and valuation continue to climb, with another infusion on the horizon and a potential valuation so high we won’t even type it because it seems implausible (although apparently it’s plausible).
It is such an exciting time for startups, and there are plenty of lessons to learn from those that thrive and those that flounder.