Economy Kushay's Matter Bank

[AK] Arguments For and Against Startups

This note will briefly discuss how startup works, and points in favor and against it.

Conventional businesses: Solves ordinary problem. Core is simple products.

Startup: we disrupt convenience by identifying additional the problem in SQ, then we solve them both. Core is idea. Example: How do we make our homes more productive? I know! Why not allow people to stay on our houses and charge them?
What’s the problem with businesses that codifies ideas? 4 boxes.

The execution of idea is easily replicated. GoJek -> Grab Bike -> Uber Motorcycles. Game of endurance on who can get most money and survive at the end of the day. Implication: Bleeding, race to the bottom (reduce cost as much as possible by lowering salaries and facilities for workers) etc. Can conventional businesses be the same? Yes but it’ll be much safer because… You have patents, and can go to battle of innovation.

Startup businesses heavily rely on capitalization than sales because they rely on ideas that can’t be sold. For example WhatsApp doesn’t get profit, but they have high valuation because of high consumers. The problem is that capitalization requires exit plans (IPOs and acquisitions). So they won’t care in the long term! Sustainability of their worker, etc. What’s more problematic is that exit plans heavily relies on temporary trends.

It normalizes bad conduct of businesses because capitalization doesn’t rely on sales but relies on image (so it becomes a public relations game).

Conventional businesses work on Standard operational procedure which is like standard working hour. Startups are lean and flexible, which is destructive because the worker’s won’t be able to unionize because you can’t mingle much with people, so it individualizes work.


Fair opportunity to compete

– Ideas is an unlimited resource, physical resource is.

– No entry barrier

Limited capital in startups are beneficial

– Lean because of cost-efficiency, smaller hierarchy

– Lower salary, need a fun culture so your life is your work

Flexibility is a key tenet to personal development of millennials

– Flexible, trial and error easier, you’ve got not much to lose, because a startup’s fixed asset is not that much anyway.

Suits lifestyle of millennials because you can work remotely and more flexibly.

Conventional business is stagnant (warning: unorthodox argument, bad elaboration might result in a 72-73 speaker score)

– Waste and pollution is everywhere because ordinary product is too abundant

– We’re too over productive, so we need to focus to service to deindustrialize!

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