A young employee once told Matthias Prammer: In the past, you had to start a band to be cool and have an impressive resume—today, you start a start-up. However, the numbers tell a different story, says the founder and CEO of the consultancy Die Umsetzer, as start-ups in the narrow sense (young, innovative, growth-oriented companies) make up only about one percent of all start-ups and employ only one percent of the workforce in Austria. From his perspective, start-ups are significant for three completely different reasons.
"Start-ups are a myth. They are the good, bright side of the Force. We like these young people who work 16 hours a day with shining eyes, look good while doing it, and then still go out to party," says Prammer. Terms like Unicorn (a start-up with a valuation of more than one billion euros whose shares are not traded on the stock market) and Moonshot (making the nearly impossible possible) fit this narrative. Even large companies contribute to the myth by portraying (corporate) start-ups as a "shining counterculture to their own traditional practices," as Prammer says—though this is often not justified because the returns usually come from established business areas. Secondly, they fuel the motivation to start businesses, which is economically beneficial, especially when the goal is to create jobs. The third point is the most exciting, says Prammer. "Start-ups are the seeds for ideas and products that change the world—for the better. At least in their own narratives." There is probably no start-up that claims to have developed innovative landmines.
On the Way to Scale-Up
Those who want to support start-ups should not glorify them but appreciate them. Prammer recommends start-up founders consider ten points:
1. Knowing the market is just as important as having a brilliant product.
2. Avoiding hockey stick projections—quickly achieve profitability.
3. Thinking through real risks is as important as enthusiasm for one's own ideas.
4. Having the right people on board: "You can go fast alone, but you go far together," says Prammer.
5. Full concentration—progress is minimal if pursued on the side.
6. Bringing personal enthusiasm for an aspect of the job (researching, selling, etc.).
7. Not fearing failure, learning from it, but not glorifying it either.
8. Hitting the right timing: in one's own life and in the market.
9. Choosing the right environment: engage with customers rather than going to a start-up hub.
10. Having the courage to approach things in new ways while respecting what already exists.
Those who implement these points can develop their start-up into a scale-up. This can be identified when the product or service reaches the market, engages target groups, generates revenue, and maintains a healthy cash flow, even if external capital is still needed.
At the threshold from start-up to scale-up, it becomes clear whether the founding idea is sustainable: "Does it have the power to grow?" Do mission, vision, and purpose hold up? This is also the moment, says Prammer, when one "must have the courage to contradict oneself." Finally, this is the time to recognize: "What brought us here won't get us there." Progress requires "things you never wanted: rules, roles, structures." By this point, order among the founders is necessary (keyword: generosity, which is needed to avoid getting bogged down in every little detail), especially since 95 percent of start-ups are founded by teams. And space to allow the people in the team to grow.
Listening More Than Talking
For leaders, listening and self-reflection become more important. "As a founder, you talk a lot, which is important for growth." But this changes over time. For employees, the web of relationships and social complexity also change. Whether one personally wants this is ultimately a question of type: Some experience the transition from start-up to scale-up "as growth that provides opportunities and chances for new things—even for more earnings," says Prammer. "For others, it feels like being expelled from paradise because it forces structures."