Why it’s harder then ever for startups to succeed in 2022

  • The ideal conditions for startups are no longer in place. Running a startup in 2022 is doing it on Hard Mode.
    • Good talent is going to the hypergrowth incumbents due to hiring power, high salaries and other perks, resume brand power.
    • It’s more expensive than ever to hire a tech team. In the past the workaround was equity - the promise of equity is no longer enough due to higher than ever cost of living (specifically property prices).
    • Over the last ten years a lot of apps have been created, with a few of them sticking around and further expanding/diversifying their product portfolio/feature list (Airbnb, Uber, Slack, Github, Amazon, Meta etc). On top of that, smartphones themselves and the other underlying hardware technology around us (Google Home, cars, etc) have solved many of the “easy problems” that were fun for startups to play with in the last ten years.
    • Startups now must pick off ideas that are low risk enough to invest a lot of money into but high reward enough to enable the necessary growth required in a space where they are typically competing with the (well-resourced and funded) incumbents’ internal teams.
    • Tech for tech (B2B) product companies are in a good position as they have the opportunity to create tools for teams as those teams grow and potentially don’t invest in or create their own tools. In a high growth/flourishing team, share of (team budget) wallet is easy enough to get, especially if you product can replace another one.
    • B2C product companies face the increasingly difficult prospect of competing for share of (consumer) wallet, where most individual consumers are already overwhelmed by the sheer amount of different products, apps, devices etc already. Cutting through requires a level of innovation that is unlocked through a rare combination of individual talent and organisational structure.
    • Additionally, the two skills that are critical for growth but often undervalued are management and hiring. Successful startups might be founded by people who have worked at hypergrowth incumbents. First-time founders face a particular challenge in this regard.
    • Web 2.0 Innovation techniques (Design Sprints, etc) are now largely too heavy. Most problems have reasonably known solutions, and the key to winning is efficiency rather than creativity.