Opinion pieces on business & economic issues
Platform: A Way to Catalyze Innovative Start-ups
Oct. 30, 2013
As the nation seeks to join the ranks of advanced economies but faces a low-growth environment, one of the drivers for a breakthrough would be innovative start-ups. These firms are high value-added, knowledgeable and tech savvy. Appearing in all business categories, they are often at the forefront of economic expansion in advanced economies.
In Korea, starting up business out of necessity, or to sustain a living, is very high, considering that the average income level of US$30,000. Unfortunately, the failure rate of new businesses also is high due to operating costs, inadequate financing, low number of participants and the extended time to develop technologies.
The main pitfalls are that new owners have to use up their own savings to launch and must directly oversee or handle too many matters, such as production, distribution, etc, making it difficult to focus on core issues.
Start-up platforms can help mitigate the difficulties. In general, they are tangible and intangible structures that are designed for multiple tasks and can be used in different business environments.
A budding entrepreneur can use platforms to reduce costs and risks, freeing up capital for where it is most needed or effective. Platforms help generate and evaluate business ideas and produce a prototype, eliminating inefficiencies. They also can provide high-tech equipment, thus reducing the time and cost for product development, and link external financing and expertise to a new business owner.
There are six primary types of start-up platforms.
1. Quirky: Turning ideas into reality
Quirky is a "social product development platform" that turns ideas of individuals into reality. When an individual offers an idea, Quirky carries out idea evaluation and turn ideas into business. Then it gives reward to the best idea provider. "Pivot Power" is a flexible electrical power strip that bends to fit every sized plug. The inventor, Jake Zien, has earned nearly US$280,000 so far.
2. TechShop: For budding manufacturer
TechShop is an open-access manufacturing platform that allows users to use high-tech equipment such as 3D printers and facilities for a modest weekly or monthly fee. Some success stories include "DoDo Case," a product that makes holding of tablet PC feel like a book. More than 1 million have been sold.
3. InnoCentive: Solution finder
InnoCentive is a platform that connects businesses and organizations seeking solutions with necessary technology. Exxon Mobil could not solve an environment problem from its Alaska oil spill 17 years. InnoCentive solved in just three months and the solution provider received a US$20,000 reward.
4. Kickstarter: Collective money driver
Kickstarter is a crowdfunding platform that connects start-ups with innovative ideas and money of ordinary people. Users can post projects along with their goals, a timeframe and reward offer and individuals pledge money. Since the platform started in 2009, the financing goal of 44% of 110,000 projects has been met for a total US$650 million. Culture, arts and publication sectors have accounted for 80% of all the projects
5. Y Combinator: Incubator
Y Combinator is a platform that provides various education opportunities to incubate start-ups. Airbnb through Y Comninator got various education support including technology and marketing from, and grew into a firm that shares 33,000 cities' lodging information in 192 countries in just five years since foundation.
6. Start-Up Chile: Engaging the world
Start-Up Chile is a government short-term program that connects Chilean people and foreign entrepreneurs in network. It serves to spread a culture of entrepreneurship and innovation throughout the country. Chilean participation in the program has surged to 37% from 10% at the beginning.
Start-up platforms should be fostered on a national level to build innovative start-ups in all sectors -- manufacturing to agriculture and service. Start-up entrepreneurs could use various start-up platforms to reduce costs and risk and to focus on core capability. The government should participate as resource provider for start-up platforms, rather than directly supporting the entrepreneurs, to help autonomous growth of start-ups. Companies on their part could seek ways to collaborate and take advantage of the innovativeness of start-up platforms. At the same time, the platforms could also be used to encourage employees to nurture creativity and to manage a corporate venture.
The author is research fellow at Samsung Economic Research Institute. Visit www.seriworld.orfg for more SERI reports.