The recent story about the IPO of Uber as well as WeWork is not just some stories of overreach by these entrepreneurs. The IPO of Uber fell way short of the valuation that was predicted for it. Its valuation was predicted at a hundred billion dollars. Om the other hand WeWork which has recently been rebranded as We have cut down its valuation from forty-seven billion dollars to ten billion dollars. WeWork’s public offering was postponed and it was on the verge of bankruptcy, but it was saved by its biggest shareholder. The disappointment that these public offerings became has a lot to tell about the end of a long list of IPO’s of recent years which have seen crazy high valuations. If we take into consideration profitability, then with or without IPO Uber and WeWork are till now startups and we cannot call them businesses. You can also get a fair idea regarding this by searching ‘startup here enterprise Toronto‘ on the internet if you live in Toronto for example. For self-sustainable enterprises that produce value, five things are required.
A business model that has been proven
If someone wants to get a descriptive idea regarding how a satisfactory amount of profit is made by a company then the best way to do so is by looking at its business model. A business model gives a detailed account regarding the product that the company has to offer, how the particular product or service has been created as well as delivered, who are the target customers, the way to find them, the plan of selling the product and the cost of the product.
A sales process that has been proven
Every product, as well as service which has some amount of customers, needs a process for sales that does both the job of finding the target customers as well as converting a significant portion of them into the company’s customer and doing all this at a definable cost.
Customer Satisfaction that is proven
In a viable business, the value of a product that is seen by a customer and in what way that value is created as well as being delivered in a way that a good reputation is earned by the company is understood.
A competitive advantage over competition that is proven
It is a well-known fact that all good ideas are copied someday. Hence, every company which is out there in the market should not only show the advantage that they have over their potential competitors but also how the advantage that they have over their competitors can be maintained.
Operations which are reliable as well as appropriately scalable
No service or product can be delivered without reliable operations. Without scalable operations, there isn’t a scope to accommodate new customers. It means that the price of an extra unit should be lower or at least equal as compared to the last unit.
These are the points that are required by self-sustainable enterprises. These points help in knowing the difference between a startup and a business. Uber, as well as WeWork, had all the above-given features except one when they went public. They didn’t have a profitable business model. So they can be considered as Startups and not a business.