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Business Revolution: Rise of Startups

Public companies dominated the market in the past but managers only focused on short-term profits, not long-term performance. This led to conflicts between managers and owners. Now, startups are rising as a new organizational form. Startups can easily solve problems using new technologies and go global quickly with only a few employees who are highly motivated by shared ownership. Venture capitalists invest in startups, helping them grow, and eventually startups may get acquired by large public companies or go public themselves in a lucrative win-win situation. This business revolution requires reinventing traditional company structures.

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10 views1 page

Business Revolution: Rise of Startups

Public companies dominated the market in the past but managers only focused on short-term profits, not long-term performance. This led to conflicts between managers and owners. Now, startups are rising as a new organizational form. Startups can easily solve problems using new technologies and go global quickly with only a few employees who are highly motivated by shared ownership. Venture capitalists invest in startups, helping them grow, and eventually startups may get acquired by large public companies or go public themselves in a lucrative win-win situation. This business revolution requires reinventing traditional company structures.

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A
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd

Business revolution

We are on the verge of a business revolution! Nowadays, you can see so many successful
companies such as Uber, Airbnb, Amazon, etc. But have you ever thought what is standing
behind that success?
First of all, public companies used to dominate the market, but it all changed in the 1980s
when they decided to encourage the managers. Well, it turned out that managers only care about
their profit and not about their companies at all. They were more concerned about the price of
the share rather than the company’s overall performance. Since then, the connection between
‘people who nominally own companies and the companies themselves’ was very unstable due to
conflicting interests.
Unfortunately, it was not the only problem with the managers. They would also focus on
quarterly results instead of securing both short-term and long-term achievements. After all, the
internal regulations and standards for the managers and the employees severely increased.
Consequently, the failure of public companies gave a chance to other corporate organizations to
grow and evolve. Nonetheless, we still have to acknowledge that the best public companies are
like well-oiled machines, and they continue to dominate the market.
Now we reached the turning point of our business revolution. A new organizational form
is on the rise and it’s called a startup. All you need is an idea with big potential! When you
already have that idea, and you have any kind of problems, it can be easily solved with the new
technologies. For example, you can crowdsource on Kickstarter; hire a programmer on Upwork;
find anything you want on Amazon or Alibaba. At the same time, new technologies allow the
company to go global.
Why they are so special? Usually, new companies have a few employees. All of them
share the same interests and are willing to work hard to achieve the company’s goals. With that,
every employee has a stake in the ownership of the company which works as another incentive.
Even if the company will go big, the founders can keep control through “A” class shares.
Another distinguishing feature is that venture capitalists invest in startups which separates
them from the rest of the economy. In return venture, capitalists get more privileges.
Going back to the best public companies, they end up buying startups. At some point,
startups will list themselves on a market. And it’s a win-win situation for everybody no matter
what. For example, WhatsApp was sold for $19 billion to Facebook.
In conclusion, this revolution forces us to look back at the structural organization of the
company and we can see that it needs reinvention.

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