Startup

A startup is an early-stage organization made to fulfill a need a founder believes exists—and disrupt the industry for the better. Startups are typically funded by the founders themselves, or family and friends, as they seek out crowdfunding and venture capitalists.

There’s never been a better, or more competitive, time to start a startup, thanks to the digital age and the amount of resources available to build a brand. 

What is a unicorn startup? 

A unicorn startup is an organization that hasn’t yet been listed on the stock market but is valued at more than $1 billion, serving as the golden standard of startups. Notable examples include: Uber, Airbnb, Stripe, Slack, Instacart, and Discord. 

What are the characteristics of a startup? 

It may be hard to believe, but organizations like Airbnb, Instagram, and Microsoft were once startups—and beat the odds of 70% of startups and small businesses failing. While the idea of startups may evoke images of a college dropout, Silicon Valley, or humble roots, what they all share in common is that they all began with an idea. 

Here’s what you can expect as a startup: 

  • High risk of failure 
  • Employees may feel they have the ability to make a larger impact and are more likely to wear different hats 
  • Few employees 
  • Ambitions for high speed and growth 
  • Internal priorities can change overnight 
  • Priority of raising capital 
  • Lack of revenue while requiring high costs for the first few years 

What are the top reasons startups fail? 

According a CB Insights data analysis, these are the top 12 reasons startups fail: 

  • Failed to raise new capital 
  • Lack of market need 
  • Lost to the competition 
  • Problematic business model 
  • Legal issues 
  • Pricing and cost problems 
  • Ill-timed product 
  • Poor product 
  • Misalignment among team and investors 
  • Lack of passion 
  • Pivot turned for the worse 
  • Hiring difficulties 

How does user feedback benefit my startup? 

A startup may be high risk, but also high reward. By obtaining user feedback early and often, you’ll ensure your product is user-friendly and minimize the risk of hefty rework costs. Nielsen Norman Group even found that a study with five participants will uncover 85% of the usability problems.

UserTesting’s startup customers have included Canva, Rothy’s, and Jotform, among others, and our contributors’ insight has helped them evolve into the organizations you know and use today. 

Here’s a glimpse of what user feedback can help you do: 

  • Ensure product-market fit 
  • Evaluate concepts with prototype testing 
  • Build a customer journey map 
  • Discover creative use cases 
  • Uncover demographic trends 
  • Learn competitive insights 
  • Validate messaging and positioning 

Questions to ask as a startup: 

  • Does your product really address a core problem that an audience has? 
  • Do you know who your audience is?
  • Does the product or service idea work?
  • What is the problem you’re solving and has anyone else tried to solve it? 
  • Does anyone want to buy it, and who?
  • Is your audience going to love using it?