The Not-So-Rosy Reality of Startups [strategy+business]

According to this research, startups have struggled to show job and revenue growth. CEOs and startup owners should and have to balance goals of expansion versus the reality of cutbacks and downsizing.

The bad news, however, is in the details. On an individual level, startups seem destined for a bumpy ride — much of their contribution to the economy depends on cannibalizing other emerging firms. For example, 65 percent of the jobs created by startups in year five are offset by the number of positions eliminated at other new ventures, removing some of the sheen attached to the idea that fledgling companies propel the economy. The same is true, to a lesser extent, of financial growth: About 34 percent of the revenue generated by new firms in year five comes at the expense of their competitors. (Think of the way Facebook grew to the detriment of the previously burgeoning MySpace.)

Curated from The Not-So-Rosy Reality of Startups [strategy+business]


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