Hello everyone and welcome back to course or course on commercial open source software

startups and how to spin off one such startup from university.

We are now about to start the third of three parts of this course where we will be looking

at how startups work and how to start them at university.

Previously in the first part of this course we looked at the software industry as a whole

and in the second part we looked at open source and specifically commercial open source.

So when I say startups I obviously talk about software startups and then commercial open

source software startups.

We will learn today that a startup is basically an organization in search of a viable business

model that's the definition and that this search has an expanding scope that goes through

the three main stages that we call following industry terminology that we call findings

or searching for and then hopefully finding problem solution fit, product market fit and

product channel fit and we will close with a short look at metrics.

So this part of the course heavily leans on established industry terminology.

There are no academic textbooks but there are practitioner textbooks as Minch mentioned

in the beginning of this course and here I use the Lean Startup by Eric Ries and the

Startup Owners Manual by Steve Blank and Bob Dorff.

So what is a startup?

As just mentioned the definition we use is that a startup is an organization in search

of a viable business model.

That may sound a little bit sloppy or floppy or something but it's actually quite serious.

Yes, it's an organization, it's a company, it's somehow usually incorporated but the

challenge, the main challenge that determines its action is that it does not have yet a

viable business model and needs to find one if it wants to survive and grow and that distinguishes

it from an existing company with steady revenue, with steady cash flows.

A startup does not have that incoming money, hence a startup is not a small version of

a large company and you should not treat a startup as such.

That is a big challenge.

You need to think very differently from being, from what you would do at a large company

for example if that's where you started out in business and the inverse is also true.

If you succeed, your search succeeds and you grow then eventually you are a large company

and what worked for you as a startup does not apply any longer.

So a startup is an organization with a very different state of mind, different practices

and they have to change over time.

Commonly when people think or hear startup they think, oh they are doing something new,

there is some innovation here and that's true but there are very different forms of innovation

with different associated risk profiles and also different potential competition.

You need to think about this before you jump head on into a startup opportunity.

When you have your idea, you are still a long way usually from an actual product and you

may be hiding, you may be in stealth as they say but at the same time other people are

so as well.

So if it's half a year or even a year until you might even be able to show something depending

on the complexity or deepness of where you are headed, then by then there might be competitors

doing exactly the same thing and these competitors may come from very different places.

We will look at how to cut all these time frames so that you get certainty faster but

it still applies that some innovations make more sense for a startup than others.

So looking at this what does not make sense for you to compete with as a startup is an

established organization company in their established markets.

For example it will be really hard to compete with existing high-end sneaker companies with

a new sneaker.