This article is an excerpt from the Shortform book guide to "The Unfair Advantage" by Ash Ali and Hasan Kubba. Shortform has the world's best summaries and analyses of books you should be reading.
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What’s a hyper-growth startup? What makes them grow so fast? How are they funded?
In their book, The Unfair Advantage, Ash Ali and Hasan Kubba explain what hyper-growth startups are. They discuss how these businesses get started, how they’re funded, and what type of product or service they typically involve. They also provide some insight into the chances of success and what it’s like to be part of one of these businesses.
Keep reading to learn the basics of hyper-growth startups.
Hyper-Growth Startups
Hyper-growth startups almost always distribute a technology-based product or service. The focus is outpacing competitors to quickly capture as big a portion of the market as possible. As Ali and Kubba explain, costs are often very steep initially and then taper off when (and if) the business gains traction. Why? Once digital products are created, they can usually be mass produced with moderate expense.
(Shortform note: According to the World Economic Forum, startups qualify as “hyper-growth” when they maintain an average annual growth rate of at least 40% for more than one year. As Ali and Kubba mention, most hyper-growth companies launch digital products or services. Other business leaders point out that these companies also harness technology as part of their strategy to expedite rapid growth, lower costs, and keep teams connected. For example, many hyper-growth startups rely on artificial intelligence solutions to enhance customer service and streamline operations.)
Hyper-growth startups require generous funding from outside investors given their incredibly high upfront costs as well as the priority placed on accelerated growth, according to Ali and Kubba. Hyper-growth startups often remain unprofitable for a long stretch of time, sometimes losing vast sums in the push to strike it big. However, those that do succeed reap massive profits, which make the risk worthwhile for investors.
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Here's what you'll find in our full The Unfair Advantage summary :
- The guidebook you need if you're planning to start a business
- How to find and use your unfair advantages (everybody has some)
- The steps you must take to achieve startup success
