Two types of Startup

According to an industry research, Information Technology startup was account for approximately 38 percent of new jobs created in the U.S. in the past decade. Many startups are growing in size, creating significant employment growth and contributing to the local prosperity. For example, when Apple went initial Public offering (IPO) over 300 people immediately became millionaires. When Microsoft went Initial Public offering, four people became billionaires, and 12,000 Microsoft employees became millionaires. When Google went public offering, the number of people became billionaire were not disclosed, but over 900 employees became millionaires . Following this U.S. model, two Chinese companies, Alibaba and Tencent were also handing out stock to their workers and when they went public, the number of billionaires were also not disclosed but thousands of their employees also became millionaires.

The rise of technology-based startups and their people have encouraged many young people to learn more about entrepreneurship as they dream of creating their own startups, driven by a dream that they can succeed as well. Many government leaders also realized that technology-based start-up can become an important driver of economic growth, not just in the U.S. but in their country too.

A startup can be categorized into two types: Technology-based startup and Small business-based startup. Technology-based startups can provide a significant economic advantage as it grows fast, hire more people and keeps expanding when small business-based startups do not grow beyond a few employees. Technology-based startups thrive to achieve high productivity, and profits when small business-based startups have lower productivity and profits. Technology-based startups often aim to a larger number of customers and sometimes all over the world when most small-business based start-ups are focusing on local needs (i.e. retail, restaurant etc.) The technology-based startup is focusing on changing, improving, and disrupting the entire market when small business-based startup, as often called “family business” is merely about making a living.

To improve the economy and solving the high unemployment problem, the government should focus on promoting and helping technology-based start-ups to succeed as they can generate high-paying jobs, more innovation, better productivity, as well as improving the competitiveness of a country. The foundation of every technology-based startup is technical knowledge resulting from a strong training program in science and technology. Without a large number of technically skilled workers such as software engineers, and programmers etc. nothing can be achieved. Therefore, to promote technology-based startup requires the government to push for a major change in the education system by focusing more on science and technology.

Another important factor for any startup is the ability to communicate in English, as it is the common language among technology workers. For example, one of the main reasons India’s success in Information Technology is due to the high number of workers who can speak English. Even China who has good education system but could not catch up with India because it has fewer people who can speak English well. Today, in this connected world, English proficiency is a key determiner of economic competitiveness as many businesses are conducted over the Internet and skilled workers can work for any company from anywhere. In the past few years, China realized its language disadvantage and took action to put English as the second language in all of its education system. Today teaching English has become a huge business in China as well as many non-English speaking countries.

As I traveled to several countries in the past years, I found that many countries were moving quickly to adopt the technology-based startup model to take advantage of the current 4.0 industrial revolution. Among these countries, there are several initiatives to improve its education system focusing on science and technology and the race to move fast to develop more technical workers is obvious as no one wants to miss a good opportunity and be left behind.


  • Blogs of Prof. John Vu, Carnegie Mellon University

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