Google What is a Startup Company? Here’s a Final Answer

What is a Startup Company? Here’s a Final Answer

So, you’ve got a killer… business idea.

What’s next?

Well, I am not a mind reader, but chances are you’ll probably be thinking:

“It’s time to do the startup thing.”

I know – classic!

After all, ‘launching a startup’ has never been sexier’…

But before you dive in, let’s consider for a moment what you’re about to build.

Why do I say that?

Simples! While people are throwing around the term startup like crazy, it seems to me that…

… there is a big confusion over:

a) What is a startup company

b) How long is a company considered a startup

c)  When a startup is no longer a startup

Whaaaaat?

I know; you’ll probably wonder: Who gives a f*ck about terms? Does it even matter?

Well, if you consider that thousands of new entrepreneurs are screw*d every day because they buy into startup fantasies (more on that later), I think it kind of matters.…

Without any further delay let’s dive straight into this topic, explore things, and give a final answer to this simple question:

What is a Startup Company?

Ok let’s get straight in…

What is a Startup Company? The Three Main School of Thoughts

Startup Definition #1: New companies that are committed to doing things differently

What does that suppose to mean?

According to Andrew Blackman, an advocate of this line of thinking:

Doing things differently doesn’t necessarily mean inventing a whole new industry, but it does mean taking a markedly different approach to the companies that are already established.

Different in what respects?

Well, even though that could be anything related to a company’s business model, I would imagine Blackman is probably talking about either…

… the product’s DNA, the company’s marketing strategy, or the biz’s revenue model (or even their company’s culture).

Startup Definition #2: New companies no more than 3 years old

Ok, this one couldn’t be more straightforward.

If a startup has been around for more than 3 years, it’s time to hang up the startup uniform and graduate to the big boys’ league!

I know, 3 years might seem fairly arbitrary but in the advocates’ opinion, that’s a necessary evil because…

… otherwise, you risk having any entrepreneur under the sun calling their business a startup (because, for a variety of reasons, that term sells), and render the term useless.

Startup Definition #3: A startup is a company designed to grow fast

Yep, time for the ‘grow fast’ narrative…

But who says that?

No other than Paul Graham, Y Combinator’ founder!

In Graham words:

“A startup is a company designed to grow fast. Being newly founded does not in itself make a company a startup… Most companies started every year are service businessesrestaurants, barbershops, plumbers, and so on. These are not startups. A barbershop isnt designed to grow fast. Whereas a search engine, for example, is.”

So, what are the necessary ingredients for having a proper startup?

In Graham’s formula, you HAVE to:

a) Target a big market with a mass appeal product

b) Do things with a finger on the pulse of the future

c) Come up with a disruptive product that has a real edge

d) Have a highly scalable business model

e) Raise a sizeable amount of external capital

And just in case you wonder, in the experts’ opinion, you stop being a startup when you unequivocally succeed in finding a repeatable and scalable business model that serves perfectly the intended target market.

To sum things up, if you have a company with the aspiration (and the ability) to have a turbo-charged growth that meets the above criteria, congratulations, you probably have a startup!

Or maybe not?

Myth Busted: That’s NOT a Startup!

Yes my friends, a startup:

– Is NOT about growth

– Is NOT about innovation

– Is NOT about the company’s culture

– Is NOT about the company’s size (and age)

– Is NOT about coming up with the next big thing

– Is NOT a mini-version of a larger (tech) company

– And, yes is NOT a type of business

But rather, it IS a stage of business…

You did read that correctly: STAGE!

Yes, it’s a stage in the process* of turning a business idea into an established (and profitable) real business.

* The (business) process: Pre-start, Startup, Early-stage business, Growing business, and Established business

Want a proper startup definition?

Dave McClure couldn’t describe it better:

A ‘startup’ is a company that is confused about –What its product is. Who its customers are. How to make money. As soon as it figures out all 3 things, it ceases being a startup and becomes a real business. Except most times, that doesn’t happen.”

And that’s my friends is what’s a startup!

I know, such a definition will understandably be anathema for some entrepreneurs and “startup experts,” who are committed to selling the notion that new entrepreneurs have just two options:

– Either build a fast and furious type of scalable startup, or

– Sell themselves short by setting up just a small and boring little business

But in reality, that’s what I call, classic business BS as usual, from snake oil (startup) salesman make a living from selling fantasies and motivational “yes, you can” type of BS (aka consulting).

And with that being said, let’s put this post to bed by wrapping things with today’s key takeaways…

Today’s Key Takeaways

– Startup does NOT equal growth

– Doing things differently doesn’t make you a startup

– A startup is a stage and NOT a type of business

***

Ok guys, that’s all from me for today.

If you enjoyed today’s post, check out my kindle book, The Vertical Startup: A Practical Guide on How Today’s Bootstrapped Entrepreneurs Turn their Late Market Entry Into An Advantage By Going Vertical, that is currently available at Amazon.

I hope to see you soon.

Best,

Andreas

“In the Middle Ages, children were considered to be smaller versions of adults. We now know that the human life cycle is more complex; children aren’t just small adults, and adolescents are not simply large children. Instead, each is a unique stage of development with distinctive behavior, modes of thinking, physiology and more. The same is true for startups and companies.”

– Ningherself

Categories: startup definition

Download our free foundation guides

Comments are closed.

error: