I Would Define a Startup As …
January 19, 2008 · Print This Article
Well actually that brings up a good question. Last week, Allen over at Centernetworks had a post “How Do You Define a Startup?” . He laid out a few criteria, or questions rather, to get us thinking about what qualifies as a startup:
- Is it based on funding? If a company has funding of any size, can they still be considered a startup? Angel round = startup, Series A = not a startup?
- Is it based on level of “live”? If they are in pre-alpha, alpha or beta, are they automatically a startup?
- Is it based on employee count? If the company has more than x employees - Erick on TC called a 14 person company yesterday “tiny”
- Is it based on time? If the company is in business a year or more, no longer a startup?
- Is it based on revenue? If the company generates over x amount in the first year, no longer a startup?
I had to chuckle a bit at this post. The other day I started a DC Area Startup Wiki where I wanted the DC community to be able to go in and add local startups. One reason was to bring together the community with the hopes of further building said community and also to let people know some of the great things that are taking place in the local area.
What was funny was that the night I created the wiki, there was a ongoing conversation between a couple of us, Nick O’Neill, Peter Corbett, and myself, as to what should be considered a startup to put on the list. We came to the same conclusion Allen came to, it is hard to define a startup. So I decided to let the list speak for itself. Let it grow organically and let it sort itself out. My intent is to showcase local companies really, “startup” or not.
There was a pretty funny response post to Allen’s post over at The Drama 2.0 Show.
So what about it ? Leave a comment and simply continue the sentence I started as the title, I Would Define a Startup As … and lets see what we can come up with.
I thought I triggered that Twitter conversation about what defines a start-up?
It is not only figuring out what defines a “start-up”, but I think it is important to be clear about the industry — in this Web2.0 world, it is often forgotten that there are start-ups outside the web/technology space.
There are many large entities with funding that I believe have put them outside the “start-up” classification, such as Digg, Twitter, Facebook, etc. So, a start-up can be too big to be a start-up, but can a start-up be too small to be a start-up? You by a domain, set-up a wordpress site and bame, you are a start-up? Is SocialTimes a start-up? Is your Wiki a start-up?
I saw an interesting comment a while back that I think defined a start-up in a similar way that I define a start-up. “While any new company could be considered a start-up, the description is usually applied to aggressive young companies that are actively courting private financing from venture capitalists”.
It makes for a compelling difference between a “small business” and a “start-up” — which can typically be one in the same. I think the term “start-up” has become over-used and incorrectly used, much like the term “entrepreneur”. Or my favorite one being used by all lately is “serial entrepreneur”.
This question reminds me of arguments we used to have in the GW MBA program (what is entreprenership? Is a small business owner an entrepreneur or a small business owner, etc.).
I think that a start-up is:
- a company in the early stages of development. This is defined as a pre-launch or post-launch and still in ramp-up phase, obtaining users/customers.
- likely high tech/web but not necessarily so.
- The company is not a slow-growth company, but one that has potential for exponential growth and scale.
- Investment activity like pre-funding, seed/angel, Series A shouldn’t affect whether something is a start-up or not. However, selling the company (exit of founders/initial investors) likely moves it into a “developed” company.
Google was a start-up once. When did it cease being one?
Great discussion. @Martin i think your definition of ’seeking financing’ makes a lot of sense. However, many startups are self financed and don’t require capital infusions.
That’s the case with iStrategyLabs and therefore wouldn’t jive with your definition. I’m trying to rap my mind around whether or not I consider my business a startup - not sure that it matters in the end. Do you consider nclud to be one? I think socialtimes is, as i know Nick is looking to create a media company and there’s a lot he needs to do to achieve that (funding is probably part of it, but i don’t know).
peter
http://www.twitter.com/corbett3000
http://fbook.us/corbett3000
I do stand corrected, I knew I was missing somebody, but Martin was in on our What is a starup discussion that night. Sorry, i am getting old, memory failing
Anything starting-up is technically a start-up. So a kid that decided to shovel snow this winter is a start-up. No one says you need a business plan, any projections for growth or strategy for sustainability or even a concept of begin profitable.
@Andrew, I’d say you are right on with your definition of a start-up. When did Google stop being a start-up? To Peter’s point, does it really matter?
Being a “start-up” is like the new cool thing. It is a status label — almost like being an “entrepreneur”.
@Peter, I’d say nclud is a “small business” — not really a “start-up”. We are definitely in start-up mode and all the definitions above seem to apply to us. We’ve been in business for just over one year now, are profitable, have sustainability and a strong and growing client base — have we out-grown start-up status?
To me, you grow out of start-up mode once you’ve reached some level of sustainability. I don’t really understand this desire to want to be classified as a “start-up” … isn’t the goal to out-grow it as soon as possible? Is this just the whole under-dog thing?
I’d say that Google stop being a start-up the day their primary search service gave their company sustainability.
@martin agree on most of the above. couple points though:
1) I’d say Google stopped being a startup when they went public. That’s clearly a driver of ‘company sustainability’. For highly visible ’startups’ the going going public moment is probably the final stop on their ’startup’ journey. If facebook does so, i think they should stop being called a startup, and start being called a public media company. So for me, that road ends with either a) going public b) getting acquired or c) going bust.
2) I’d say iStrategyLabs is also a small business, rather than a startup. Our models are much different than the ‘build it > iterate > release it > cash out’ model. I’ve never really been interested in that kind of business…as alluring as it may be (past tense could start being used soon i think…bust #2 happening as we speak).
3) “Start-up” is certainly the new cool identifier for folks…though “entrepreneur” is timeless and i don’t consider it to be a part of the hype machine. I think people either have that in them (meaning they are willing to assume great risk for great reward) or they don’t. Most entrepreneurs these days are going the startup route, as, yes, it’s kinda sexy be associated with one. Others just make big investments and make their money at investment time or soon after. Very capital intensive and must less hyped except among the financial elite who are doing those kind of deals every day.
@Peter do you consider Facebook to be a start-up, even after a 10% buy-in from mega-giant Microsoft for $240 million? I am just ranting here now … I think you said it best, “does it really matter”?
I am seeing an influx in people over-using the term “entrepreneur” though. I agree with you with respect to how you perceive an entrepreneur, “they are willing to assume great risk for great reward”. But much like the over-abundance of “start-ups” coming about with nothing more than a WordPress install and a name better suited for a vanity plate than a domain name — everyone seems to being finding an easy, low-risk, no-barrier to entry mechanism to label themselves “entrepreneur”. Again, to my earlier example … the kid deciding to shovel snow this winter is technically an “entrepreneur” — but it is definitely the cool term; perhaps because it is so closely synonymous with start-up.
Well, for someone who personally uses a wordpress template for his business’s site and is doing serious work for serious brands for serious campaigns I certainly don’t agree that a communications platform defines a startup let alone whether someone is an entrepreneur.
Re: Facebook…yeah I think it is still a startup as it really hasn’t defined a sustainable model yet. Facebook Ads is a failure so far and that valuation/investment is questionable.
Re: being an entrepreneur - it’s as simple as it’s dictionary definition “A person who organizes, operates, and assumes the risk for a business venture.” Kids who shovel snow instead of playing video games are definitely entrepreneurs. Anyone who is putting themselves on line to do something outside of established corporate structures are entrepreneurs.
Actually, even those who have the mind set to do so are…and are just working on their idea, growing their connections and waiting for the right market opportunity are as well.
@Peter, I will agree with that.
Also, I wasn’t calling you out via my WordPress example. Just referring to many “start-up” web applications that are just re-works of WordPress with a few plug-ins or a more customized out-of-the-box Pligg site.