What Exactly Defines A Startup?
Until today, a lot of startup CEO cannot define what a startup is. I’ve asked startup mentors, investors, designers, programmers and many other people in the startup community about their thoughts on the definition of a startup. I’ve received hundreds of different answers ranging from a startup is an early stage business to startup is something that requires a lot of investment and can scale.
From what I’ve concluded a startup company is a temporary organization with a high level of uncertainty. This high level of uncertainty includes:
- Revenue Generating Business Model
- A Stable Profitable Product
- Potential Customers
More often than not a startup change their original idea. That is all apart of the early startup phrase. For example, the lean startup method suggest that you get as much feedback from your peers as possible and tweak your product according to the feedbacks. A lot of startups also realize that their initial product or idea that they had will not work out for them. 9gag and Fab are perfect examples of startups that changed their idea and tweaked their products along the line. In other words, startups go through a lot of changes as well.
A startup is always adapting and wants to score a big exit. A startup is not a small business. To many people compare startups to small businesses. A small business like a cafe or small restaurant usually grows slowly and doesn’t scale like a startup can. A startup takes in early investment money to accelerate faster growth. Both small businesses and startups have hard working founders and individuals, but startups run out of money and fail faster. Most startups are somewhat associated with tech because of the ability that a tech startup can scale and reach out to the world.
Steve Blank concluded that a startup is an organization formed to search for a repeatable and scalable business model. A startup will keep taking in funding rounds so that they can grow and have money to conduct more test until they find a correct formula that consumers actually like. Before the lean idea debuted, companies would just be randomly guessing their next move. The lean method allows startups to have more certainty and less risk, it literally changed the way the startup community worked.
Is Uber, Airbnb, Dropbox A Startup?
This can be viewed both ways, but most people would agree on that the listed companies are no longer startups. These companies are most likely going to have a strong exit. Unless something big happens, they most likely won’t be changing their product. These companies will however add more to their features or product line. When your business can afford to do that, it means you already pass the growth phrase and your highly certain that the business will succeed.