Calling your business a startup can be distracting rather than empowering.
This blog was written in 2015 and originally appeared on Medium
Brad Feld recently wrote how misleading the term “entrepreneur” since it has been applied to a broad range of businessmen and businesswomen — from the fish vendor to the tech startup founder but what about startups themselves?
The term “startup” (or its bastardized cousin “start-up”) has also been applied to a broad range of businesses at various stages. According to Eric Ries, a startup is “A startup is a human institution designed to deliver a new product or service under conditions of extreme uncertainty” while I prefer Steve Blank’s definition which can be summarized as “an entrepreneurial venture or a new business in the form of a company, a partnership or temporary organization designed to search for a repeatable and scalable business model”. However, we still consider Facebook to be a startup even though they found their business model years ago.
If a founder follows this trend and holds Facebook as an example by calling their company a startup then you are communicating to others that you are focusing more on being an actor in the startup scene than actually building a viable business. It is true that building a startup does involve building a business but others will also expect you to be doing so much more such as:
- Focus on scaling growth in new markets
- Leveraging technology (in order to scale)
- Keeping a close eye on startup metrics in addition to cash flow (oxygen)
- Raising venture capital
- Participating in “extra-curricular” activities such as startup contests or hackathons — which some VCs encourage while others discourage
- Have a well-defined exit strategy
None of these are bad things but they aren’t a priority unless you have chosen this path for yourself. However they will all be expectations from the time you say “I’m building a startup”. What if you just want to serve a small market and interact directly with your customers?
If so, it will be a lot simpler if you do the “boring” thing and treat your company like a business — maybe you can also follow Sam Altman’s advice to refer to it as a project. This way, you maintain the flexibility to engage in any of the above activities in order to benefit from the startup scene without feeling forced to meet others’ expectations to “build the next Facebook”.
UPDATE 1
Sam Altman explained how startups can improve chances of success here
UPDATE 2
Andreessen Horowitz went further to explain what startups should measure as they aim to make a great impact