3 ms·

Ask HN: How does one define a startup?

1 points by embit 7y ago

What is a startup business vs small business? Also when does startup stop becoming a start up and just called a regular business? Is it time bound or revenue bound or size of business ?

streetcat1 7y ago
Startup is a small giant, or a child giant. They are defined by the market size. Small businesses usually have a local market (street/city). The startup market is global.
- jakoblorz 7y ago
  Hmm, I think this definition needs some kind of innovation factor. Most start-ups try to do something different than the competition. Those who succeed improved or innovated successfully. Small local business mostly innovate on how to do things (process improvements to cut cost), less on the product itself
nostrademons 7y ago
The best definition I've heard of a startup is a business that doesn't know: 1. Who its customers are. 2. What it's selling. 3. How to make money. Aside from being punchy in its absurdity, it also explains other good startup definitions, eg. the Lean Startup's "A startup is a temporary organization designed to search for a repeatable and scalable business model" or Paul Graham's "A startup is a business designed to grow really fast." What is it searching for? The answers to those 3 questions. Why is it temporary? Because it runs out of money if it can't find the answers to these questions. What happens when it finds them? It grows really fast. The other thing I like about this definition is that it emphasizes that startups are meant to fill a previously-undiscovered hole in the marketplace. Is a McDonalds franchise a startup? No - it knows exactly who its customers are, what it's selling, and how to make money. Is a niche e-commerce shop a startup? No - it knows exactly who its customers are, what it's selling, and how to make money. Was Facebook a startup? Yes - it was unclear what it was selling or how to make money when they started (they had a pretty good idea that their customers would be local advertisers, though). Was YCombinator? Yes - they knew who their customers were and how to make money, but hadn't quite nailed down what they were selling. Was VMWare? Yes - they knew what they were selling and how to make money, but weren't clear who their customers would be. Are these 3 companies startups now? No - they've found the answers to all 3 questions, and now have a scalable, repeatable business model. Businesses like Stripe and AirBnB are also not startups anymore, but arguably Uber still is, because they haven't yet figured out how to consistently make money. And it makes clear what you should be doing when founding a startup (trying to find the answers to these 3 questions), why people choose not to found startups (if you don't find these answers, you've wasted millions of dollars and years of your life), when a company graduates into a regular business (when they've found answers to these 3 questions), why startups grow so quickly (because they're entering effectively virgin business territory, they can capture the whole market without resistance once they find a business model that works), why they often seem absurd to critics (because they are), and why the rewards are so high (because the risks are too).
- streetcat1 7y ago
  So what happens if a startup competes with existing huge companies. For example, my startup create a new auto ml platform. I am competing with Google AutoML and azure auto ML (at least feature-wise). In this case: 1) I know who are the customers. I.e. Google/Azure customers. 2) I know what I am selling - auto ml. 3) I know how to make money. So in this case, I am not a startup? My point is that for some reason founders love uncertainity.
  - nostrademons 7y ago
    If they compete on the big company's territory, the most likely outcome is that they die. Big companies have more resources to deploy. If you're competing for the exact same customers, on the same featureset, with the same business model, there's usually little reason for the customer to choose the startup over the big company. Any new features can be reimplemented by the big company; any price reductions can be matched. If you've identified a particular customer segment that has needs that aren't being served and can't easily be served without rearchitecting the big company's product or business model, then you can survive. But the process of doing that means answering "#1 Who are your customers?" and "#2 What are you selling?", which makes for a startup. Once you've answered that you have a small business (if the niche is static and small) or a new fast-grower (if the niche is a result of a change of the environment that affects a large number of customers).
    - streetcat1 7y ago
      Have you worked in the R&D department of a big company? Did Nokia match Apple? Why not? Was it a resource problem? Did MS matched Android? Why not?. I mean the biggest OS company in the world has no mobile OS? Did IBM matched Dec? Have you seen a big company do that? If yes, can you give a concrete example, where a big company killed a startup? Do you know what motivates big company R&D decisions?
      - nostrademons 7y ago
        I have worked in the R&D department of a big company (Google Search). I'm currently a startup founder. There is no way in hell I would want to compete directly with Google on terrain they are dominant in. Several startups have tried and failed (Cuil, Blekko), as well as one big company (Bing) and one that's become a successful niche business (DDG, occupying the niche of privacy-conscious searchers that's significantly smaller than the general population but cares a lot about that one attribute that Google can't match).

1 points by embit 7y ago

What is a startup business vs small business? Also when does startup stop becoming a start up and just called a regular business? Is it time bound or revenue bound or size of business ?

streetcat1 7y ago

Startup is a small giant, or a child giant. They are defined by the market size. Small businesses usually have a local market (street/city). The startup market is global.

jakoblorz 7y ago
Hmm, I think this definition needs some kind of innovation factor. Most start-ups try to do something different than the competition. Those who succeed improved or innovated successfully. Small local business mostly innovate on how to do things (process improvements to cut cost), less on the product itself

nostrademons 7y ago

The best definition I've heard of a startup is a business that doesn't know: 1. Who its customers are. 2. What it's selling. 3. How to make money. Aside from being punchy in its absurdity, it also explains other good startup definitions, eg. the Lean Startup's "A startup is a temporary organization designed to search for a repeatable and scalable business model" or Paul Graham's "A startup is a business designed to grow really fast." What is it searching for? The answers to those 3 questions. Why is it temporary? Because it runs out of money if it can't find the answers to these questions. What happens when it finds them? It grows really fast. The other thing I like about this definition is that it emphasizes that startups are meant to fill a previously-undiscovered hole in the marketplace. Is a McDonalds franchise a startup? No - it knows exactly who its customers are, what it's selling, and how to make money. Is a niche e-commerce shop a startup? No - it knows exactly who its customers are, what it's selling, and how to make money. Was Facebook a startup? Yes - it was unclear what it was selling or how to make money when they started (they had a pretty good idea that their customers would be local advertisers, though). Was YCombinator? Yes - they knew who their customers were and how to make money, but hadn't quite nailed down what they were selling. Was VMWare? Yes - they knew what they were selling and how to make money, but weren't clear who their customers would be. Are these 3 companies startups now? No - they've found the answers to all 3 questions, and now have a scalable, repeatable business model. Businesses like Stripe and AirBnB are also not startups anymore, but arguably Uber still is, because they haven't yet figured out how to consistently make money. And it makes clear what you should be doing when founding a startup (trying to find the answers to these 3 questions), why people choose not to found startups (if you don't find these answers, you've wasted millions of dollars and years of your life), when a company graduates into a regular business (when they've found answers to these 3 questions), why startups grow so quickly (because they're entering effectively virgin business territory, they can capture the whole market without resistance once they find a business model that works), why they often seem absurd to critics (because they are), and why the rewards are so high (because the risks are too).

streetcat1 7y ago
So what happens if a startup competes with existing huge companies. For example, my startup create a new auto ml platform. I am competing with Google AutoML and azure auto ML (at least feature-wise). In this case: 1) I know who are the customers. I.e. Google/Azure customers. 2) I know what I am selling - auto ml. 3) I know how to make money. So in this case, I am not a startup? My point is that for some reason founders love uncertainity.
- nostrademons 7y ago
  If they compete on the big company's territory, the most likely outcome is that they die. Big companies have more resources to deploy. If you're competing for the exact same customers, on the same featureset, with the same business model, there's usually little reason for the customer to choose the startup over the big company. Any new features can be reimplemented by the big company; any price reductions can be matched. If you've identified a particular customer segment that has needs that aren't being served and can't easily be served without rearchitecting the big company's product or business model, then you can survive. But the process of doing that means answering "#1 Who are your customers?" and "#2 What are you selling?", which makes for a startup. Once you've answered that you have a small business (if the niche is static and small) or a new fast-grower (if the niche is a result of a change of the environment that affects a large number of customers).
  - streetcat1 7y ago
    Have you worked in the R&D department of a big company? Did Nokia match Apple? Why not? Was it a resource problem? Did MS matched Android? Why not?. I mean the biggest OS company in the world has no mobile OS? Did IBM matched Dec? Have you seen a big company do that? If yes, can you give a concrete example, where a big company killed a startup? Do you know what motivates big company R&D decisions?
    - nostrademons 7y ago
      I have worked in the R&D department of a big company (Google Search). I'm currently a startup founder. There is no way in hell I would want to compete directly with Google on terrain they are dominant in. Several startups have tried and failed (Cuil, Blekko), as well as one big company (Bing) and one that's become a successful niche business (DDG, occupying the niche of privacy-conscious searchers that's significantly smaller than the general population but cares a lot about that one attribute that Google can't match).