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>It's perfectly fine to start a company that's only going to grow 10x or 20x best-case. VCs won't be interested in you, but that's fine, you don't necessarily n

>It's perfectly fine to start a company that's only going to grow 10x or 20x best-case. VCs won't be interested in you, but that's fine, you don't necessarily need investment. But is that a startup at that point or just a small business ?

ghaff 5y ago
Well,it's just a business if you self-referentially define startup as a business which must have the characteristics that would make VCs interested in investing in it. (In fairness, I'd probably roll my eyes if someone called their McDonald's franchise or arts & crafts retail store a "startup" but plenty of today's big businesses got to where they are without VC funding or really looking much like what people think of as a startup today.)
- deleted 5y ago
  [deleted]
- duped 5y ago
  To me (just some random person on the internet that works at startups) the defining characteristics of a startup are growth and employee equity as compensation. The second has to come from the first, since equity is worthless if there isn't some future promise of payout.
- hn_throwaway_99 5y ago
  We've been over this a lot before. I'm not saying pg's definition is the end-all and be-all, but for usefulness in discussion "high growth potential business" is the most reasonable definition: http://www.paulgraham.com/growth.html http://www.paulgraham.com/growth.html
  - ghaff 5y ago
    I don't really disagree. Much as the "But pg says..." school of argument is like fingernails on a blackboard for me, there is clearly a qualitative difference between a business that's just intended to support one or two people and maybe some other employee--and has no larger ambitions--and one that will possibly take off or, more likely, close down within five years (or whatever). Obviously there are still other businesses that aren't inherently self-limiting but that aren't really constructed for go big or go home either.
    - blacktriangle 5y ago
      The problem with "startup" is that there are two separate issues mixed up in the same word. PG defined it as hypergrowth which is certainly one class of startup, but there's another one as well. The other aspect of startups is that they are newish products doing something new in new markets. As such, issues like product-market fit are key. The problem is when you start to say things like you're not a startup, you're a traditional business is that most traditional businesses don't have the product market fit issue, and thus most traditional businesses are far far less risky. For example, I don't need to convince a bank that my coffee shop will achieve product-market fit, we know people love coffee and have lots of tools for evaluation the financials of a potential coffee shop, which is why I can get a bank loan to go start up my shop. Now there's the issue of starting a company that is trying something new and lacks product-market fit, thus is higher risk and we don't have good tools to evaluate those risks, but is also looking to grow conservatively thus isn't able to get the interest of those looking to give out high-risk funding, ie VCs.
      - ghaff 5y ago
        Not that I have tried to get a loan for a coffee shop but IMO there's very much a question of fit of your particular coffeeshop concept and your particular market (and location). The parameters are narrower than in the case of some totally novel software or hardware product but just because "people buy and drink coffee" is not remotely a guarantee that your particular coffeeshop will be sufficiently successful to stay in business.

ghaff 5y ago

Well,it's just a business if you self-referentially define startup as a business which must have the characteristics that would make VCs interested in investing in it. (In fairness, I'd probably roll my eyes if someone called their McDonald's franchise or arts & crafts retail store a "startup" but plenty of today's big businesses got to where they are without VC funding or really looking much like what people think of as a startup today.)

deleted 5y ago
[deleted]
duped 5y ago
To me (just some random person on the internet that works at startups) the defining characteristics of a startup are growth and employee equity as compensation. The second has to come from the first, since equity is worthless if there isn't some future promise of payout.
hn_throwaway_99 5y ago
We've been over this a lot before. I'm not saying pg's definition is the end-all and be-all, but for usefulness in discussion "high growth potential business" is the most reasonable definition: http://www.paulgraham.com/growth.html http://www.paulgraham.com/growth.html
- ghaff 5y ago
  I don't really disagree. Much as the "But pg says..." school of argument is like fingernails on a blackboard for me, there is clearly a qualitative difference between a business that's just intended to support one or two people and maybe some other employee--and has no larger ambitions--and one that will possibly take off or, more likely, close down within five years (or whatever). Obviously there are still other businesses that aren't inherently self-limiting but that aren't really constructed for go big or go home either.
  - blacktriangle 5y ago
    The problem with "startup" is that there are two separate issues mixed up in the same word. PG defined it as hypergrowth which is certainly one class of startup, but there's another one as well. The other aspect of startups is that they are newish products doing something new in new markets. As such, issues like product-market fit are key. The problem is when you start to say things like you're not a startup, you're a traditional business is that most traditional businesses don't have the product market fit issue, and thus most traditional businesses are far far less risky. For example, I don't need to convince a bank that my coffee shop will achieve product-market fit, we know people love coffee and have lots of tools for evaluation the financials of a potential coffee shop, which is why I can get a bank loan to go start up my shop. Now there's the issue of starting a company that is trying something new and lacks product-market fit, thus is higher risk and we don't have good tools to evaluate those risks, but is also looking to grow conservatively thus isn't able to get the interest of those looking to give out high-risk funding, ie VCs.
    - ghaff 5y ago
      Not that I have tried to get a loan for a coffee shop but IMO there's very much a question of fit of your particular coffeeshop concept and your particular market (and location). The parameters are narrower than in the case of some totally novel software or hardware product but just because "people buy and drink coffee" is not remotely a guarantee that your particular coffeeshop will be sufficiently successful to stay in business.