4 ms·

A startup is a small business that has recently started up (duh), especially in a technology sector, that is capable of scaling into something big.

mechanical_fish 18y ago
The point about scaling is key. If the business can't easily expand to handle more than a limited number of customers, and/or can't meaningfully be sold to someone else who can carry it on while the original owners lounge around on a beach in Argentina, it's not a startup. That helps us to see why my consulting company, the (independent) pizza place on the corner, and your dentist's LLC are not considered "startups" -- and, indeed, why the majority of small businesses are not startups. On the other hand, once the pizza place starts selling franchises without limit, it becomes much harder to distinguish it from a startup (although people probably wouldn't use the word, because it's a tech sector word).
- tptacek 18y ago
  37signals considers itself a small business, and has the scalability thing licked.
  - jackowayed 18y ago
    Well, the other thing about a startup is that it just ... started up. You can't be a startup forever. At some point you're just a business that started up awhile ago, and obviously at 12 employees, 37signals can't call itself anything but small.
  - mechanical_fish 18y ago
    Well, yes. Perhaps I should have explicitly mentioned Rule Zero: "You can call your company whatever you want. It's yours." :) I'm not sure it's possible to objectively identify a startup, except perhaps in retrospect. To borrow PG's fun metaphor for a moment: You can look at a tall redwood and conclude that it was once a seedling, but you can't look at a seedling and conclude that it is destined to be a tall redwood. And that's not just because some seedlings get eaten by beetles before they can grow tall. Sometimes seedlings end up living for many years as bonsai trees, where they are carefully pruned and tended in their tiny indoor pots.
    - tptacek 18y ago
      You're right, but I wish we could get past the value judgements. A startup is a company that just started. A small business is a company that is small. A large business is a company that is large. Why do we have to build a speculative growth curve into the term "startup"?
      - mechanical_fish 18y ago
        Why do we have to build a speculative growth curve into the term "startup"? Presumably because, if the average small business with no net profits went up to a VC and asked for $3m on a valuation of $100m, it would be laughed out of the room. I'm inclined to agree with you, but AFAIK the word "startup" was invented by small companies which desperately wanted to convince investors that they were absolutely determined to become large companies. So I'm not surprised that it still carries that connotation... the real surprise is that the connotation is wearing off. We're getting to the point where your proposed definitions sound more and more reasonable. Because it no longer takes five years of advance planning, an enormous staff, office buildings, multiple factories, and all the other big-company trappings to scale up a small company, if that company is on the web.
    - kwamenum86 18y ago
      Perhaps the term "startup" is, at least in part, partly a marketing term these days just like Web 2.0.
  - staunch 18y ago
    "licked"? How does 37 Signals(!) have any chance at scaling beyond the relatively tiny business they have now?
    - tptacek 18y ago
      That's a strange question; 37signals is a 7-8 figure business with perhaps tens of thousands of customers all driving monthly recurring revenue; they're profitable, they have an infrastructure to build new products faster than their competitors, and they have one of our industry's great brands. And they remain a "small business" (they're, what, 15 people now?).
      - staunch 18y ago
        In the context of this thread I interpreted your comment to mean that you think 37 signals is on track to become a much much larger company. From 5-15 million/year to 50-150 million/year and beyond. I think that is highly unlikely to happen. They're a trendy software boutique with a loyal but relatively tiny customer base.
        tptacek 18y ago
        Many large companies don't have 15 million customers, especially in a single year. In fact, most public software companies don't. The difference between, say, Salesforce.com and 37signals is that nothing at Salesforce gets done without: * a 10 person dev team * a 5 person QA team * a development manager * a QA manager * a director of engineering * a VP/engineering * a technical product manager * a product manager * a VP/product management * 3 dedicated sales engineers * an account manager * a regional district manager * a VP/sales * an SVP/sales * a marketing/communications person * a marketing manager * a PR person * a VP/marketing * an accounts receivable person * a CFO * and I could keep going...
        deleted 18y ago
        [deleted]

mechanical_fish 18y ago

The point about scaling is key. If the business can't easily expand to handle more than a limited number of customers, and/or can't meaningfully be sold to someone else who can carry it on while the original owners lounge around on a beach in Argentina, it's not a startup. That helps us to see why my consulting company, the (independent) pizza place on the corner, and your dentist's LLC are not considered "startups" -- and, indeed, why the majority of small businesses are not startups. On the other hand, once the pizza place starts selling franchises without limit, it becomes much harder to distinguish it from a startup (although people probably wouldn't use the word, because it's a tech sector word).

tptacek 18y ago
37signals considers itself a small business, and has the scalability thing licked.
- jackowayed 18y ago
  Well, the other thing about a startup is that it just ... started up. You can't be a startup forever. At some point you're just a business that started up awhile ago, and obviously at 12 employees, 37signals can't call itself anything but small.
- mechanical_fish 18y ago
  Well, yes. Perhaps I should have explicitly mentioned Rule Zero: "You can call your company whatever you want. It's yours." :) I'm not sure it's possible to objectively identify a startup, except perhaps in retrospect. To borrow PG's fun metaphor for a moment: You can look at a tall redwood and conclude that it was once a seedling, but you can't look at a seedling and conclude that it is destined to be a tall redwood. And that's not just because some seedlings get eaten by beetles before they can grow tall. Sometimes seedlings end up living for many years as bonsai trees, where they are carefully pruned and tended in their tiny indoor pots.
  - tptacek 18y ago
    You're right, but I wish we could get past the value judgements. A startup is a company that just started. A small business is a company that is small. A large business is a company that is large. Why do we have to build a speculative growth curve into the term "startup"?
    - mechanical_fish 18y ago
      Why do we have to build a speculative growth curve into the term "startup"? Presumably because, if the average small business with no net profits went up to a VC and asked for $3m on a valuation of $100m, it would be laughed out of the room. I'm inclined to agree with you, but AFAIK the word "startup" was invented by small companies which desperately wanted to convince investors that they were absolutely determined to become large companies. So I'm not surprised that it still carries that connotation... the real surprise is that the connotation is wearing off. We're getting to the point where your proposed definitions sound more and more reasonable. Because it no longer takes five years of advance planning, an enormous staff, office buildings, multiple factories, and all the other big-company trappings to scale up a small company, if that company is on the web.
  - kwamenum86 18y ago
    Perhaps the term "startup" is, at least in part, partly a marketing term these days just like Web 2.0.
- staunch 18y ago
  "licked"? How does 37 Signals(!) have any chance at scaling beyond the relatively tiny business they have now?
  - tptacek 18y ago
    That's a strange question; 37signals is a 7-8 figure business with perhaps tens of thousands of customers all driving monthly recurring revenue; they're profitable, they have an infrastructure to build new products faster than their competitors, and they have one of our industry's great brands. And they remain a "small business" (they're, what, 15 people now?).
    - staunch 18y ago
      In the context of this thread I interpreted your comment to mean that you think 37 signals is on track to become a much much larger company. From 5-15 million/year to 50-150 million/year and beyond. I think that is highly unlikely to happen. They're a trendy software boutique with a loyal but relatively tiny customer base.
      - tptacek 18y ago
        Many large companies don't have 15 million customers, especially in a single year. In fact, most public software companies don't. The difference between, say, Salesforce.com and 37signals is that nothing at Salesforce gets done without: * a 10 person dev team * a 5 person QA team * a development manager * a QA manager * a director of engineering * a VP/engineering * a technical product manager * a product manager * a VP/product management * 3 dedicated sales engineers * an account manager * a regional district manager * a VP/sales * an SVP/sales * a marketing/communications person * a marketing manager * a PR person * a VP/marketing * an accounts receivable person * a CFO * and I could keep going...
        deleted 18y ago
        [deleted]