When does a Startup stop being considered a Startup?
I often read stories about how Google and Facebook began as startups way back when (those few years ago) and wonder if we still consider them to be startups. Or if somewhere they stopped being a startup and became a real bonofide business.
As a new writer in the tech industry, I started to enquire about the definitions surrounding the word “startup.”
I've done a lot of reading over the last few days to try and suss out a better idea of how we think about startups. But where does the startup label end? There must be some point where we look at an entrepreneurial group and say, they're no-longer starting up -- they've made it as a company.
The most basic definition for a startup is a company that’s new to the market. These companies will still be exploring the market and conducting research. Most definitely, they are companies that have moved beyond the idea-stage and have secured financing. A startup will have some structure to their business and will also have begun operations and trading. In other words, a startup will look and act a lot like a regular business, but they’re operating history will be limited.
So what? Businesses have been starting up for centuries. Why the sudden need for the new word? There’s a restaurant that’s opened up near my apartment, but i don’t see anybody referring to it as a new startup.
Where the term first appears in our collective lexicon, is in the early 90s during the dot-com bubble. Because there were so many dot-com companies “starting-up,” it became natural to refer to them as “start-ups.” In the same way that we used to refer to “e-mail messages,” we eventually shortened them to “e-mail” — and eventually rid ourselves of the hyphen and now we have just “email.” The then bubble popped due to some dubious financing in the industry, the “dot-com” label lost its luster and we were left with “startups.” As such, startups these days are usually associated with the consumer tech industry.
Another interesting idea surrounding the startup is that they are typically small(er) scale, rely on a small team of investors, and typically aren’t sustainable over the long term. There’s the element of risk and innovation — as there is with most new business ventures. Where a startup differs however, is that they essentially bank their success on a product or service that hasn’t existed before. Beginning a new startup isn’t like opening another burger shop where there wasn’t a burger shop before. Because the Internet lets us be everywhere at all times, finding demand for a product or service requires finding an entirely new product or service. The assumption is that when this demand is created, it will be easily transferred with minimal startup costs. The infrastructure for growth already exists in our networks — the trick is finding a platform that people want to get on board with.
The question is when does a startup cease to be a startup?
Before Twitter, nobody knew that they needed to tweet. While the company is still in search of a business model, it has now raised $360 million in venture capital. Is Twitter still a startup?
As the industry seems to change month-to-month with new products, new technologies, and new services, there seems to be an endless supply of markets out there for those that are inclined to create them. Businesses seem always to be in the task of starting-up. Two years ago, nobody knew that they needed a tablet, or even an e-reader. Even successful businesses need to consider starting up in these markets or risk being left behind.
Could it be, as Audrey Waters suggests, a situation where “I know it when I see it sorts of things?” After all, when does something “rather large” become something “really big”?
Give us your thoughts. Is there a line?
