What is a Startup?

1 Dec

As the entrepreneurship frenzy in the US grows it seems that more and more people are walking around talking about their “startup.” Sometimes they refer to a full time venture-backed endeavor.  And sometimes it’s just a project “on the side.”

But what actually turns a group of people into a “startup”? Do we call a group of people a startup:

  • when they have an idea and start to pursue it?
  • when they make a commitment to one to the other to find an idea and pursue it jointly?
  • when they form a company?
  • when they start building something or invest capital?

We might also ask – when does a startup outgrow the definition of “startup” and become an actual “company”? Does the startup threshold have to do with:

  • company size (# of employees)
  • # of customers
  • company maturity
  • ratio of R&D to the rest of company
  • brand awareness
  • the type of investors who are investing (for example, private equity versus VCs)
  •  profitability

Think of many of the hot tech companies today – Jive, Yammer, Twittter, Yume, Palantir, etc. Many have large customer bases and big staffs. Few are profitable.

What do you think? Should they be considered startups?

No comments yet

Leave a Reply