How Do You Define a Startup?
Shane Reiser explores the origins, methodology, and long-term vision of a data-driven initiative focused on uncovering patterns that improve startup success and support global entrepreneurship.
Every Startup Genome curator asks me this question: What is our definition of a startup?
In other words, which companies should be listed on Startup Genome and which should be excluded?
Steve Blank's perspective is "you're no longer a startup when you've finished discovering your business model and you're focused on execution."
The dilemma with Steve's common-sense definition is that it's not measurable. :(
So we asked our curators how they define a startup. Here's what we heard:
- A startup must have fewer than n employees.
- A startup must be less than n years old.
- A company should only be considered a "startup" if it has generated revenue or raised investment dollars.
- A startup is a company that cannot sustain itself yet - it's either bootstrapping or dependent on outside capital to survive.
- A startup is no longer a "startup" when it becomes profitable.
- A startup stops being a "startup" when it has an "exit" event - a merger, acquisition or IPO.
All of the above seem like reasonable answers. But where should we draw the line? (is it 50 employees or 100? 2 years old or 3?) And how do we gather the data on when a company becomes profitable? If a company launches and becomes profitable just weeks later, are they no longer a startup?
How do you define a startup?
Personally, I've always been interested in geographically-agnostic companies with the potential to scale quickly.
Geographically agnostic means that the company will likely grow outside of its hometown. If all of a company's customers reside within driving distance, it's not a startup. There must be a potential to expand to new geographic regions. By this definition, the local restaurant down the street that just opened a second location is not a startup.
Scale quickly means that the company can be considered "high growth." If user-adoption and/or revenue does not have the potential to grow quickly, it's not a startup. By this definition, a blog is not a startup.
Before we announce our official definition of a startup - and thus, what can and cannot be included on Startup Genome - we'd love to get your thoughts.
Please share your thoughts in the comments below or join the conversation on Quora.
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