What The Heck Even Is A Startup?

A little clarification on this overused buzz word.

When my cofounder Tim & I were first laying out our concept for Whttl, we knew we wanted it to be a place where users could discover and engage with new and exciting, geographically based products like Instacart, Uber, and Munchery. What we didn’t know was which label to use to identify all of these companies. For months, we experimented and deliberated until finally, we just couldn’t shake the obvious designation of startup. The term has made its way into mainstream vernacular, meaning it is often overused and overhyped. It’ s no doubt a popular buzz word. So, what really is a startup then? Were Tim and I defining it in the right way?

In an a previous post of mine titled Aspiring Entrepreneurs: Stop Telling Yourself You Can’t, I briefly reviewed the difference between a SMB (small-medium sizes business) and a true startup. Let’s examine a few definitions and supporting points in greater detail.

Paul Graham

In one of his essays, the famous YCombinator cofounder Paul Graham states that the ethos of a startup comes down to one thing: growth. He puts it simply as follows:

“A startup is a company designed to grow fast.”

A company that is designed to scale quickly is by it’s very nature, a startup. Rosy’s Home Cleaning Service is different than say, Homejoy, because the latter intends to expand nationwide, and eventually internationally. Nothing against Rosy, but her ambitions are probably not the same.

Peter Thiel

Cofounder of PayPal and famous investor Peter Thiel writes extensively on what a startup is in his recently released book Zero To One. His main point is that a startup creates something that was not previously there. To put it in the author’s terms, they create a “1”, when only a “0” came prior. Before there was nothing, now there was something.

Before PayPal, people could not effortlessly pay one another electronically. Before Google came along, a search engine of the same caliber did not exist. They both broke the mold.

Let’s look at the fake example of Bob’s Livery Service of San Antonio, launched a few months ago. It may be new, but it isn’t novel. There were certainly dozens, if not hundreds, of livery services in the San Antonio area before Bob came along. However, another livery product, called Uber, is much different. Before this transportation juggernaut came along a few years ago, there was no way to summon a car with an app on your phone. There was no global layer of linked automobiles. There was no ubiquitous coverage of drivers and cars. And now, there is.

Bob’s concept was been-there-done-that. Uber’s concept was not. Hence, the former is not a startup, and the latter is.

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Maybe Size Matters

At some point, it seems logical to conclude that a company exits startup phase and becomes just a company or business. They could still be doing innovative things, but at a certain headcount, revenue level, or otherwise, the startup label just doesn’t fit anymore.

However, Uber has a labor force of hundreds of thousands of drivers all over the world. Their last valuation placed them at $40 billion. They have a globally recognizable brand. That doesn’t really sound like a startup, does it?

Well, the leading tech publication TechCrunch has them nominated for “Best Overall Startup of 2014″ for their 8th annual Crunchies Awards.

Hmmm…that changes things. Ok, so maybe once a company goes public, that’s when we should stop calling them a startup, right?

Look who else is nominated for this year’s best startup. GoPro, the action sports camera manufacturer, has been publicly traded on the Nasdaq Index since June 2014. They have a market cap of $6.5 billion, and are earning over $1 billion per year as of this writing. So when the heck do we stop calling a company a startup?

It seems like only time allows the term to fade off. I imagine that in another 3–5 years, we won’t call Uber a startup, IPO or not. I mean, you wouldn’t call Twitter, Facebook, or Google a startup.

If you love, err…startups like Lyft, Instacart, RelayRides, and Munchery, checkout Whttl.

If you found value in this, it would be tremendous if you scrolled down a little further and hit the “Recommend” button.

Greg Muender is the founder of Whttl, described as the “Kayak.com for startups.” Use it to find the sweet startups that have launched in your ZIP code and thus,#winatlife. Drop Greg a line via greg<at>whttl/dot/com or check him out on Twitter.

Originally published at blog.whttl.com on January 16, 2015.