Are you a startup?

or are you a business?

Picture Courtesy: Outlook India

Meet Moosa. Moosa opened a roadside tea stall only last week. His roadside tea stall has elements overlapping with any VC backed startup but his roadside tea stall is not a startup, it is a business.

Moosa, like any entrepreneur, had to raise funds from his family or borrow from the bank (raising funds), had to choose a location that would attract tea drinkers, price his tea, figure out how to differentiate himself from the 100 other tea stalls in the city (4P marketing), hire someone to help him run his stall (recruitment), put the word out there that a new tea stall is open (advertising), choose dishes that can be served alongside his tea (product bundling), select items such as sweets and chocolates to create additional revenue streams (last slide on pitch decks), keep track of his profits and losses(finance) and explore how he can create a wonderful tea drinking experience for his tea drinkers. Almost every element you find in a startup is present in the roadside tea stall business. But does that make the business a startup? No. Then what is it? Is it ambition?

True, Moosa has no intention to transform his tea stall business into a unicorn. But for the sake of the argument, let us assume that he is ambitious enough to have a chain of tea stalls set up across India. Will that make his business a startup? No, because then, so many restaurant chains or jewelry chains would also be startups. Then what is the distinctive feature of a startup that makes it a startup?

Picture Courtesy: Everhour

Growth. Accelerated growth.

What makes a startup distinct is the speed at which it aspires to grow into an established business. True that not all startups achieve an exponential growth trajectory but all startups are organized for that kind of crazy growth curve. Otherwise, their venture capital investors will not be able to make a return on their investment in time to make a positive return for their limited partners (pension funds, university endowment funds etc).

Hence, every business owner is an entrepreneur but every business founded is not a startup. Having said that, every business owner can turn his business into a startup if he wishes to provided that he is in a market which supports that kind of crazy growth. So, are you a startup or are you a business?