When Is A Startup Not A Startup Anymore?

For better or worse, you can’t stay a kid forever.

A company that graduates from an accelerator or raises a small seed round is clearly a young startup and should be allowed to experiment, make mistakes and grow. They can be excused for not getting it quite right the first few times around. They are young and don’t really know what they want to be when they grow up.

But when should a company stop using the “startup card” as an excuse for demonstrating poor growth and just having a weak product? Is it tied to a specific funding round and/or amount? Years in operation, perhaps? I don’t know what the answer is or if there even is a straight answer.

I’ve worked for several startups in various stages of maturity and I’ve also worked for several large companies who have been in operation for years. I’ve seen patterns that tell me “ok, we are definitely not a startup anymore”.

The rise of middle management

As an employee of a startup you wear many hats. Depending on team size you could be CTO/engineer/QA/Product/HR all at once. As the company grows, products become more complicated and stakeholders increase. Roles are decoupled. An engineer can no longer think of a feature, build it, test it (or not) and ship it all within a few hours. It now has to go through a committee of business people, designers, project managers and what used to take an hour will take days and weeks. If a copy change on your site takes a week to update it’s safe to assume you’re no longer the agile startup you once were.

Design stagnation

A lot of companies underestimate the importance of product aesthetics and the need to keep up with design trends. Bad design will kill your app and if your site has had the same design/er for more than a couple of years it will stand out. This is not to say your designer can’t update her style but if your product looks old fashioned (as in it was made 1 year ago) it will put off customers and potential talent checking you out. You will pay heavily for skimping on a good designer.

Running through molasses

This is related to middle management also. One of the perks of being a young startup is that almost everyone is willing to put up with your mistakes. You only have a few users/customers so one little bug won’t destroy you (hopefully) — you get back on your feet and push out a hotfix and we’re good. Investors will also expect you to make some mistakes. Fast forward to a later-staged company with a million paying customers, a surly board of directors and vulture-like competitors waiting for you to slip. You have to move fast, very fast, but not too fast where you’re breaking the product.

In the dark

As an early employee at a startup you are more or less in the same boat as the founders (minus all the stress and equity) in that the team is small enough to keep you in the loop in terms of business development, risk areas and changes in direction. In a later-staged company a new engineer on board has very little information or influence over business or product decisions. They are often the last to find out about anything. Once your engineers feel disconnected from the business, it’s the beginning of the end.

This is merely an observation. I’m not saying one is better over the other but it would be nice to see more companies proudly embrace their new selves as grownups and stop hiding inside the scrappy startup nest.