The pursuit of a startup; small business and entrepreneurship. An attempt to clear the semantics for event organizers.

To begin with, let me admit that I am guilty of confusing entrepreneurship in any form with small business, startups and have had some confusing conversations in startup-specific events in the past.

A startup can be run by a business owner (not an entrepreneur) and a small business can be run by an entrepreneur if you apply Stevenson’s definition. So, why is it necessary to understand the difference between startups, small business & entrepreneurship in general, especially in the context of startup events?

A small business can morph into a startup and scale; like the case of 37signals. BTW, I love this recent post called Reconsider, by DHH. Lots of lessons for young entrepreneurs about building a profitable business.

And a startup can morph into a small business as you learn from experiments. Here is another interesting story about the jellyfish entrepreneur.

But if you are in a startup event, you better be precise about the takeaway for the audience and be on the topic. Otherwise it gets confusing.

In many an event, we find organizers muddle these things by bringing in small businesses that are profitable and nicely run (that in itself should be celebrated, in my view) and attempting to derive lessons for startups. In such events, on one hand, we have small business owners slamming the startup trends, like pivots, raising capital etc. and on the other hand, we’ve sessions where the entrepreneurs are talking about fast experimentations, raising capital & their journey. So what’s an aspiring entrepreneur’s takeaway? If he listens to the small business owner and applies small business principles to a startup, would he not be worse off?

Given the impact of such narratives, it requires strong moderation to bring the stories out in the right context. Without strong moderation the perspectives shared will be misunderstood. Also, it requires a highly curated audience — one that knows what to expect and interpret from what’s being shared at these events.

On any day, irrespective of what kind of a beast you are trying to tame, it’s enriching to have discussions about building capital intensive small businesses, like restaurants, gyms, factories. They are very much unlike the tech startups or a one-man vegetable shop. It’s fascinating to learn about their economics. It’s useful to learn how gaming companies deal with capital intensive experimentations. Nonetheless, it’s important to know that such lessons don’t directly apply to startups.

Inviting speakers from such backgrounds has a downside if they start taking positions (Ex: Startups are overhyped and that the vegetable vendor who is profitably running his life as one man show is better off). Of course, such examples drive home some valuable points. But they don’t relate to how startups are run. Besides, you did not turn up to learn how to build a small business or a self-employment career.

It requires strong curation AND moderation to run any event of value. So it is very important that event organizers can understand the differences.

There is nothing wrong about learning lessons from small businesses & services style businesses. In fact, there is so much to learn. But what we lack is specific forums where you discover & discuss them in isolation.

A startup is not a business in itself but a pursuit of a business model and an attempt that is ambitious. During the journey, you may figure that it is best run as a small business and suit your model accordingly.

In startups, you tend to experiment a lot, learn from those experiments really fast. Fail fast applies to these experiments, not necessarily to startups themselves.

However, if the ambition and pursuit to discover scale isn’t part of the dna then that is when it stops being a startup. So, when you are part of startup events your expectation is to learn from each other about this pursuit, discoveries, mistakes.

Why is it important to understand this difference?

You dream & attempt to build a product that can scale; learn the finer details in that pursuit and change course accordingly when it morphs into a business, big or small. If you have the requisite clarity, you’d know if you are building an ambitious, entrepreneurial company or a small business. The clarity informs and charts the course for a good decade or more, of your life.

Definitions:

Entrepreneurship is the pursuit of an opportunity without regard to resources currently controlled. By this definition Infosys is not an entrepreneurial company. It once was. Apple isn’t. Tesla is. All our startups are. Most small business owners are not entrepreneurs. It’s not that they are any less enterprising. It’s just that they are just a different class.

A startup company or startup or start-up is an entrepreneurial venture or a new business in the form of a company, a partnership or temporary organization designed to search for a repeatable and scalable business model.[1]

We sincerely hope this helps you understand the difference and that any event projected to aid startups should focus on lessons that help the “search” instead of straying without focus.

Thanks to Ashwin Ramasamy for helping me write this article. Thanks to Aditya for reading drafts.