Problems & Pitfalls — from WORDS & DEFINITIONS?!? (part 1)
What IS a STARTUP?? [P.S. Oceans and Ice Cubes are both water, but…
Our World-Famous “Startup” vs. “Water” Analogy:
We have SO MANY words for “water” — depending on type, form, etc.
Yes, technically, it might all be the same (2 parts hydrogen? 1 part oxygen?), but, for any real-world purposes…
- Wouldn’t it be DIFFICULT (and DUMB?) to try to drink an iceberg or a glass of steam or the morning dew…?
- Wouldn’t it actually be DANGEROUS (and DISASTROUS?) to dive head-first into a puddle or a frozen lake or a bathtub…?
[Editor’s Note: OK, enough of the analogies; get to the point!]
So, WHY Do We Use Just ONE (1) All-Inclusive Term: STARTUP?!
QUIZ: Which of the following do YOU consider to be a “Startup”?
- STARTUP A — a pair of bootstrapping co-founders, hustling and grinding, working from coffee shops or co-working “hot desks” on their pre-revenue, pre-funding MVP…
- STARTUP B — a 30-person B2B SaaS company, 7-figure ARR, currently raising a Series B round of 8-figure funding, at a 9-figure valuation, with aspirations of being a Billion-Dollar Unicorn!?
So, which of those are Startups? (A? B? Both?)
Regardless of your answer, hopefully we can all agree that “A” and “B” are VERY different from one another! But, herein lies the rub… [Editor’s Note: I’ve just always wanted to write that phrase for some reason…]
The problem is that Entrepreneurs from Startups like “A” are reading the same blogs, listening to the same podcasts, and attending the same “Lunch & Learns” that are intended for Entrepreneurs from Startups like “B”… and ALL “Entrepreneurs” are constantly hearing all the same “Startup Lessons” and “Best Practices”…
- “Best Practices” — Definition: “commercial or professional procedures that are accepted or prescribed as being correct or most effective.”
Ok, pretty straight-forward definition.
BUT… it can be Dumb, Dangerous, Detrimental, Destructive, Disastrous, Devastating… to follow ANY “advice for entrepreneurs” or “best practices for startups” when ignoring type, size, stage, etc. Because there are very few (if any!) pieces of entrepreneurial advice or “Best Practices” that will apply to BOTH “Startup A” AND “Startup B” in the example above!
My favorite example of confusion that can arise when (blindly?) following “Startup Advice” and “Best Practices” — that might not apply to ALL Startups or ALL Types of Entrepreneurs — involves these two thought-leaders… BOTH super-smart, super-successful, and have a ton of wisdom to share! But, wait…
[Editor’s Note: The main premise of the column above had been in my head for YEARS (that the ambiguously broad term “Startup” was causing a lot of problems for entrepreneurs — generally unbeknownst to them!) but I was never happy with how to articulate and classify the different types of startups I was talking about. But I recently stumbled upon something very close to what I was looking for in a few columns from David Cummings (serial entrepreneur, Atlanta Tech Village visionary, and probably the best startup blogger in Atlanta) — so I will be copying/pasting them below, verbatim]
Idea Stage — No revenue or product, but lots of energy and enthusiasm.
Seed Stage — Under $1 million in revenue (often under $100,000), working product, and paying customers with some early metrics (seeking product/market fit).
Early Stage — Between $1 million and $5 million in revenue with solid metrics and a repeatable customer acquisition process.
Growth Stage — $5 million or more in revenue, strong team, and working on scaling all aspects of the business.
StartupWhatever.com Notes on the above:
1: As much as I REALLY LIKE these classifications, they only really work — to eliminate confusion and corresponding problems — if they become universally accepted. And we definitely have a long way to go for that… I mean, just think about how many times have you’ve heard a pre-revenue business just getting started that refers to themselves as “Early Stage” — which would actually be “Idea Stage” by the definitions above (since “Early Stage” would actually mean over a million in revenue!)?
2: My overall point — there are very few things (advice, best practices, etc.) that apply to all (or even more than one!?) of the Startup Types/Stages as described above.
3: For the most part, all of OUR ThoughtsOnStartups.com / ReThinkingStartups.com (thoughts/theories & improvement initiatives) will primarily be in regard to IDEA STAGE STARTUPS and/or SEED STAGE STARTUPS…
Successful Entrepreneurs are often characterized as “Risk-Takers” — But, wait…
The 99% of UNsuccessful Entrepreneurs Were Risk-Takers Too, Right?? (full column)