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What is a startup?

I hear a lot of complaints along the lines of: "isn't a startup just a small business?"

The simple answer is: no. Many small businesses will remain small, often by design. In contrast, a startup is an early stage business that is looking for a way to grow. As Steve Blank famously put it:

A startup is an organization formed to search for a repeatable and scalable business model.

Both of these clauses are important. Repeatable means that you can offer the same service to many customers. Scalable means you can grow the business to a large size in a way that is not linearly correlated to the resources you spend to provide it. When a startup has found a repeatable, scalable business model, they will have found product / market fit: a large addressible market that is well-served by the product the startup has created. In order to find product / market fit, the startup will need to perform rapid, iterative experiments on both its product and the market it's addressing to fine-tune both simultaneously. That's the game.

It's important to call out what a startup is not: it's not an R&D lab that creates new technology, for example. Instead, a startup may bring a new technology to market as part of serving a need. It's also not a product studio that solely focuses on making elegant software; it's a business that is able to build a great product that serves a skillfully executed strategy.

I believe that for a startup to have a chance of success, it needs to meaningfully change the way something valuable is done. For example, Salesforce dramatically simplified the way sales teams collaborate. Facebook, for all its faults, simplified the way we keep in touch with our commuities. Slack has transformed internal communication. As Ev Williams memorably said on-stage at XOXO: you have to take out steps. Make life easier. It's not enough to just put something online; you have to meaningfully change the process.

For all our talk of startup ethics - and make no mistake, these conversations are vitally important - we can't lose sight of the basics. Make something that people want, in a scalable, repeatable, defensible way, and make their lives better in the process.

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