The Defining Qualities of a Startup
What is a startup? Is it a group of friends united by a great idea and the passion to bring it to life? Is it the development arm of a major corporation, where skilled innovators have permission to go fast and break things? Does a start up, by definition, disrupt – changing industries, lives, perhaps the planet – with its arrival, or can a startup thrive in the world as it is right now?
Perhaps. Successful startups have taken all of these forms and more. Steve Blank, the Silicon Valley entrepreneur, explains that a startup is a growing company en route to a repeatable and scalable business model. Industry watchers have found it easier to define when a company is no longer a startup: growth rates stabilize, a significant number of employees have been hired, and key valuation numbers have been reached.
Until that point? You’re in startup territory. The timeline associated with this journey varies, based on the individuals associated with and the resources committed to the endeavor. Some startups sprint from concept to launch to maturity very rapidly. For other startups, overnight success can take years.
What Does a Start Up Need to Be Successful?
Eric Ries, who wrote The Lean Start Up – you might have heard of his work – referred to as “The Start Up Bible” – defined a startup as a human institution designed to create a new product or service under conditions of extreme uncertainty. Investopedia uses the phrasing “A company in the first stage of operations” before explaining the reasoning many investors are wary of funding startups: a lack of operational business infrastructure means there’s no way for fledgling companies to overcome periods of high expenses and low revenue.
A startup has to have a product – the driving idea that’s motivated the team into action. The product doesn’t have to be perfectly realized before a company launches – very often, it’s not even close – but the understanding of what the product does, who will appreciate it most, and where it fits in the marketplace – must be clear before investors will want to get on board. Victoria Ransom, co-founder of Wildfire, the social media management app acquired by Google in 2012, reminds aspiring entrepreneurs that flexibility can be useful, “Even if you don’t have the perfect idea to begin with, you can likely adapt.”
Success for a startup happens when creativity and entrepreneurship converge; balanced state where business building and innovation contribute in appropriate, meaningful measure to the venture’s success. It doesn’t matter if your venture is large or small, fledgling or established, bootstrapped or fully funded – the essentials of startup success remain the same.
So upon reflection, how would you define a startup?