{Briefing} Questioning The Definition Of Startup

Image

Steve Jobs often spoke of Apple “startup culture” and the New York Time referred to the airline Virgin America as “a startup”.

Today any small company operating in the digital industry tends to be defined as a startup. Hence confusion in perception, consistence and business models in the startup scene worldwide.

Steve Blank, one of the most influential people in Tech and teacher at Stanford, defines a startup as “an organisation formed to search for a repeatable and scalable business model”. The key attribute is not to be a tech company. Neither to be a small company using digital and/or operating on the Internet. The key attribute is a repeatable and a scalable business model.

In recent years, popular lexicon has begun equating startups with tech companies, as though the two are inherently intertwined. But let’s face it. Is Uber with a valuation record of $17bn still a startup or rather a multinational logistics company which generated $213 million revenue in 2013?

Mark Babbitt, CEO at YouTern, an online community focusing on careers management, expanded Steve Blank’s definition stating a startup is “an entrepreneurial-driven organisation formed to search for a repeatable and scalable business model”. The Entrepreneur enters into the equation.

Eric Ries, founder of the Lean Startup Movement, included an entrepreneurial management paradigm for new ventures. Inspired by the Japanese car manufacturer Toyota, Lean thinking has radically altered the way supply chains and production systems are run. The Lean Startup is conceived as an entrepreneurial management assess tool through a validation learning process based upon Customer Development.

For Eric Ries, if according to Steve Blank’s definition a startup is an organisation it thus requires tailored management tools specifically geared to its context of extreme uncertainty. The Lean Startup addresses this issue.

A startup may also be defined as an innovative venture. Does a startup need to be innovative or disruptive to be qualified as a startup? Innovation or disruption are not conditions per se but are likely induced by the scalable and repeatable business model requirement. Innovation and disruption enable critical growth and scalability but are not mandatory to be qualified as a startup.

So, what constitutes a startup? A repeatable and scalable business model? An entrepreneurial-driven organisation? A company that handles extreme uncertainty? A new entrepreneurial management paradigm for innovative ventures?

What do you think?

 

Advertisements

One comment

  1. A startup should not be defined by the repeatability or scalability of its business model. In fact, the very reason it’s a startup is because it doesn’t have a validated business model yet. A startup should however be defined by the temporary state of exploration required to achieve product market fit.

    Pre-product market fit = startup
    Post-product market fit = company

    The sole purpose of a startup is exploration, or rather the search for product market fit. Once product market fit is attained, and therefore a repeatable and scalable business model identified, it’s time to scale like crazy.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s