A “Startup” isn’t always
I don’t think there is a term more overused in the entrepreneurship world than “Startup.” It’s a term applied out of convenience, misapplied to describe the status of a company more than a stage. When funding isn’t going well, and a company is ten years old with five-hundred employees, you’re not really a startup, but they will call themselves that to explain away their lack of profitability or even progress. They will say, “Well, we’re just a startup…” as if it excuses something, all while they struggle to hit profitability. If you’re a ten year old company, you’re definitely not a startup, no matter what condition you’re in, or how many false starts you’ve digested. Mess maybe, but startup, no.
According to Investopedia, they say; “The term startup refers to a company in the first stages of operations. Startups are founded by one or more entrepreneurs who want to develop a product or service for which they believe there is demand. These companies generally start with high costs and limited revenue, which is why they look for capital from a variety of sources such as venture capitalists.” Notice the term, “first stages” of operation, not fifth or twentieth.
Then they go on to explain it a little differently; “Startups are companies or ventures that are focused on a single product or service that the founders want to bring to market. These companies typically don't have a fully developed business model and, more crucially, lack adequate capital to move onto the next phase of business. Most of these companies are initially funded by their founders.”
Then Wikipedia defines it this way, “A startup or start-up is a company or project undertaken by an entrepreneur to seek, develop, and validate a scalable business model.[1][2] While entrepreneurship refers to all new businesses, including self-employment and businesses that never intend to become registered, startups refer to new businesses that intend to grow large beyond the solo founder.[3] At the beginning, startups face high uncertainty[4] and have high rates of failure, but a minority of them do go on to be successful and influential.[5]”
Do you notice that this too is a different definition? Part of the problem is similar to what we encounter when we define the word, “exotic car.” Everyone knows one when they see one, but where do you draw the line? Is anything with a racing strip exotic? What about wheels? We know it’s generally rare, expensive, and sporty. How sporty?
Startup is often used as an excuse, as if the mess they are in was intended all along. I see this with companies that have multiple failed initiatives or when they reach a point of near collapse because of their own mismanagement. It’s cognitive dissonance as if using the term makes the chaos okay when it doesn’t. The first thing when solving a problem is always to admit you have a problem. Isn’t that what they tell addicts? Start by owning where you are.
Our goal when we get a call is to get a company on its feet and growing again. As we say over and over, if you misdiagnose a problem, you mistreat a problem, and so we are always striving for accuracy when we describe any company that needs help. This includes not calling a company a startup that isn’t while using it as an excuse. If you have a pattern of missteps, own it, acknowledge it, and determine why you’re making the mistakes in the first place and why you still call yourself a “startup” when you’re not. Own what you are and rebuild from there. Look in the mirror and describe where you are accurately and it will help clear up what needs to change.