When is a Startup No Longer a Startup

A controversial article and topic like work/life balance in a startup is good fun as people have strong feelings on it. I really enjoy hearing competing opinions and point-of-views. After more debate on the original topic, another item came up: when is a startup no longer a startup?

Devon Wijesignhe offers up that once you are profitable and have at least $10 million in revenue you aren’t a startup:

I agree with him that those criteria could be part of what makes a company no longer a startup but revenue and profitability alone don’t feel right. In fact, I wanted to offer more specific ideas of when a startup is less like a startup and more like a regular business. Here are a few ideas to distinguish a startup from a regular company:

  • Product/market fit has been achieved and the focus has been on scaling as opposed to staying alive for at least one year (it takes time to realize where you are)
  • Profitability has been achieved for at least one year and revenue predictability within a 10% margin of error has been achieved (one theme is that once the startup is no longer unpredictable, it is no longer a startup)
  • Management team and team member depth is strong enough such that any person in the company can go on vacation for two weeks without any issues and everything keeps moving forward
  • Growth has slowed down to the point that the approximate maximum business size is foreseeable (e.g. it’ll be a ~$5M business indefinitely based on current factors as opposed to the possibility of being a $1B business)

Part of being a startup is that it feels like a startup internally. That could be a flat hierarchy, quick decision making, people wearing many hats, or a sense of unbridled optimism. Regardless, a startup is no longer a startup when people inside it feel like it is no longer a startup. There’s no right or wrong answer.

What else? When do you think a startup is no longer a startup?

 

2 thoughts on “When is a Startup No Longer a Startup

  1. Interesting thoughts on the qualification of a startup based on revenue. Though, I’m not sure if just [gross] revenue is really a great measure. I’m sure this is one of those “it depends” situations, but in general, I believe your points around predictability around size and revenues/ earnings could be proxies.

    Recently, there was an article about 10 Startups in Atlanta by The Next Web. As I was reading the list, it made me peruse your blog about startups because it’s clear that at least a few of those on the list have been around and have been doing very well over the years. (article: http://thenextweb.com/insider/2013/09/15/a-peachy-keen-startup-scene-10-startups-from-atlanta-that-you-need-to-know-about/?fromcat=all#!)

    I’m curious if your thoughts around startups (and what qualifies) have changed over the last 1+ year since your wrote this.

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