Paul Graham’s most recent essay this week, titled Startup = Growth, argues that startups are companies designed to grow with a scalable business model. The idea is that a startup is different from most businesses, like a barber shop, in that they are high growth-oriented from the beginning. So, a startup can be in the early low/no growth phase as well as the rapid growth phase that eventually levels off, resulting in a regular, large business, if the startup is successful.
Another prominent startup author, Steve Blank, argues that a startup is an organization formed to search for a repeatable and scalable business model. The idea is that once the new entity figures out product/market fit and starts building a business, the organization is now a company and no longer a startup. Now, these are fundamentally different: one says that startups are high growth-oriented companies from the beginning through rapid growth stage and the other says that startups are temporary businesses at the earliest stage.
My personal belief is that startups are of the Paul Graham definition (and a superset of the Steve Blank definition). Here’s how I view a startup:
- Large, scalable business potential that isn’t predicated on any one person (most businesses are replicative of an existing model instead of innovative with a new model)
- Significant amounts of change and uncertainty on a weekly or monthly basis (companies like a healthcare provider have change and uncertainty, but it doesn’t manifest itself in such a short time frame)
- Top line annual revenue growth of 30% or more once a modest level of product/market fit has been achieved
To me, startups are about scale and growth with the later being the most important, as Paul Graham clearly articulates.
What else? What are your thoughts on a startup being a scalable growth-focused company?