A startup is a scalable, replicable, intrinsically innovative and temporary enterprise.
Not all ‘startups’ are actual startups. Many people mistakes a business for a startup. So what is a startup? What are its characteristics?
In this article we try to clarify the definition of startup :
- What exactly is a startup? (which is not written start-up or start up)
- What does startup mean?
- What are the 4 characteristics of a startup?
Let’s get going then!
Startup: Definition (What Is A Startup?)
Many have given a definition of startup, we will soon analyze them all, however very few have managed to give a clear and unambiguous one.
Here’s our definition of a startup:
A startup is a highly innovative company that wants to solve a problem that previously had no solution.
Definition Of A Startup By Steve Blank
In Steve Blank’s words, a startup is “a temporary organization looking for a replicable and scalable business model ”.
Definition Of Startup By Eric Ries
To propose a second definition of startup , according to Eric Ries a startup is a human institution conceived to offer new products or services in conditions of extreme uncertainty.
Startup Definition By Paul Graham
A third definition to understand what a start-up is offered by Paul Graham, who states that a startup is a company designed to grow quickly.
Characteristics Of A Startup
There are four necessary characteristics that must absolutely be realized to really understand what a startup is : scalability , replicability of the business model , intrinsic innovation (process or product) and temporariness.
Let’s explain these characteristics better:
Feature # 1: Business Replicability
Business repeatability means that a startup’s business model can be repeated in different geographic areas and in different time periods without requiring major changes.
Ask yourself the following question: does the business model I am structuring allow me to have a continuity of application independent of the context, market conditions and trend volatility?
Feature # 2: Model Scalability
Scalability is the ability of a startup to grow exponentially using few resources.
Ask yourself the following question: does the business model I am structuring allow me to expand, without encountering limits related to scarcity of resources? Am I able to go from 1 customer to 1,000,000 customers in a matter of days? Can I reach millions of people very quickly?
Feature # 3: Inherent Innovation
Innovation (process or product) is a essential while talking about startups. Startups are born to satisfy a need not yet satisfied (or to create a need that is not yet evident). They are born to subvert the “status quo”. They are born to disturb (or to create) a market.
That is, they are born to innovate.
Ask yourself the following question: Do I have an innovation that carries a substantial advantage (10x or more) over what currently exists?
Feature # 4: Temporariness
The definition of “startup” is temporary . The “startup” phase is in fact transitory and represents the first phase of the company’s growth path that will lead it (hopefully) to become a large company.
Without these characteristics, to which I would add the ability to disrupt an existing sector ( disrupt ) or the ability to create a new market , we can hardly say that we are running a startup.
So can the new pizza shop near your house be defined as a startup? Absolutely not… unless you invent a new franchising model that allows you to open stores in an unlimited number of countries, in a short time and gaining very, very high market shares.
In short, unless a new business model is invented, replicable and scalable (that is, one that allows rapid growth on a large scale) and that leads to the disruption of the reference market.
But If It’s Not A Startup, Then What Is It?
This is the start-up of a new business , of one of the thousands of SMEs that make up the backbone of the world’s economic and productive system; or rather a “lifestyle business” with which we can identify a company that creates value, gives work and boasts more or less regular customers who allow entrepreneurs (and collaborators) to “take the loaf home”.
Obviously there is nothing wrong with all this, starting up and maintaining a “lifestyle business” is no less complicated than starting up and running a startup.
They are, however, two different things.
In summary, to the question “what is a startup?“, I would answer with this definition: a startup is a temporary and unstructured organization, looking for a replicable and scalable business model. Basically born from the desire to want to solve a problem, it needs to find a business model that allows it to keep growing.
Until When Can A Startup Be Defined As A Startup?
A startup will remain a startup till it starts generating significant revenue and gets off the ground. Normally, this will be a period of 4-5 years.
Hope that answers your doubt as to what is a startup.
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