When is a startup a startup?

Author: Notre Dame ESTEEM


In the world of small business we throw around the term “startup” quite often. But what does it mean to actually be a startup?  Are all business initially considered startups, or does that tag only apply to a certain sect of entrepreneurial endeavors?

I am going to do two things right now that your High School English teacher told you never to do.  First, began an essay with a definition, and second, use Wikipedia as a source.  So, without further ado, here is how our great online dictionary defines a startup:

A startup company or startup is a company, a partnership or temporary organization designed to search for a repeatable and scalable business model. These companies, generally newly created, are in a phase of development and research for markets.

That definition seems fairly cut and dry.  A startup is a newly formed company trying to find their way in the marketplace.  Seems reasonable, right?  Not so fast, if you ask Dylan Bathurst, one of the co-founders of the iPhone app Rumgr.  

The Las Vegas Review-Journal recently did an article on this topic, and in that piece Bathurst is quoted as saying that to be considered a startup a business has to have “rapid growth” built into their business model.  He credits Paul Graham, co-founder of the funding source Y Combinator, as his main influence when it comes to the topic, and seems in lockstep with Graham’s opinion that, “A startup is a company designed to grow fast. Being newly founded does not in itself make a company a startup.”

That is an interesting distinction.  

It would seem to that on a certain level all companies have an inherent desire for rapid growth.  We want our businesses to grow, and we want them to grow as fast as possible.  A savvy entrepreneur most likely doesn’t expect smooth sailing and instant growth right out of the gate, but that hope is always there.  I’d be curious to hear what type of businesses Bathurst and Graham believe don’t start with that particular aspiration.

So what do you think, does every company start off in the startup phase?  Or does that label apply to only certain business models?