At What Point Is Your Business No Longer Considered a Startup?
When you picture a startup what do you see? Possibly, a vibrant colourful open-plan office, with quirky office additions such as ping pong tables, foosball and maybe an office dog. Or maybe you see a small dingy office basement, with a group of workers hacking away at trying to make their idea a reality with limited funds to see them through.
These are both realities of starting up a business, whether they aim to grow through bankrolled investments or struggle organically to uncertain success.
However, at what point does a startup stop being called a startup to being called officially a fully-fledged business?
For one, startups are precarious and many sadly fail, so if you start turning your potential into real profits consecutively, then you are on your way to something that is a viable business.
So if you do this over 10 years does that mean you are no longer a startup? Or is it more than 5 years? Do you count the time when you were operating from your bedroom or when you first received your first check from your VC?
Investopedia defines a startup as “a young company that is just beginning to develop. Startups are usually small and initially financed and operated by a handful of founders or one individual. These companies offer a product or service that is not currently being offered elsewhere in the market, or that the founders believe is being offered in an inferior manner.”
So in that case is Uber still considered a startup? They still believe they are and with the nature of its recent phenomena – some people might actually agree. However, it has been operating for over 5 years and has been able to scale up massively – with thousands of employees and heavy investment within the billions may actually counter their claim.
It makes me think – can you actually apply a criteria to what makes a startup a startup? For instance, if you have been operating for less than 5 years BUT have hundreds or even thousands of employees does that break the criteria of a start-up?
Needing to accommodate an ever expanding workforce is not only a sign of growth but of a transition is happening. Whether you have to look at expanding the way your growing work force communicates or needing to move to a bigger office space – the organization starts to become more structured and dare I say it more “corporate”. I am not saying the hoodies will be replaced with suits, but in order for a company to function optimally and efficiently as possible, business processes and structure need to be in place.
Often startups are typically linked to exciting tech ventures. They are breaking new grounds in technology with their products or offering an innovative service to the market which has never been seen before. They almost pride themselves to be seen as opposites to corporations or to be doing things differently to big businesses.
So where do you draw the line when you say “we are no longer a startup”? It seems that there are no ridged rules of whether you should or need to change your status from a startup. Quite frankly it seems like it doesn’t matter.
It’s as if we look at startups as an idealised way of doing business – something that we aspire to. A culture and mindset of not just making money but creating something “cool”, something that continually impacts our lives in a positive way.
It’s as if having the label of “startup” allows a new era of big businesses to retain a culture that achieving great things is never over but they are always at the beginning of another challenge. I think most people quite like the sound of having more businesses like that.
When do you think a business is no longer considered a “startup”? Share with us in the comments below!