Ask HN: What is the difference between a startup and a small business?

https://news.ycombinator.com/item?id=2628347

by Slavo • 15 years ago

1 3 15 years ago

news.ycombinator.com

I asked this question on one of the stackexchange sites. Here's the text of the question itself:

I've had a conversation with some friends recently on the differences between a startup and a small business. One of my friends said that a startup in a brand new company, which aims to scale fast and become a large company, while a small business stays small and doesn't plan to scale. Examples for this definition of a startup may be Google, Facebook, Microsoft and Apple in their early days.

From what I read online, no one makes this distinction. What do you think - do you make a difference between a startup and a small business?

I'm very curious about the different opinions in the hacker news community.

thaumaturgy• 15 years ago

Your friend is pretty close; pg has said before that "scalability" is one of the defining characteristics of a startup. They don't necessarily have to become a large company, but, if a startup wants investment, they have to show some chance of scaling quickly. (At which point they get bought, or raise more funding, or something.)

HN in general isn't very interested in small businesses. Unfortunately.

xxyz• 15 years ago

I think the term startup is in fact somewhat misleading, because in many cases venture capitalists that want to invest in these organisations want them to have a full business plan and evidence of customers / market leverage. Obviously it makes sense for them to ask for these things, but to me it seems odd to call an organisation with a long term plan and often a number of employees a 'startup'. Organisations that are truly starting up are in much earlier stages of development, trying to decide if there is a market for a particular product and trying to fit this market and generate interest.

But the definition you give of a startup seems to be the current interpretation that many people would have.

steventruong• 15 years ago

I hate the word startup (in the definition sense) because by sheer definition of the words, it just means to "start up" or start something. ANY business technically would fit this description.

The valley (or rather the tech related community anywhere really) however prefers to attach its own strict definition to startups. Even something like Facebook with thousands of employee, billions in revenue, been around for years, and a ton of raised capital, can and still be stupidly labeled as a startup. Like WTF. Seriously. They are NOT just starting up.

I have my own definitions regardless of what the textbook definition actually is and I don't really care whether or not others (particularly Angels/VCs/Incubators) agree...

You're a startup if you're less than 2 years old, have less than 20 people, or haven't made over 2 million gross. If ANY of these (and maybe a few other factors I'm not naming) is ever not true, including the age of the company, you're not a startup. I don't care if you're still pivoting, still trying to grow fast, blah blah blah... or whether its a coffee shop or a scalable tech company.

If you want to define it as a scalable company or tech company, then by all means reference it as something like a scalable tech startup. Maybe its because of the words start and up but I hate trying to warp the definition to something else just because people are in specific industries and want to give it various definitions to correlate to what they do or what they invest in. I mean do people feel offended just because a mom and pop coffee shop calls themselves a startup because technically they are just starting up simply because people may think it demeanors the word and makes what they're trying to do sound less cool? I don't really get it.

If I had to venture a wild guess, the term probably came into popular use in reference to companies that were just starting out and were possibly looking for venture capital to scale. So sure, there's correlation to how it may evolved and get labeled as what it is today but that probably isn't a precursor to defining what the actual word presents.

Ask HN: What is the difference between a startup and a small business?

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