Definition of a Startup
January 16th, 2008 | Categories: financing, launch, marketing, markets, networks, social media, strategy, trends, wikisYesterday’s post brought up an interesting topic. What is the definition of a “startup”? In other words, when does a startup progress to a “company”?
Is it defined by:
- Time? i.e. Less than a year old?
- Revenues? i.e. Under $10 million in revenues?
- Profitability? (Self explanatory)
- Traffic? i.e. Less than 20 million page views per month?
- Staff size? i.e. Staff size smaller than 50?
This topic is particularly interesting because many believe Flickr, Facebook, MySpace, YouTube, etc… are still startups. I don’t believe so. Facebook, for example, has:
- Been around for 4 years
- Revenues in the hundreds of millions
- Billions of page views per month
- A staff of a couple hundred
Can you still consider it a startup? I’m not convinced…
On an ambiguous note, Wikipedia defines a startup as “a business with a limited operating history”. So basically, I’m no further ahead than when I first visited Wikipedia.
I’ve been thinking about a term to use to describe the aforementioned boundary or limit. I’m not certain whether a given term exists or not, so I’m going to coin one anyways. The startup threshold will now be known as the point when a business transitions from the startup phase to a full-blown company. The exact metric or number has yet to be established, but I’d like to get feedback from readers.
How do you think a startup should be defined? What number(s) do you think are most important? What would you consider the startup threshold?
January 16th, 2008 at 12:48 pm
You have some incorrect facts in your post. Facebook does by no means make hundreds of millions of dollars. They have over 300mil in funding from VC’s/Microsoft but they don’t make that much.
January 16th, 2008 at 1:00 pm
Gavin,
According to all the sources I’ve researched, Facebook generated $100 million in revenue in 2006, and I would expect that number to double for 2007.
You also misquoted what I said. I never said they “make” hundreds of millions. I said they generate revenues of hundreds of millions. There is a huge difference between gross revenues and net income.
Cheers,
Aidan
February 19th, 2008 at 3:13 am
Hi Aidan,
I think the most important part is based on the phase that a company is in. For instance, a start-up is always at an early stage in the life cycle at the beginning where the founder moves from the idea stage to a start-up stage. The business is at its earliest stage of development and it starts to initiate operations.
A start-up could be at any scale in my opinion. However, most of them are small.
Now let me ask you. How do you think a startup should be defined? What number(s) do you think are most important? What would you consider the startup threshold?
Greetings,
Jörg
As soon as a start-up creates value and operations are set, the start-up moves on to the next stage where I would call it a “company”.
April 8th, 2008 at 1:07 am
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March 7th, 2010 at 7:31 am
An accurate description of a “start up” business
March 7, 2010
“Start-Up: A company that has been in business up to 12 months.
Existing Declining: A company that is 12 months or older with even or decreasing sales.
Existing Healthy: A company that is 12 months or older with even or increasing sales.
Nascent (Pre-venture) Entrepreneur: those individuals who have taken one or more active steps to form a business.
According to the Kauffman Foundation (www.kauffman.org).
Brett Bringardner
founder
Libriloop.com
book recycling