Startup doesn't mean what you think it means

I just finished an intensive two days workshop in Italy for a great bunch of early stage entrepreneurs and during a break I ended up having an unexpected conversation around the definition of startup.

One of the things I outlined during my initial presentation is that every business goes through the same four phases:

  • idea
  • startup
  • growth
  • mature

This maps rather well to Steve Blank's 4 stages described in four steps to the epiphany:

  • customer discovery
  • customer validation
  • customer creation
  • company creation

It basically says that initially it's all about validating the idea by finding someone willing to pay for it and later, once the business has been validated, scale the product out until you have a mature company (although here the hope is that such company would start over the cycle and innovate, but that's for another post).

If you buy that then it makes no sense to say that you're starting a startup, what you are starting is a business or building a product. A startup is not a special type of company, it's rather a state your company is at. Eric Ries defines a startup as

a learning organization with the objective of finding a viable business model

which highlights even more how this is a temporary thing tied to that learning goal.

When you go around and ask people however, startup really means a young company generally building something focused on technology. This seems to have roots primarily in the timing and conditions that have seen the Lean Startup movement flourishing in the tech-driven Silicon Valley.

Talking to AM, one of the entrepreneurs attending the workshop, I discovered that in Italy however that's even a law. No wonder people are confused. Basically you can now incorporate as a startup which means you get all sorts of fiscal advantages and can access certain contracts that would normally not be available to a normal company.

That makes sense as a stimulus to try to get going a stagnant Italian economy, but while it may be useful for the short term in my opinion it could damage the long term with other companies being left out of the Lean Startup movement and with that miss on methodologies that can be very useful for any type of business, not just those building software products.

Furthermore this confuses people in regard to the four stages we were talking about earlier and somehow creates a sense of being part of a reality that while cool may end up being alienating or counter productive when it comes to building a long term business.

So to most people probably startup doesn't mean what it really means and I worry this could be to their own detriment if in the every day practice it prevents them from seeing the bigger picture.

What do you think?

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