
Ask HN: How does one define a startup? - embit
What is a startup business vs small business? Also when does startup stop becoming a start up and just called a regular business? Is it time bound or revenue bound or size of business ?
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nostrademons
The best definition I've heard of a startup is a business that doesn't know:

    
    
      1. Who its customers are.
      2. What it's selling.
      3. How to make money.
    

Aside from being punchy in its absurdity, it also explains other good startup
definitions, eg. the Lean Startup's "A startup is a temporary organization
designed to search for a repeatable and scalable business model" or Paul
Graham's "A startup is a business designed to grow really fast." What is it
searching for? The answers to those 3 questions. Why is it temporary? Because
it runs out of money if it can't find the answers to these questions. What
happens when it finds them? It grows really fast.

The other thing I like about this definition is that it emphasizes that
startups are meant to fill a previously-undiscovered hole in the marketplace.
Is a McDonalds franchise a startup? No - it knows exactly who its customers
are, what it's selling, and how to make money. Is a niche e-commerce shop a
startup? No - it knows exactly who its customers are, what it's selling, and
how to make money. Was Facebook a startup? Yes - it was unclear what it was
selling or how to make money when they started (they had a pretty good idea
that their customers would be local advertisers, though). Was YCombinator? Yes
- they knew who their customers were and how to make money, but hadn't quite
nailed down what they were selling. Was VMWare? Yes - they knew what they were
selling and how to make money, but weren't clear who their customers would be.
Are these 3 companies startups _now_? No - they've found the answers to all 3
questions, and now have a scalable, repeatable business model. Businesses like
Stripe and AirBnB are also not startups anymore, but arguably Uber still is,
because they haven't yet figured out how to consistently make money.

And it makes clear what you should be doing when founding a startup (trying to
find the answers to these 3 questions), why people choose not to found
startups (if you don't find these answers, you've wasted millions of dollars
and years of your life), when a company graduates into a regular business
(when they've found answers to these 3 questions), why startups grow so
quickly (because they're entering effectively virgin business territory, they
can capture the whole market without resistance once they find a business
model that works), why they often seem absurd to critics (because they are),
and why the rewards are so high (because the risks are too).

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streetcat1
So what happens if a startup competes with existing huge companies. For
example, my startup create a new auto ml platform.

I am competing with Google AutoML and azure auto ML (at least feature-wise).

In this case:

1) I know who are the customers. I.e. Google/Azure customers.

2) I know what I am selling - auto ml.

3) I know how to make money.

So in this case, I am not a startup?

My point is that for some reason founders love uncertainity.

~~~
nostrademons
If they compete on the big company's territory, the most likely outcome is
that they die.

Big companies have more resources to deploy. If you're competing for the exact
same customers, on the same featureset, with the same business model, there's
usually little reason for the customer to choose the startup over the big
company. Any new features can be reimplemented by the big company; any price
reductions can be matched.

If you've identified a particular customer segment that has needs that aren't
being served and can't easily be served without rearchitecting the big
company's product or business model, then you can survive. But the process of
doing that means answering "#1 Who are your customers?" and "#2 What are you
selling?", which makes for a startup. Once you've answered that you have a
small business (if the niche is static and small) or a new fast-grower (if the
niche is a result of a change of the environment that affects a large number
of customers).

~~~
streetcat1
Have you worked in the R&D department of a big company?

Did Nokia match Apple? Why not? Was it a resource problem?

Did MS matched Android? Why not?. I mean the biggest OS company in the world
has no mobile OS?

Did IBM matched Dec?

Have you seen a big company do that? If yes, can you give a concrete example,
where a big company killed a startup?

Do you know what motivates big company R&D decisions?

~~~
nostrademons
I have worked in the R&D department of a big company (Google Search). I'm
currently a startup founder. There is no way in hell I would want to compete
directly with Google on terrain they are dominant in. Several startups have
tried and failed (Cuil, Blekko), as well as one big company (Bing) and one
that's become a successful niche business (DDG, occupying the niche of
privacy-conscious searchers that's significantly smaller than the general
population but cares a lot about that one attribute that Google can't match).

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streetcat1
Startup is a small giant, or a child giant. They are defined by the market
size. Small businesses usually have a local market (street/city). The startup
market is global.

~~~
jakoblorz
Hmm, I think this definition needs some kind of innovation factor. Most start-
ups try to do something different than the competition. Those who succeed
improved or innovated successfully. Small local business mostly innovate on
how to do things (process improvements to cut cost), less on the product
itself

