There are millions of small businesses (in the US) and the vast majority of them are just lifestyle businesses that bring freedom/pleasure/excitement to the owner with perhaps a possibility of earning more, but there are many that earn less than what they could make at a regular job with their same experience.
This whole world domination startup thing seems to be localized to SV really. Nowhere else is this considered normal.
By the way, there's a lot of confusion with just the term "startup" in general when it should really be reserved for something new (biz model, innovation, etc). If you're just doing something that's already been proven, which is completely ok, then it's just a small business.
Basecamp with 50 people is still small to me, I'd say companies need at least 100 people before they can be called mid-size.
Trying new things means the other spun-out companies are startups. Basecamp itself is nothing new, just different software solving the same problem as hundreds of other project management and collaboration tools.
I think new can be summarized as a new business model, new way to monetize something, new innovation like a product or service that didnt exist before, new industries in general, etc.
There can be multiple startups doing the same problem but most "startups" in SV aren't really doing anything new, just a more modern approach or revamped UX of existing solutions so I wouldn't call them startups. There's nothing wrong just being a small business that grows into a medium and large business.
Not everything has to be brand new and it's not always worth it either.