1. This is a superb essay delineating the attributes of a fast-growth, all-or-nothing type of startup. No surprise here. Who besides pg has had the depth and breadth of quality first-hand experience with such ventures over such a sustained period and in such an explosive context as that of recent years? He has here given us a classic analysis of the prototypical, Google-style startup.
2. I think the idea of a startup should not be so narrowly defined, however, and the big reason is this: many founders set out to build ventures that are tech-based, innovative, aimed at winning key niches via hoped-for rapid growth and scaling, positioned for outside funding as suited to their needs, and aimed at liquidity via capital gains as the primary ROI for their efforts . . . but who also place a huge premium on minimizing dilution and maximizing founder control. These are the independents. The ones who, by design, want to defer or even avoid VC funding so as to build their ventures on their own timing and on their own terms. Now this is not the Google startup model. It is, in a sense, its opposite. But it is not the model of a small business either. It is just a different type of startup.
3. The trend over this past decade has moved decidedly toward greater founder independence in the startup world. Back in the bubble days, as a founder, you had very little information available to learn how startups worked, you often had heavy capital needs (e.g., $2M to $4M) right up front to do such things as build your own server banks, and you would almost certainly have little leverage by which to minimize dilution or loss of control at the time of first funding. Today, this has completely flipped. Vast resources are extant teaching founders how startups work. Initial capital needs are often minimal. And it is relatively easy to get reasonable funding on founder-friendly terms. What this means is that, today more than ever, the independent-style startup is more open to founders than ever before.
4. Given the above, it seems to me that this is not the time to say that the only style of startup worthy of the name is that of the super-rapid-growth type. The rapid-growth type may be more glamorous by far but it really defines only the tip of the startup world. Beneath it is a vast world offering incredible opportunities to founders who want more control over the timing, scale, and management of their ventures and who seek to realize gains and manage risks accordingly.
So why would balancing lifestyle, minimizing dilution, and maximizing founder control not qualify as valid constraints for a "startup" on the principle of growth as a priority? After all, no startup, ever, has grown as fast as they could have if nothing else truly mattered.
EDIT: removed a reference to criminal activity deemed to be a strawman
Most organizations have goals - be it growth, profit, advancing a nonprofit mission, or whatever - and in all cases, the rider "Oh, and of course we mean to pursue this end by legal means" is so obvious that, unless we're talking about a criminal organization, it doesn't even need to be stated.
Same about remaining within the legal field: it is true only as long as overwhelming majority of the competition also does so. Otherwise you become a criminal, or go out of business, that simple (not related to startups at all, but common for general businesses in many countries). This point is just to explain that the constraints you have are seldomly morally defined, they are set by the environment you operate in (unless you are a total outlier - the idea is exceptionally brilliant, or you have some kind of other competitive advantage which puts you in a totally different league from others).
I find the entire discussion about "terms" and getting the best deal for startup founders laughable.
While there are certainly people who are truly unique and doing truly unique things (just like there are people in high school who are so "hot" they can choose which quarterback or cheerleader to date and still get dates no matter how they treat people or people who can go to Harvard, Yale, Princeton or Stanford with fully paid scholarships) I believe most likely the majority of people would be glad to just get funded and would take any reasonable terms to get an investment. By the way, if you, mr/ms founder, are such hot shit there is nothing to prevent you from renegotiating your value or terms later either (celebrities and sports stars do this when they are exceptional, right?)
Getting funded on any terms and having success of course will allow you to move to something else in the future because you will have made contacts and have your ticket punched. If you succeed as we often see even if you fail.
Participants on Shark Tank on TV exhibit this behavior as well. You have a chance to get an investment and advice of, for example, Mark Cuban for your crappy little company with a marginal "maybe" idea that you haven't been able to do by yourself. And you're going to kill a deal with him because you want to only give up 15% vs. the 20% he is asking.
It's interesting how the startup world is always complaining about how they get taken advantage of by VC's, angels etc. and trying not to get "screwed" and playing games. I think they actually are giving the funding sources a run for their money in many cases. Nobody wants to loose out on the next big thing and since they are expecting failure it's not as if they can easily corelate when they impulsively get manipulated and give founders to good of a deal.