Hello, founder of a bootstrapped WordPress theme & plugin development business reporting in. Been running a profitable "startup" for 5-7 years (depending on whether you count my first two years as a solo freelancer).
Can confirm that not all startups are like this!
1) Meetings
We have one per week and sometimes cancel that because we feel it's overkill
2) Hiring tons of people
If anything we don't hire enough because we never spend money we haven't yet earned
3) Vanity benchmarks
One benchmark - cash in the bank (if it's too little, tighten the belt, if it's too much, spend it to grow)
4) Meetups
I'm terrible at networking and should do more of these!
5) Sponsoring conferences
HA!
6) Office, business cards and so on
Don't have either... 100% remote has worked since day one... OK, just got an office (sort of, it's shared) in Bangkok but no one works there!
7) Having more conversations with people outside of your market than people in it
I am totally guilty of that one!
Please don't take any of this as a claim that we are better... I can and have leveled a thousand criticisms at how I run things... just saying, "startups" that exist way, way outside of this mold are definitely out there :)
On the other hand, what you describe doesn't sound like a start up from the high-growth/external investment required point of view.
Sure startup is a sexier way to describe a young, small business but semantics aside, this feels like "traditional" business looking for glamour. Of which I am equally guilty, donnt take this as criticism.
You'll find that outside HN and the Bay area the definition of "startup" tends to be broader than simply "high growth, high risk".
It actually feels like there are two conflicting definitions.
In tech you often hear people describe companies like AirBnB, Facebook and even Google described as "startups" although they're no longer "early stage" by any means and often have already peaked their growth and surpassed investment needs (though there may still be additional investments happening).
Outside it often feels like the label applies to any small service or tech company that was recently founded, period. This is certainly what a lot of "startup" events cater to. And of course there are plenty of companies that would be "startups" in the Bay area sense but failed to find investors and instead ended up bootstrapping and becoming profitable.
If I was looking for glamour I would have raised money, started the type of business described in the blog post, and probably gone on to make many more of the mistakes it lists.
I guess the point I'm trying to make is if you're an aspiring business owner you don't have to go for this high-growth/external investment model. It encourages lax fiscal discipline which is the cause of these mistakes. I sometimes feel people I know who have gone through this could have learned more and earned more by bootstrapping.
The point zdkl was making was that you're not running what people describe as a startup - that is, a high growth, early stage business. And that if you're not running a startup then it is only logical that you are much less likely to 'play startups'. Do you see what he means?
Also, you talk about raising money like it's a bad thing. Don't forget that plenty of fiscally responsible high growth companies have raised angel & VC rounds. Just because you take on less responsibility doesn't make you more responsible, as a founder & business owner.
Not everyone buys into the redefinition of a startup as a company pursuing massive growth. The word has a broader meaning that encompasses other kinds of strategies for becoming a viable business.
> The word has a broader meaning that encompasses other kinds of strategies
Does it really? I don't actually accept that, but around here at least, this is a common enough definition that you should call it out when you're going to deviate from it:
A startup is a company designed to grow fast. Being newly founded does not in itself make a company a startup. Nor is it necessary for a startup to work on technology, or take venture funding, or have some sort of "exit."
The word is a regular English word that has a widely accepted meeting outside this message board, and had that meaning for decades before Paul Graham tried to redefine it. [https://en.oxforddictionaries.com/definition/us/start-up]
Litigating what the correct meaning of "startup" is on HN is not productive, but we should recognize that not everyone agrees with Graham's redefinition, and therefore arguments that cite his essay are begging the question.
> Litigating what the correct meaning of "startup" is on HN is not productive
I disagree. It's really really really hard to build a business and make it grow. Any logical tools we can use to cut down on the space of strategies and goals worth pursuing is worth its weight in gold. Coming to more restrictive definitions of "startup" does exactly that.
More prosaically, if we don't do it ourselves, investors are just going to do it for us and leave us in the dark as to what their real criteria for funding is. We want them to be a part of the conversation because bootstrapping everything sucks. Being needlessly inclusive hurts everybody.
So, let's say you're a would-be entrepreneur looking to start a business and run an enterprise and get rich. How do you know where to begin? If you don't have connections to help, you're stuck with only your own understandings, your own resources, and your success or failure will be mostly attributed to luck.
Cutting down on this luck factor is the problem the startup landscape is trying to solve. We can provide two things to would-be entrepreneurs, information and resources. Information can obviously be free, but resources have to be limited.
It does the industry, the collection of people providing information and resources, the most good if following the information, which they can get for free, leads easily and directly into provisioning of resources. A more transparent process makes it more democratic and a better route for real social change.
So we want to constrain the definition of words like 'startup' so that they better conform to what investors are looking for in ventures to fund. Sure, anybody can use the term any way they want, but for this community, 'everybody starting a venture is a startup' does nothing to help the would-be entrepreneurs to do the right things they need to do to get investment. It's too inclusive, it does not provide a pathway for people that want to join the community to gain real, material help with their venture. It needs to be a useful tool of exclusion.
Even in technology, which is just a slice of all of (say) American enterprise, it's hardly an accepted norm that new business starts must be funded by investors.
What's instead happened is that people who pay attention to message boards like this are afflicted with a kind of snow blindness from all the random businesses that do get funded by third party investors. It is true: if you want to be funded by third parties, you will need to build a certain kind of business, and that business will look a lot like what Paul Graham defines as a startup. There's a lot of debate about whether and why this is, but the math is straightforward: if you want to take a few million dollars of O.P.M. to build a business with, you need to aim at the moon and hit it for those investors to have a viable business model.
What people who don't build businesses on O.P.M. object to is the notion that O.P.M. is the only way to start a viable company.
So: sure. If you want to educate people who plan on building VC-funded companies, you're right. It's a good idea not to delude them into thinking they can take a few $MM and grow organically. They should probably follow most of the Paul Graham playbook.
But more companies should reflect about whether they want to take a few $MM to begin with. Many people would be happier if they didn't. A lot --- most, in fact --- of the companies who do take the money have fooled themselves, and are frittering away the single most valuable resource they have (their time) on companies that have less than a crap-shot chance at success. Craps works extremely well for investors. It's not so great for founders.
You're the only one litigating the meaning of words. Anytime you find yourself providing a link to a dictionary, you should consider that you're being pedantic and have no point. That's certainly what it looks like to me.
I'm not providing a link to a PG essay because it coincidentally agrees with my position -- there's a big orange "Y" at the top of this page, and it's not there arbitrarily. If you're having a conversation on HN about startups, there's an underlying culture which you need to be aware of. Demanding people justify a shared understanding of a term's meaning by challenging whether or not it doesn't mean something else is arrogant -- have you considered that you are ignorant of the basic terms of the discussion, as it occurs on HN?
There are other conversations where your definition might be right. That has nothing to do with this conversation.
I realize that I'm defending vinegar-based sauces on a BBQ discussion board that is committed to tomato-based sauces, and run by a powerful tomato conglomerate.
But I've been here a long time (just like you), and my account predates Paul Graham's fatwa about startups. If he chooses to redefine other words in future essays, I reserve the right to link to the dictionary again.
My goal is not to be obnoxious, but to keep the terms of debate open for people who have a more expansive view of what online businesses can look like, and what values might be important to their founders.
What is your definition of a startup? I have a hard time thinking of my local pizzeria as a "startup" even though they are undoubtably a small business.
Ultimately, I think PG's definition defines a useful category of businesses to think about and litigating the label we use for that category doesn't help anyone.
Ask someone who's lived for any serious amount of time in Ann Arbor whether a local pizzeria could be a "startup". Domino's started as a single crappy pizza place in Ypsi. It's an 8 billion dollar company today that will almost definitely outlast Twitter and Yahoo.
For reasons I don't quite fathom, discussions about business on HN seem all to be born without the part of their brains that understands business fundamentals. Almost every business can be made to scale (ironically, the more high-status the business, the trickier it is to scale, which is why you'd be better off investing in a crappy pizzeria than in Grant Achatz). You can build a billion dollar plumbing company. You can build a billion dollar accounting firm. Someone out there --- god, I hope it's actually a housecleaner --- is going to build a billion dollar housecleaning company. Do you really need the mechanics of how this works? Do the work. Get good. Hire people to do the work for you. Get good at managing them. Hire people to manage the people you hire to do the work. Repeat.
Nobody disputes whether the category of businesses Paul Graham describes is useful. It clearly is. If you plan on building a business on other people's money, it's vitally important that you understand almost everything he has to say.
What is in dispute is whether that category of business is so important that it should annex the term "startup". Plenty of businesses you would describe as startups don't obey Graham's rules at all, because they scaled up on a different schedule than A16Z wants businesses to, and did it without a single wire transfer from A16Z.
I think you're being excessively patronizing, which is insulting because I usually like your comments. I'm well-aware of "business fundamentals."
I'm not saying high-growth startups are better than other kinds of businesses. Heck, I'd very willingly advocate the view that other kinds of small businesses have better business fundamentals than tech startups.
Just because one pizzeria managed to scale doesn't change the fact that the vast majority of small businesses are not built to scale. Most small business owners think about how to grow 10-20% in the next year, not 100-200%. Heck, in my experience a lot of them are terrified of the concept of rapid growth.
Like I said in my comment, I don't really care if we use the term "startup" to refer to high-growth businesses or not. We should just all agree on a consistent set of terms and stick to that.
Otherwise you get unhelpful comments. Like I could talk about how my "startup" has reached profitability and 6 figures of revenue with only a single employee. Except this startup is my consulting business and has no business being lumped in with high-growth VC-funded companies.
The vast majority of tech companies aren't built to scale either, and the entire VC model is built around the assumption that in a portfolio of 10 companies, 5-6 of them will fail as well.
I think "VC-backed startup" captures the thing Paul Graham is talking about, and I think the modifier "VC-backed" is particularly important because you want to follow the Graham playbook if you're VC-backed, but not otherwise.
You probably don't want to get me started on the growth and return potential of a consulting shop doing a regular 6 figures of revenue.
> The vast majority of tech companies aren't built to scale either, and the entire VC model is built around the assumption that in a portfolio of 10 companies, 5-6 of them will fail as well.
The latter isn't good evidence for the former. VC-backed startups are explicitly designed to either fail fast or grow quickly. So they simultaneously have a higher failure rate than standard small businesses and a higher rate of becoming $100M+ companies.
> I think "VC-backed startup" captures the thing Paul Graham is talking about
That's fine (and I agree that it's a more thorough definition), but I don't think it's useful to require a redefinition of a word that most people in the community already understand to mean high-growth VC-backed companies.
> You probably don't want to get me started on the growth and return potential of a consulting shop doing a regular 6 figures of revenue.
Honestly, I really really do. :) To be clear, I've had lots of success selling my time (either as a developer or, occasionally, managing a small team of contractors) but not at scaling myself.
The very fact that you're having this conversation indicates that not everyone here agrees with your definition of startup. If you want Hacker News to be a Silicon Valley only / Paul Graham acolyte space, I think it's a battle you've lost already.
The GP's point is that definitions are important and litigating the definition of the word startup has been tried before and doesn't end up benefiting anyone.
The logic flows as such:
1. People making judgements about startups
2. Not everyone can agree what the definition of a startup is (even if the benevolent dictator has stated their opinion on the matter)
3. Therefore it's incredibly difficult to agree or disagree about judgements of startups because the underlying definition is not clear
You may claim that #3 should be pg's definition "because its HN/YC", but not all HN members agree.
Okay, here's the other thing though -- unless you use the definition I'm providing, the article linked to here about "playing startup" doesn't make any sense. Unless someone genuinely doesn't understand that startup is being used in a narrower sense, there's no reason to raise this objection.
It's like objecting to a discussion about angels (the investors) because the word typically refers to angelic beings, or the baseball team.
Starting a business is not the same as a startup. Just like having your own business doesn't make you an entrepreneur. Finally, an idea can be great but that doesn't necessarily make it innovation.
We have one per week and sometimes cancel that because we feel it's overkill
Needing to have meetings isn't necessarily a bad thing. If you're making things that don't need many decisions to be made, and everyone agrees on the best approach, then meetings are completely pointless, but if everyone agrees then you're probably not pushing any limits. People have differing opinions at the edges, not about the boring well-trodden middle.
I'm interested actually as an engineer who do some side gigs and lives in Bangkok currently. Where is this shared office and how much do you pay for it?
ok, but the article was about signs that a startup is doing the wrong thing. it didn't for a minute claim that all startups are doing the wrong things. only that some of them are, and that these are typical warning signs.
Are you confusing bootstrapped business with a startup? Would you call a bootstrapped fast food shop a startup since the owner dream of making it up to a McDonald like chain?
Can confirm that not all startups are like this!
1) Meetings
We have one per week and sometimes cancel that because we feel it's overkill
2) Hiring tons of people
If anything we don't hire enough because we never spend money we haven't yet earned
3) Vanity benchmarks
One benchmark - cash in the bank (if it's too little, tighten the belt, if it's too much, spend it to grow)
4) Meetups
I'm terrible at networking and should do more of these!
5) Sponsoring conferences
HA!
6) Office, business cards and so on
Don't have either... 100% remote has worked since day one... OK, just got an office (sort of, it's shared) in Bangkok but no one works there!
7) Having more conversations with people outside of your market than people in it
I am totally guilty of that one!
Please don't take any of this as a claim that we are better... I can and have leveled a thousand criticisms at how I run things... just saying, "startups" that exist way, way outside of this mold are definitely out there :)