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.
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.