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.
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.
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.
Where's the confusion?
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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."
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.
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.
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.
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.
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.
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.
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.
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'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.
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 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.
I agree that "venture-backed startup" is a useful mental category. Pretending that it's the only category is what bugs me.
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.
It's like objecting to a discussion about angels (the investors) because the word typically refers to angelic beings, or the baseball team.
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.
The redefinition (a useful one for many discussions) was by pg to clarify his points in several essays - not by the Wordpress community.