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Comment by s_dev | Hacker News Reader

This is HN while not everyone's subscribes to everything pg says there is a lot of agreement on what constitutes a startup and differentiates it from other more conventional businesses.

PG says a startup is any company who looks at growth as their primary measure. A business is any company who looks at the bottom line as their primary measure.

So it depends on the definition you wish to subscribe to. There isn't a universal consensus but in this sense many HNers would see GitLab as a startup despite being worth many Billions.

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Seems silly though. The term "growth company" seems a lot more authentic. Of course these labels are not black/white, but it's a useful distinction. There are simply different dynamics at a growth company vs. a startup.

A "growth company" is a company with high P/E, with the added assumption that the high P/E is justified based on an expectation that E will increase much faster than P.

"growth" is taken as the opposite of "value". A "value" company is a company with a low P/E, and with the added assumption that P is low due to reasons which are likely to change in P's favor.

Thus the difference between "growth" and "value" is simply if you are looking at the numerator or the denominator. This has no bearing on "startup" vs. "not startup"

> PG says a startup is any company who looks at growth as their primary measure.

Intel is a startup by this definition.

I'm willing to bet there is a non zero number of executives at intel that seem to be under the impression that it is.

Correct -- and he cites big companies like Google and Amazon as still being startups. I agree with this definition -- it's very useful for distinguishing different types of companies and ultimately why some can earn SO much more in investment compared to others.

Oh.

I really have a negative emotional response to abusing language like this.

All companies focus on growth to some extent. A growth-focused company is, in my option, a completely separate thing from a startup.

Though startups are usually extremely growth focused.

What about Cisco, then?

They are also very much focused on growth, and there was a time not so long ago when they were as dominant as Google/Amazon.

I really don't see how the definition is helpful in distinguishing companies, nor on how it has anything to do with which companies will be market winners.

For another example, Twist Biosciences. Some truly amazing tech, in a market which will dominate the future. They traded for about $20-30 from 2018 to early 2020. Peaked around 180 (6x 30)in Jan 2021. Currently trading as 31.92.

Are they a startup?

Disclosure-- A contact I discuss with regularly gives me some insight into what C-suites are actually thinking.

Novy-Marx (http://rnm.simon.rochester.edu/) showed that top-line revenue growth (rather than bottom-line, the "primary measure" cited above) was the strongest predictor of share price appreciation. He may or may not have been right, but he was undoubtedly influential, in that his insight lead to the "management quality" factor in factor modeling. [The Other Side of Value: The Gross Profitability Premium, Journal of Financial Economics 108(1), 2013, 1-28. http://rnm.simon.rochester.edu/research/OSoV.pdf]

So I would say most CEOs are looking at top-line revenue growth as their key measure.

Which makes PG's distinction more of a polemic than a discriminant.

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