que es una startup

13.04.2015

What is a startup?

Image | Startup Stock Photos

Although the word startup has been one of the hottest terms in recent years, its definition is far from simple. What does seem to be clear, however, is the mobile industry’s impact on this type of budding business; the most valued startup in the world is Xiaomi, a mobile device manufacturer.

Considering that most startups are tech-based and many are linked to the smartphone world, it’s pretty safe to say that the world of startups is now more mobile than ever.

However, the big question remains: What is a startup? The answer lies in different factors:

Growth factor

For Paul Graham, founder of Y Combinator, the key to startups lies in growth. Graham defines a startup as: “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 only essential thing is growth.”

Uncertainty factor

According to entrepreneur and university professor Steve Blank, a startup is “an organization formed to search for a repeatable and scalable business model.” In this sense, the road for a startup is full of uncertainties, since the sole objective is to find a way to gain profitability through growth.

Novelty factor

Along the same lines as Blank, entrepreneur Eric Ries says that in addition to facing uncertainty, a startup also has to create something new. In his own words, a startup is “a human institution designed to create a new product or service under conditions of extreme uncertainty.”

Technology factor

The strong tech component in most startups makes it inevitable to relate this type of company with technology. In fact, Wikipedia defines startups as “emerging companies supported by technology that are generally associated with innovation and technological development.”

Time factor

Another theory explains that a company stops being a startup over time. However, this implies establishing a time limit that can be up for debate. Is a startup a company that has been around for more than four years? Six? Does it depend on its particular business situation?

Work factor

Lastly, for many, start-ups are defined as small tech companies with few employees. If a company grows over a short period of time to have more than a certain amount of workers, say 200 or 500 for example, then it can no longer be classified as a startup, even though it is continuing to grow and create disruptive products. As such, Google, Facebook and King cannot be considered startups, but rather, major corporations.

whats a startup

Imagen | Startup Stock Photos

Of course there are many more ways to define a startup. Some take into account a company’s venture round and number of employees. Nevertheless, the definitions proposed by Graham, Blank and Eric Ries are, today, the most accepted. And what do you think? What’s a startup?