A Startup is Not a Company

a startup is NOT a company live work anywhere

I was just at an event last night where we went around the room and introduced ourselves.

Many people talked about their “company.” It’s hard to tell if they were talking about the company they worked for, the piece of code they were working on, or the group of friends they worked with to raise a seed round.

Steve Blank gave the best definitions of a startup I’ve ever heard: A temporary organization designed to search for a repeatable and scalable business model.

It’s a project. Until there are paying customers, a formed corporation, and a need solved that’s scalable, it’s a project. Startups fail because they are experiments.

Of course, it depends on where you are in the process. Anyone can turn from XYZ into CEO overnight with a project. It’s easy to give yourself a title and to build a prototype. That’s the simple part.

A startup moves from the project phase into the company phase when there is revenue. Revenue comes from paying customers.

By now, Lean Startup has become a common term. Lean Startup takes the principles of Customer Development and Agile Development and combines them. It’s important to think of customers first—who will actually buy your product? It ‘s usually not who you think! After you figure that out, how quickly can you iterate on your development when you learn this? This is known as agile development, or SCRUM.

On the other hand, there is no need to start a company (or even incorporate) when all you have is a project. Unless there are some patents, trademarks, etc that are essential to the core of the product, then all you really need to do is experiment. That’s the beauty of a startup. It’s not failure if you are experimenting and documenting what you’re learning.

A startup project is fun, exciting, and experimental. A company deals with real revenues and expenses, customers and support issues. So if you want to build a company, it’s okay to begin with a startup. Just keep in mind that customers are your goal. With customers comes real business decisions. If you don’t want a company, keep building startups! It’s all about the learning.

In your experience, at what point does a startup become a company?

Guts Not Grades

Guts Not Grades | Live Work Anywhere

Having a startup is about conviction. The most appropriate synonym that comes to mind when I think of entrepreneurs and startups is resilience. I compete with Ivy League grads for business who, disturbingly, many people look at in awe. Book knowledge and street knowledge are very different things. But, beyond knowledge are instincts and guts. Two things that can’t be taught.

I believe there is such a thing as “Startup DNA.” A startup is like a newborn baby. It needs nurturing.

People tend to get hung up on titles and labels. They mean very little, especially in the beginning when building a product. The product matters, your early customers matter. Not quitting matters.

It’s difficult to see the view from the top of the mountain when you’re climbing uphill and the top is hidden in the clouds. But, entrepreneurs know deep down inside that if they keep at it, keep climbing, eventually they’ll see the clouds clear (and return, and clear, and return, etc etc until they reach the top).

People have said entrepreneurs are special in the sense that they are illogical, unreasonable, or downright insane! It’s true that an entrepreneur is unique. Most people aren’t interested in extreme sacrifice. They would prefer to be comfortably led like sheep. The job of the entrepreneur is to convince the sheep that he/she isn’t crazy for thinking differently. There’s a process that takes place to get to that point that involves many sacrifices, overcoming doubts and challenges, and infinite bouts of courage.

As with dealing with a sick baby or trudging uphill when you’re exhausted, it’s not about running when things get tough.

Some people are cut out for startups; many are not. There is an excitement, even a cool factor, that people get caught up in. But when the hard work kicks in, 50% drop out. When there are tough days or funding is running low, the strong are separated from the weak, and the last one standing are the ones with conviction.

The true test comes when things are difficult.

Giving yourself a pseudo0title to get attention or to get into certain events or companies doesn’t actually change your DNA into that of a startup person. Skipping a night out with friends or a family function, even with all the pressure and guilt, to hit a deadline, is true dedication.

This is what I mean by necessary sacrifice:

“The workload of a start-up is ridiculous. It’s really not healthy. For eight years of my life, there were very few waking moments that Tripod did not completely consume. I rarely returned the phone calls of good friends. I routinely missed important family gatherings. I couldn’t keep a steady girlfriend. To put it plainly, I didn’t have enough time to maintain the sort of normal relationships typically associated with the human race.”

Bo Peabody, Greycroft Partners, in his book Lucky or Smart

I couldn’t have said it better myself. If you ever wonder if the daily grueling grind, the ups and downs, the mental anguish, the ramen noodles, the amazing days followed by crushing defeats, if all of it is worth it… take a look at Bo’s story. Are most people willing to stick around for EIGHT years, with few friend or family interactions? It’s up to you. I won’t lie, it wears on you. You question things—a lot. Sounds borderline insane, but it takes guts.

There has to be a balance, don’t get me wrong. I’m a huge believer in “sharpening your saw” as Stephen Covey says. Too much for too long causes productivity to diminish relative to time output. But what I am saying is that you have to have the chops to handle it.

A final great quote from Chris Dixon, CEO of Hunch, and active angel investor:

“It’s a cliche, but early-stage startups are really all about the people. Had you taken any company I’ve been involved with and drawn a straight line extrapolating forward, I don’t think you would’ve seen why it was an interesting company… what ends up happening is that the environment changes, you discover flaws in your original concept, and good entrepreneurs adapt and change. The only way you would’ve seen it is if you’d understood the passion and the guts of the people involved”.

– Chris Dixon, quoted on Founder Collective

Passion and guts.

I’ve had business partners, developers, salespeople, interns, clients, deals, and so on, come and go. Recognizing that this ebbs and flows, that startups are in a constant state of flux, is the key to overcoming the bad days and learning resiliency. Behind every cloud is a silver lining, after every crushing defeat is a rewarding accomplishment. You have to have the guts to keep going.

What do you think it takes to run a successful startup?