What is a Startup?

The term “startup” is sometimes used too loosely and liberally.  Let’s consider the definitions of two respected authorities in the startup world.

startup-owners-manualAccording to Steve Blank, serial-entrepreneur, Stanford University professor, and father of the Customer Development methodology, “a startup is a temporary organization used to search for a repeatable and scalable model.

According to Eric Ries, entrepreneur, blogger, and author of The Lean Startup, “a startup is a human institution designed to deliver a new product or service under conditions of extreme uncertainty.

lean-startupWith respect to the journey any organization takes from founding to going concern, the term startup refers to the beginning of a process or journey.  Steve Blank’s use of the word “temporary” supports the concept of startup as the first step along a journey.  Once an organization concludes the search for a repeatable and scalable model, it can enter subsequent stages of maturity.

In this stage of the company life cycle, an organization is nothing more than an indefinite series of experiments to find and deliver an effective, repeatable, and scalable solution.  Founders are no different than scientists who:

  • start with hypotheses about problem and solution,
  • design experiments to test the various hypotheses,
  • measure results,
  • gather insights and learn from the results,
  • amend the hypotheses to reflect the insights learned,
  • and repeat this process

The more experiments a startup can conclude in a given period of time; the sooner it will arrive at effective solutions that can be scaled to ever growing audiences.  Given that scientists need multiple attempts at getting an experiment right, all of the experiments leading up to the ones that prove to be successful are considered failures.  Thus, we get the phrase, “fail fast, fail often” because if startups do this, they will arrive at success sooner rather than later.  In a world with limited financial runways, it is imperative startups experience a great deal of failure as soon as possible.

According to this definition, is your organization in the startup phase?