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A startup doesn't need to be a unicorn

mattgiustwilliamson.substack.com

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Re: A startup doesn't need to be a unicorn

#101

Post by flir »

marcinzm wrote: post #82
flir wrote: post #73

Earlier quoted context omitted.

You said this below, too. What's the difference? In my mind a startup is just a newly established business, but you seem to have a different vision?

Startups aim to grow quickly. Every single definition highlights that difference versus traditional small businesses. Trying to re-brand small businesses into "startups" for the cool name factor just seems silly to me. If you're making a sustainable small business then call it that. Don't call it a startup. You'll get more customers that way as well and more relevant business contacts. People care about startups beca…

Gotcha, thanks. I always thought it was "first 3-5 years". Could be an example of word meaning diluting as it goes mainstream - hacker being the ur-example. ("Semantic bleaching" is the jargon term, apparently).

I was wondering when the first use of the term in its modern sense was, so I just glanced at Google Books and found this from 1805, which is just too good: "a startup was a coarse kind of half-boot with thick soles; [...] its use is now superseded by that of the modern spatterdash." [spats?]

By 1949 I've got this: "But startup businesses, and even mature businesses in some localities, may face financial constraints" -- Agriculture Information Bulletin, Issue 664, Page 113. I can't find anything pre-WWII.

Re: A startup doesn't need to be a unicorn

#102

Post by pc86 »

tlogan wrote: post #96

I think the post is off. How exactly is a VC—or any investor, really—supposed to make money from a startup that’s aiming for a “middle of the road” outcome? That just doesn’t add up. In that case, wouldn’t it make more sense to invest in something safer or more traditional? From what I understand, the very definition of a startup is tied to ambition. Founders need to be aiming for the moon—or at least something close…

People use "startup" to mean "start up business" and not "business that is aiming for rapid, borderline-unsustainable growth and very likely requires hundreds of thousands, millions, tens of millions of dollar to even start thinking about achieving it," which is what the actual definition is.

VCs aim for 1 out of 50 investments to return 100x what they put into it, and the rest of them to die quickly and stop taking their attention. A company kicking off 5% returns every year is counterintuitively worse than flaming out immediately.

Re: A startup doesn't need to be a unicorn

#103

Post by flessner »

zwnow wrote: post #77
summarity wrote: post #9

Here's a model that exists in Germany, which I like: You can present a business plan to the state's investment bank and apply for several financial aides, including: * 1.5 years of universal basic income for you plus up to 2 other people. It's a tiny amount of money, but the point is to free you up to invest your actual time an money into the business. You do not have to pay this back. * up to 20k EUR in "consulting…

It's also connected to so much bureaucracy that you almost need to hire someone for that alone, because you wont have as much time for your actual business. Founding a company in Germany is so much unnecessary paperwork its crazy. Single handedly the only reason I will never try it in my home country.

Actually just founding the company is the easy part nowadays. You can do it online or let a notary work it out for you.

It's just everything else that's dreadful.

Re: A startup doesn't need to be a unicorn

#104

Post by kakoni »

summarity wrote: post #9

Here's a model that exists in Germany, which I like: You can present a business plan to the state's investment bank and apply for several financial aides, including: * 1.5 years of universal basic income for you plus up to 2 other people. It's a tiny amount of money, but the point is to free you up to invest your actual time an money into the business. You do not have to pay this back. * up to 20k EUR in "consulting…

So KFW (state investment bank?) has a thing called StartGeld (startup loan). I've wondered about few practicalities 1) What sort of collateral does bank expect from you? 2) Can you really get 125ke or more like 10-20ke? 3) Interest rate is a single digit number? 4) Can you really get 10 year payback periods?

Reason why I'm asking is that in Finland(where I live) these startgeld terms seem like a dream come true for entrepreneur. To give you an example;

1) Tradiotional bank wants collateral for the loan. For a 5k€ loan, 5k€ in deposits are needed. 2) There a lots of Swedish/Norwegian "loan-houses" advertising their services for companies, with interest rates are somewhere between 23-30% per annum.

Re: A startup doesn't need to be a unicorn

#105

Post by jasode »

esperent wrote: post #88
marcinzm wrote: post #82

Earlier quoted context omitted.

Startups aim to grow quickly. Every single definition highlights that difference versus traditional small businesses. Trying to re-brand small businesses into "startups" for the cool name factor just seems silly to me. If you're making a sustainable small business then call it that. Don't call it a startup. You'll get more customers that way as well and more relevant business contacts. People care about startups beca…

> Startups aim to grow quickly Maybe this is a US centric definition. It's definitely not what I mean when I talk about a startup with European or Asian tech founders.

>Maybe this is a US centric definition.

It's a common definition for new companies that intend to grow quickly beyond a small/medium size and very often associated with funding from VC.

1st paragraph from https://en.wikipedia.org/wiki/Startup_company :

>A startup or start-up is a company or project undertaken by an entrepreneur to seek, develop, and validate a scalable business model.[1][2] While entrepreneurship includes all new businesses including self-employment and businesses that do not intend to go public, startups are new businesses that intend to grow large beyond the solo-founder.[3] During the beginning, startups face high uncertainty[4] and have high rates of failure, but a minority of them do go on to become successful and influential, such as unicorns.

The characteristics in that paragraph don't apply to new mom & pop restaurants, dry cleaners, new law practices, etc so most people don't usually label them as "startups".

But there is no Global Language Police that everybody has to obey so if some folks wants to label their new neighborhood coffee house a "startup", nobody will stop them.

EDIT to REPLY: >If you keep reading we get to: "Unlike an entrepreneur, a start up founder doesn’t have a major financial motive." I'm not sure that is in line with the YC program.

I see that you're referring to a LinkedIn article that someone added to Wikipedia. I agree with you. That Linkedin blog by Japjot Sethi has bad heuristics and should be removed as a citation. The Wiki user that added it in May 2019 has been flagged and blocked for bad edits to Wikipedia: https://en.wikipedia.org/wiki/User:Sensate8

https://en.wikipedia.org/w/index.php?title=Startup_company&d...

Re: A startup doesn't need to be a unicorn

#106

Post by 9rx »

lelanthran wrote: post #86
flir wrote: post #73

Earlier quoted context omitted.

You said this below, too. What's the difference? In my mind a startup is just a newly established business, but you seem to have a different vision?

> What's the difference? In my mind a startup is just a newly established business, but you seem to have a different vision? A commonly accepted answer to this question is "The exit strategy does not involve 100X[1] valuation" [1] Pick the appropriate multiplier.

The dictionary defines startup as: "a newly established business."

Your take is typical on HN, but not the common interpretation.

Re: A startup doesn't need to be a unicorn

#108

Post by lelanthran »

9rx wrote: post #106
lelanthran wrote: post #86

Earlier quoted context omitted.

> What's the difference? In my mind a startup is just a newly established business, but you seem to have a different vision? A commonly accepted answer to this question is "The exit strategy does not involve 100X[1] valuation" [1] Pick the appropriate multiplier.

The dictionary defines startup as: "a newly established business." Your take is typical on HN, but not the common interpretation.

> Your take is typical on HN, but not the common interpretation.

TBH, it appears to be the commonly accepted answer to the question asked, but that doesn't mean it's a commmon interpretation.

To be even more honest, I'm not really sure how I'd classify the difference either; there's a lot of blurring of lines there.

Re: A startup doesn't need to be a unicorn

#109

Post by tiffanyh »

“Startup” implies VC-backed company.

And VC’s invest in companies to get a 100x return.

Which almost by definition means, if you run a startup - you need to get it to become a unicorn for it to be successful.

Otherwise, why take VC money … and just bootstrap it instead.

Re: A startup doesn't need to be a unicorn

#110

Post by 9rx »

jasode wrote: post #105
esperent wrote: post #88

Earlier quoted context omitted.

> Startups aim to grow quickly Maybe this is a US centric definition. It's definitely not what I mean when I talk about a startup with European or Asian tech founders.

>Maybe this is a US centric definition. It's a common definition for new companies that intend to grow quickly beyond a small/medium size and very often associated with funding from VC. 1st paragraph from https://en.wikipedia.org/wiki/Startup_company : >A startup or start-up is a company or project undertaken by an entrepreneur to seek, develop, and validate a scalable business model.[1][2] While entrepreneurship inc…

> The characteristics in that paragraph don't apply to new mom & pop restaurants, dry cleaners, new law practices, etc

I fully expect the founders of those businesses originally have dreams of their business becoming the next F500. But when validation fails...

> and very often associated with funding from VC.

If you keep reading we get to: "Unlike an entrepreneur, a start up founder doesn’t have a major financial motive." I'm not sure that is in line with the YC program. It is clearly focused on the huge exit.

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