Small online business owner here, chiming in. I believe the overuse of the word startup comes from a certain kind of pretentiousness, a want to associate one's own small-business, small-market, technically trivial, mom-and-pop online business with world leaders like Facebook and Google. Making the linguistic link is good for the founder's ego, and even better for convincing naïve investors to fund barely viable visio…
As college student who grew up watching Zuck "get rich easy", I was easily taken in by the Hipster startup culture. Very unfortunately for me, I only found out about this fantastic site (Hacker News) about 5 months ago. By this time, the hipster ethos was rampant and I was swept up by it. My ego deeply resonated with their fancy promises and extravagant buzz words. However, there is a thread of hope. An undercurrent…
About a month ago, I was at a meetup which had nothing to do with technology or the internet but I ran into a guy who was throwing out some buzzwords. The point came early on when he asked me what I do, and I really didn't want to say I worked for a startup (because I sensed what was coming) but I did because I do. Then came the 20 minute monologue throwing out many more buzzwords and how he'd just moved to SV. He was going over how he was just pre-launch and outsourcing the coding, blah blah blah. He was very, very excited about his project (at least there's that). But then he told me what it was (I forget but it had to do with health, it might have been a lifestyle app) and I thought to myself, "but specifically what you're describing is not a startup, that's a small business that happens to be online."
He wanted to keep in touch, almost as if we were two kindred souls braving the unknown and at that point I gave him the (true) line that works really well in certain circumstances such as these. "I'm not searchable on Facebook, sorry, but you can send me an email." In casual settings, no one ever sends the email, by the way. It's FB or nothing.
Being that I have another regular job (that happens to be online), I now say I do that instead of "I work for a startup." Though, believe me, if I had one, I'd have zero shame in saying it.