Wednesday, March 27, 2013

A conversation about startup

A: Hey, long time no see!

B: Yeah, it's been a long time.  How have you been?

A: Slogging through.  Still in the middle of startup phase.

B: Startup?  I thought you are well passed that stage.  I don't think anyone would consider your company as a startup.

A: Perhaps.  There are just lot going on, you know.  Hiring, getting new people up to speed, working out team dynamics, etc.

B: Sure, but that's not a startup-only challenge.  That is true for any growing company.

A: Yeah...  I am with you on that.  What would you call startup?  What makes a company startup?

B: For one thing, if it is a brand new, then obviously it's a startup.  Once someone told me that startup is a phase when money is invested for future revenue.  Basically, burning cash.  But that can't be it because my earlier startup we started making money about a month in.  It was small, but we were making money right away.

A: Positive cash flow right away.  That is the ideal model for self-funded bootstrapping.

B: Look, I have to run.  Have a meeting starting in a few minutes.

What does make a startup a startup?

I think it has more to do with risk tolerance and upside potential compared to current valuation.  Startup has a mindset that there is something to prove with their idea, investment and the team.  They are there to prove that they have what it takes to build a business and change the world.  They don't think about protecting their wealth.  They are out there to build something new.

And they are able to do this because there is everything to be gained by building something awesome from their blood, sweat and tears.

If there is no such mindset, I wouldn't call it a startup.

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