My thoughts on why I will not call my business a startup again | Hacker News Reader

My thoughts on why I will not call my business a startup again

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90 pointsayusaf50 comments

I think today, startups and businesses are two different things.

A business makes money. You see them all around you. Restaurants, companies that sell products (online and offline), web design firms, etc.

These businesses impact the rest of society. Real, everyday people buy from these businesses and often rely on them. Your family interacts with them, understands them, knows them.

A startup is a game. You play by the rules of the game. You (traditionally) spend a lot of time seeking VC money, get enough VC money to spend the next few years working on whatever you want, regardless of the results, and then either sell the startup, get acquired, or shutdown (exit).

The players of the game are often the only ones involved. They're the founders, the customers, the VCs. The game has very little impact on the rest of society.

But every now and then, one of them will be able to have enough of an impact to be considered a gamechanger, though these are probably outliers. Pun intended. :D

While I agree with most of what you said, the one outcome you haven't mentioned is the startup becoming a business. Start off spending VC money while putting together your business model and monetising. Exit your startup 'phase' with all of that in place, and making profit.

If VC money is involved and all that happens is a regularly profitable business, then is not really different from total failure.

To not be a failure you business must be a HUGE success, grow and profit like only startups like Google and Facebook have.

One thing I don't get... someone please enlighten me..

If a VC puts money and a startup doesn't get acquired, or goes to an IPO, but becomes profitable, the VC doesn't get anything, right (assuming no dividends)?

So making profit in that sense is still not considered success. So there's some validity to the idea that startups are a game. You're betting on a bigger fool acquiring it, whether it's another company, or the public market. Sort of like buying stocks.

In that case, everything is a game. When I throw money towards a milkshake at McDonalds, I am betting that I will derive some pleasure from consuming it. Sometimes I do, sometimes I don't.

So, everything's a game - with varying odds of winning?

that wasn't the bigger point I was trying to raise. I don't care a penny about semantics and the engrish language.

VC's and experienced angel investors use a clause in the funding agreement which can force you to sell. That clause is probably never used in real life but its presence in the world of VC explains itself.

Really it is unlikely that you will create a lifestyle business which is funded with venture money and is one of the things that vcs avoid since it is a failure from their standpoint.

mh, dont startups most of the time have customers/users of some sort too ? I bet most startups have more people interacting/relying on them (users/customers) than your local restaurant or web design firm.

I think you're missing out on an important point - Users are not the same as Customers.

Customers pay you money, they are what you need to build a business. Having millions of users who don't provide any revenue is only useful if your goal is just to be bought by someone else.

I personally think that it's a sad state of affairs that most startups don't seem to be interested in building businesses, but instead just want to play the acquisition lottery instead.

For many startups users are also customers because they pay in one form or another for the startups services. Of course there are a few startups that have enough funding to not care about monetization at all but thats an exception imo. I see much more web app service startups, mobile Apps, Games etc that actually charge something even if its not upfront. I run a games startup and our users are customers as well.

I enjoyed the article, never liked the term startup vs business, and nothing (not even hn) can really prepare you for what to expect when you actually go for it and start one.

But it's not a game. When people's businesses (even startups) fail, there's real harm done, maybe harm that will take years to repair. I guess when it's OPM who cares... but that attitude can be a precursor to irresponsible spending/investment and there seems to be a bit of that going around these days.

if vcs don't risk (avoid failure[by all means]), they wouldn't be rewarded. anyway they sometimes say 90% of startups fail... moderate income may be better than complete failure

http://www.brighthub.com/office/entrepreneurs/articles/78553...

i heard people say that the Valley beats other places of the world in creating Suns, Googles and Facebooks because [one of the reasons] it risks more and considers failure as experience

(harm too, but not that deadly)

"there's real harm done"

Not really. Having been a low-level employee on several of these sinking ships in the past few years, the pattern is despicably predictable. Everyone who works for a startup knows the game they are playing. Many of the experienced ones will even see the writing on the wall and bail early. The laid off employees have no trouble finding their next job. Just like in Vegas, there's always another game starting up in Silicon Valley.

The VPs plan for failure going in. They may lose some money, but they'll cover the loses with some of their other investments. They play the odds.

I think the only real harm is to the state of California when hundreds of people are suddenly on unemployment for a month or two between jobs.

You should put that on your next pitch deck: "VCs-- If you invest in me, you can expect to lose money! That's your business model, right? Take it from me, I'm practically making a career out of jumping off one sinking ship to another! Yeeeeee haw!"

These businesses impact the rest of society. Real, everyday people buy from these businesses

So either Facebook/google etc. were never start-up or they are making imaginary money(in billions, I must say) from imaginary customers.

You bring up a good point. Real everyday people aren't Facebook's customers, they're actually Facebook's product.

But Facebook does impact the rest of society. Families are sharing photos with loved ones, important news with those far away, etc.

Facebook's situation doesn't change my opinion though. It's an exception, not the rule.

I thought "startup" was a PHASE of business in which it STILL doesn't generate revenue and/or is trying a business model...

I think the tech-sector has significantly skewed what it means to be a "startup". But that has mostly to do with that fact that we only hear of the "startups" that are funded by some well-known VC for some large amount of money. Money that is used to build a product and advertise yet have no signs of being profitable in the near future (http://www.color.com/ comes to mind as an example of this). The media paints a pretty rosy picture of what it means to be a startup making it a glamourous venture to be associated with.

There are however plenty of companies that are just starting up, being bootstrapped from the beginning, and are happily putting food on the founders' table, but these are the startups you never hear about.

It's not the terminology's fault that you didn't understand what "startup" meant (even to yourself) when you used it to describe your project.

And if "startup" is indeed the correct abstraction for your project, why not use it?

Finally, consider your audience when picking your words. Your family is likely to be more interested in what you're doing than the fact that you're doing it in a startup. You wouldn't tell them "I work in a company" either, you'd say "I am a software developer on product X that does Y for Z. I especially like that I get to do W".

ALOT of people in this industry don't understand what the terminology means, at that rate..

That's probably true, but it doesn't logically follow that we should abandon the term.

Then they should read Four Steps to the Epiphany, Lean Startup, Innovator's Dilemma, or any of the other, you know, actual books on the stuff, and learn what the term Startup means.

Some innovative Fortune 500 companies are more of a startup or engage in more startup-like behavior than some self-proclaimed "startups" that have no idea about customers, market, and the discovery thereof.

I don't understand how terminology could ever lead you to such differening conclusions.

Maybe I own a cat. It's a great cat. But this morning, I decided that it is actually a fish, and as such, is a failed fish, because it can't breathe underwater. Or maybe it can breathe underwater, because it was a fish all along.

In any case, expecting a change in behaviour just because I changed the name... bewildering.

Great minds think alike http://news.ycombinator.com/item?id=3242765

I think you've hit the nail on the head. Calling it a startup is avoiding facing the fact that you are trying to start a business, which needs to be profitable to ultimately put food on the table.

Seems they didn't even have a minimum viable product or some basic customer research. So they weren't even a startup. That which we call a rose by any other name would smell just as sweet - Shakespeare Calling it a business wouldn't have helped.

That which we call a rose by any other name would smell just as sweet - Shakespeare

But calling it 'dung' kinda derails the conversation.

I'm in total agreement and think we should ditch the term entirely, as I wrote here:

http://themodernprogrammer.com/post/ditch-the-term-startups/

To me, as a customer, startup has a negative connotation. I am always reluctant to depend on any nontrivial service provided by someone calling itself startup, because I know they are not here to stay and continue to provide the same or improved service in the future. Instead, their goal is to exit by selling itself to whoever wants to acquire them, and that usually means the end of their service.

If I have to depend on the service, let it better be provided by a business that is struggling to make money on it for as long as possible.

We may very well see the slow fade of the word 'startup' as we know it.

The historical tendency seems to be towards consolidation. The web has been a beautiful chaos for us, but we are already seeing the changes. To name two, SOPA seeks to more rigidly defend intellectual property rights; Google has started charging for excess use of its maps. In other words...people are looking to make money.

And that is reasonable.

The low hanging fruit of the internet will disappear shortly. Like the land rushes of the railroad era, where pamphlets proclaiming the glories of midwest farming were distributed all around the world, it is important to remember those pamphlets were printed by the railroad companies themselves.

Are you speculating? Claiming 160 acres of land in Nebraska in the hopes the town booms? Or are you selling train tickets leaving New York?

"startup" as a term of trade might be accepted within certain circles. Beyond that I think it sounds really dumb to anyone who's been in business for more than a few seconds.

One of my favorite WTF? phrases is "start a startup", particularly when uttered with the "gummy" California speech pattern of a 17-year-old.

Hmmm. "Start a Business", that's what you want to do. What the hell is "start a startup"? Some kind of a recursive call? Does it imply that you are in that mode forever?

When are you done "starting a startup"?

I can see someone saying "We are going to launch an experimental business to test an idea" or "We are going to test an idea for a business" or "We launched a business to test a few ideas". Now that make sense. The term "startup" is amorphous and "start a startup" sounds even dumber.

Oh, yes, then there's "do a startup".

Sounds like the OP's idea of a startup is just an entity to acquire lots of users (eyeballs), and the money will follow, somehow. Sound familiar? Revenue? Profit? What's that?

And reading some of the comments here, it seems many people have the same idea. I am surprised at this. I thought we had all learned this lesson back in the last Tech Crash in 2001. A startup is a business. A business needs to make money to survive. The purpose of a startup is to get the point of making money as quickly as possible. Simple as that.

At the end of the day your ultimate goal is to make money, that's all. I like the change you're suggesting. We're really just riding out the cultural wave that started when all the "dot coms" were startups, and so all tech companies under the meme of "two guys one VC" became "startups."

Historically you wouldn't be a startup if you bought three ships and sailed around the map to collect spices from India, but we might consider Christopher to have been a startup which collected VC funds from Spain before three ships came sailing.

We call them startups because our clan (two guys one VC) inherited the name from the businesses before us (Amazon, Apple, Microsoft). If you want to go and change the name you will have resistance, because that's what the name for our culture is. We're filled with names that don't truthfully reflect who we are, for instance, American is often thought of as the nationality of people from the USA, but that's silly because the Americas contain many more nations. Why aren't Mexicans considered Americans, yet Germans are considered Europeans? Everyone understands that Americans are from the USA, and Europeans are from Europe.

Everyone understands that tech companies are from the land of two guys who are trying to start a business with some funding. I like the idea of changing the name to something with great synergy for a new cloud-based webospher3.0 on the extranet, but to be totally honest it's simple re-branding of something most people involved with startups and VC understand. If your company is stuck starting up, I have a hard time believing it's simply because you called yourselves a startup. Many "businesses" are also in the same "startup" phase, and it's not because they call themselves businesses. I like the re-branding only because the name "startup" is a silly name, just like I wish we didn't call people from the USA a word that represents the population of two continents.

> Why aren't Mexicans considered Americans, yet Germans are considered Europeans?

I think you know this, but that's just a quirk of the language, that there's no euphonious way to say "United Statesan" since "States" isn't really a proper noun as a place name. "American" is a least-bad option.

Also, there could be other "United States" entities in the world. The USA isn't the only example of that construct. The demonym for a resident of the Federated States of Micronesia is "Micronesian".

Besides, "American" would be a bit too broad in applying to two whole continents. Nobody lumps Germans and Japanese together under "Eurasians". A Mexican is a "North American", which along with "South American" is a perfectly serviceable term and carries just about the same amount of specificity and meaning as "European".

Yes, naming is important, but it's also important to go along with established convention for meaningful communication. "Startup" conveys the potential of shoot-to-the-moon growth and profit that isn't possible in an established large company, and your listeners will lose some of that connotation if you switch to simply "business".

And Mexican is the demonym for people from... The United States of Mexico.

Likewise, a New Yorker can be someone from the state of New York, or someone from the City of New York.

Besides. Geologically/geographically there isn't one huge American Continent. There are two land masses. The North American continent in which North Americans live and the South American continent where South Americans live.

In that respect it's like the Eurasian continent. No one from the European and Asian continents call themselves Eurasian. There is a term 'Eurasian' but that's for people of mixed heritage.

Basically, the parent poster is tilting at windmills.

I like this mentality. "Startup" should be treated as a transitive verb that needs an object ("business", usually, although other special cases can exist), rather than as a noun.

Doing a startup is similar to writing a book. You put in the time investment up-front (sweat equity) in the hopes it pays off. Sometimes it does, sometimes it doesn't.

It's not a traditional business where you sell gadget A to person B and make the difference in buy/sell.

If you want to do the latter, go ahead, if the former, go ahead. But don't let labels hold you back from either.

Totally understand your confusion. Best advice I heard when I was learning about startups: forget a business plan and come up with a business model... you can also just call your business a company, that's what I prefer

I didn't quite get form the article, she was a non-technical partner, then what was her role? just a designer?

wasn't it her job to make a business from the technology her partner was making?

A startup with users is like tapping a vein in a mountain. You can keep digging or sell your claim to a larger mining firm. That's market share and it can be a valuable commodity on its own.

Maybe a startup is simply an unproven business and once it makes profit and has a proven business model, you can call stop calling it a startup?

<Yawn> Here's a nickel kid, go buy yourself a book on entrepreneurship.

But that's his point. If he was aware that his startup actually were a business, and not just a "startup", he would have operated it as a business (and likely learning and pursuing as much knowledge as he could).

However, the term "startup" took his focus away from thinking of it like a business. Once he realized that it actually was a business (which needs profits) he knew that it was a bad one and shut it down.

But that's... insane. Changing your entire perception of the company you own based on the labels that you have chosen to apply to it? When you run the thing you really ought to have a clearer idea of what is going on.

It's psychology - we all fall fowl of the labels we apply to ourselves.

FWIW, I downvoted your comment simply because I don't think that kind of snarkiness is appropriate here on HN.

That said, I agree that there is some basic, foundational knowledge that it sounds like the author of this piece was missing. That's not uncommon among technologists though, in my experience. Myself, I was in this field a long time before I got around to reading "The Art of the Start" and "The Four Steps to the Epiphany" and that's when I really started to understand more about this "startup thing."

So yeah, I agree there is some stuff the OP might want to read / research / study... but I would suggest ditching the snarkiness in communicating that point.

Advice to call your business a business? Hrm.

I think the picture painted here is the larger problem. Someone who gets out of school and immediately sees client work as "just another client" is an issue. When someone sees self-employment as an easier option to the daily grind we have an issue. When someone thinks that their untested idea is worth devoting two years to, when everyone in their life has solid questions, it is an issue. And then to blame semantics for why you thought all of the above...terrifying.

When someone introduces themselves as an entrepreneur it is a symptom of an ego. Some people love being an entrepreneur more than they love being a great business.

A few years ago - even after having already started a company - I used to call myself a programmer or software developers.

Nowadays, I usually call myself an entrepreneur because being an entrepreneur in most cases indeed is fundamentally different from being employed, even if you're employed in the very same industry.

I find it easier to liken my 'job' to that of other business owners (including even something entirely different such as pubs) than to that of a software developer working for a Fortune 500 company (and I've been working for those, too).

I do take pride in being an entrepreneur. Does that have something to do with ego? It sure does but it isn't the only aspect.

I'd say though that society as a whole does have issues with the assumed default mode of being an employee. For starters, 9-5 sucks. Why do I have to sit 8+ hours at a desk to prove that I'm actually 'working'. Our whole idea of work organization is still so centred around the concept of personal presence and fixed working hours that it simply doesn't fit any more. Yet most companies still insist on these ideas. So you can't blame anyone for thinking that corporate working environments are ridiculous and not worth pursuing.

But there's the catch! For an entrepreneur a 9-5 is a short day. And keep in mind that for billions, a 9-5 would be a miracle.

To think that you are above this time investment, or that you can achieve great success without equally great risk, is to believe that you are entitled to more needlessly. This entitlement (not you, just generally) is a mental disease which guarantees failure. Entrepreneur has this same tone. All pomp, without the blood, sweat, and tears to make it mean something.

I'm not saying that working 8 hours a day necessarily is a problem. If you manage to keep that up having 8 hours of quality working time per day is great.

The problem lies in having a rigorous schedule telling you when and where to work. Another problem is fake work ( http://lifehacker.com/5710930/cut-out-the-fake-work-and-focu... ). In corporate environments there's a widespread tendency of wasting time on useless action just to pretend that there's work going on. Work also tends to fill up the time available for it ( http://en.wikipedia.org/wiki/Parkinsons_law ).

Activity more often than not is valued higher than efficiency or actually accomplishing something. This is why we see things like prolonged meetings and convoluted specification documents nobody actually reads. You didn't actually accomplish something but hey there's this 200 pages long bullshit specification that proves you've been working, right?

I think is due to our society's perception of what constitutes work. Work is seen as something that has to be hard, long and cumbersome or in other words: "If it doesn't suck it can't be work." People like the notorious Tim Ferriss who seemingly manage to get through work and live much more easily generally are regarded with suspicion.

So, while I think that the 4 hour work week maybe is a little extreme and certainly isn't applicable for everyone it shows the right direction. Work and work organization has to adapt in order to produce meaningful results, not just unhappy, stressed out workers.

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