What’s a startup company? Startup definitions & more.

What is a startup?

March 1st, 2020

3 min read

Two men chat while sitting on chairs inside a hip-looking startup office environment. People in the background are working on laptops and serving themselves food.

Are you a new graduate developer looking for your first or second job? Or an experienced developer looking to switch roles?

Before you start applying for jobs, it’s important to consider what kind of company you’d like to work for. Big or small? Established or startup?

Over the last few years, more and more developers are choosing to launch and grow their careers at startups. So, we’ve decided to run a 4-part series on working with startups. After all, we are a startup ourselves here at Tiny, so we have a few unique (and hopefully useful) insights we can share!

To kick things off, let’s start with the basics of what a startup actually is.

Cartoon shows two characters playing ping pong.

No, it’s not all tennis tables, bean bags, and free snacks (although, yes, we do have those here at Tiny). Also, not all startups are tech companies that develop apps, AI platforms, games, or trendy VR products (although to be fair, there are a lot of tech startups around these days).

Here are the facts...

Startup definitions

Investopedia defines a startup as “a young company founded by one or more entrepreneurs in order to develop a unique product or service and bring it to market.”

Merriam-Webster defines a startup as “a fledgling business enterprise.”

Eric Ries, the author of The Lean Startup, defines a startup as “an organization dedicated to creating something new under conditions of extreme uncertainty.”

What makes a startup a startup?

Some key factors that define startups include:

Focus - Unlike your average small business, startups are heavily focused on growth - the quicker, the better
Age - Most startups were founded within the last 0-5 years
Revenue - When turnover reaches $50 million, a business is usually considered a medium-large business
Size - If a business has more than 100 employees, it’s usually considered beyond startup phase
Product lifecycle - A startup’s product or service is still relatively new to the market
Innovation - They’re solving (or trying to solve) a problem and fill a gap in the market, often in a non-traditional way

But there’s no one-size-fits-all definition of a startup company. After all, startups aren’t exactly known for fitting neatly inside a box 🙃

What’s next after startup phase?

A group of people sitting on bean bags discuss ideas. A man and woman are visible

Startups can change quickly. Before you get pulled in by the comfy bean bags and industrial lighting, it’s important to consider what’s next for a company and what that might mean for your role and career.

Usually, startups go down one of these paths:

They scale up, expand, and become a medium-large business
They get acquired by a bigger business
They don’t figure out how to scale up but they keep operating at a small scale
They fail and the founders move onto something else

While you can’t predict where a startup will go over the next few years, you can look for potential signs of failure before you accept a job offer. The 4 most common reasons startups fail include:

No market need (42%)
Ran out of cash (29%)
Not the right team (23%)
Outcompeted (19%)

So, if they’ve got a good product, solid backing, and smart people on their team, a startup has a much better chance of success. Don’t expect the next Facebook or Google, but look for a solid place to stake your career for the next 3+ years.