The term “startup” is becoming more and more popular, mostly in the IT industry. Most of the IT news are now writing about startups: people found it, analyze it, work for it and invest into it. You can find IT companies that call themselves “startup” everywhere, from such developed countries as the US to developing ones such as Vietnam. I myself have worked for two companies that call themselves startups, however, I still don’t have a clear definition of a startup. So what criteria define a startup? Is it the age of the company? Or the size? Or something else? I saw companies that have more than 100 employees and still call themselves startup. I saw companies that are more than 3 years old and still call themselves startup. So it seems to me that there is no “unified” definition for a startup.
The purpose of this post is to present a list of all possible criteria that may define a startup. My personal opinions will also be give in the conclusion.
A quick literature review shows that different people have different criteria for startup. This list suggests all possible criteria that people may use to define a startup:
- Age: Is less than 1 year old
- Size: Have less than 100 employees
- Revenue: Generate a revenue less than X amount of money
- Office: Do not have actual satellite office (office that have more than just a representative)
- Focus: Focus on learning, discovery and crazy growth instead of profit
- Growth: Is designed to grow fast
- Output: Expected output is a new product, a new technology or a solution for existing challenges in the market
- Members: Majority of the members (more than 50%) are entrepreneurs
- Culture: Have a “startup culture”
- Business model: Is designed to search for a repeatable and scalable business model
According to my literature review, the criteria about “business model” is the most widely accepted one, followed by the “growth” criteria. I myself totally agree to this definition: A startup is an organization formed to search for a repeatable and scalable business model. So as long as you are still figuring out how to make money, you are still a startup, despite of the age and size of your company. I also strongly disagree to the “culture” criteria: A company is a startup because it has “startup culture”. In my opinion, it should be the other way around: Because you are a startup company, you must have a startup organizational culture so that your culture is aligned with your strategic plan.