I’ve noticed many 30-second elevator pitches indicate a company’s size and scope, such as “Expeditors International is a Fortune 500 global logistics provider” or “Pelago is an early stage company building Whrrl”.

When does a company go from being a startup to being “early stage”, or a “small business”?  Milestones for making the jump could be:

  • X number of employees (30? 50?) and/or someone dedicated to HR full time
  • Heavy funding, or no expectation of taking additional funding
  • Existed longer than X period of time (4 years? 7 years?)
  • Enough revenue to keep your business alive, or profitable (now or in the past)
  • Publicly traded, or are part of a merger or acquisition

Keeping the “Feel” of a Startup

I can understand the desire to identify your business as a startup, even when you’re technically not one anymore.  Maybe some companies call themselves startups for longer than they should because they want to project a particular company culture:

  • Fast moving (running 100mph every day), with a sense of racing the clock
  • Scrappy and frugal when it comes to spending money
  • Open to new ideas, new directions, and able to seize opportunity quickly
  • Innovative and inventive, nothing is set in stone yet, no bureaucracy

You Can’t Deny Reality

So why does this matter? It matters because saying, “It’s okay, we’re a startup” becomes a cop-out eventually. Saying this to potential employees, investors, or customers when it isn’t true comes off as disingenuous and smacks of enormous denial of reality. Denial of reality (think ostrich with its head in the sand) is my number one red flag when dealing with other people.  I find the inability to see the world as it truly is, is rarely a one-time error.  Usually, it can be found to be a systemic flaw in thinking that rarely results in success.

Some companies cling to the title of startup even when they are heavily funded businesses, hiding behind the label as an excuse for not having reached profitability.  Being a startup is like being an entrepreneur, it’s a temporary state.  You can be entrepreneurial but not an entrepreneur just as you can be scrappy and innovative without being a startup.  In the best case scenario the entrepreneur becomes a successful businessman and the startup becomes a successful business.

Breakdown of Business Types

Startup:  a new company, working on building proof of concept

Early Stage:  has achieved proof of concept, working on building revenues

Business:  a company with revenues, working on achieving profitability

Successful Business: a profitable company