A startup is a young company that is just beginning to develop.

Startups are usually small and

initially financed and operated by a handful of founders or one individual. These companies offer a
product or service that is not currently being offered elsewhere in the market, or that the founders
believe is being offered in an inferior manner.

The term startup has been bandied around with increasing frequency over the past few years to
describe scrappy young ventures, hip San Francisco apps and huge tech companies. But what is a
startup, really?
A startup is a company working to solve a problem where the solution is not obvious and success
is not guaranteed, says Neil Blumenthal, cofounder and co-CEO of Warby Parker.

Those who sip the startup Kool-Aid define it as a culture and mentality of innovating on existing
ideas to solve critical pain points.
Startup is a state of mind, says Adora Cheung, cofounder and CEO of Homejoy, one of the
Hottest U.S. Startups of 2013. Its when people join your company and are still making the explicit
decision to forgo stability in exchange for the promise of tremendous growth and the excitement of
making immediate impact.
According to Merriam-Webster, start-up means the act or an instance of setting in operation or
motion or a fledgling business enterprise. The American Heritage Dictionary suggests it is a
business or undertaking that has recently begun operation. Therein lies the rub to be a startup,
you must have set up shop recently.
Though there are no hard and fast rules on defining a startup since revenues, profits, and
employment numbers shift drastically between companies and industries, weve filtered out the
chatter of coworking spaces and hoodie-wearing employees to start concretely defining a startup.

A company five years old can still be a startup, writes Y Combinator accelerator head Paul
Graham via email. Ten [years old] would start to be a stretch.
Ill go out on a limb and say categorically that after about three years in business, most startups
cease being startups. This often coincides with other factors that indicate a graduation from
startup-dom: acquisition by a larger company, more than one office, revenues greater than $20
million, more than 80 employees, over five people on the board, and founders who have personally
sold shares. Somewhat ironically, when a startup becomes profitable it is likely moving away from
startuphood.
One thing we can all agree on: the key attribute of a startup is its ability to grow. As Graham
explains, a startup is a company designed to scale very quickly. It is this focus on growth

unconstrained by geography which differentiates startups from small businesses. A restaurant in

one town is not a startup, nor is a franchise a startup.
In recent years, popular lexicon has begun equating startups with tech companies, as though the
two are inherently intertwined. Is Uber, the car-hailing app which has raised a whopping $307
million in total funding for a reported valuation of $3.5 billion, really still a startup? Well, no its a
multinational logistics company which will generate a reported $213 million in revenue this year.
Certainly, startups often adapt technology to solve problems and the ubiquity of that technology
98% of Americans have access to the Internet, while more than half have smartphones allows
the critical growth. Though it often is, a startup does not, by definition, have to be tech-oriented.
And when a tech startup has grown so big its generating multimillion dollar profits, we should
acknowledge its status as a startup graduate.
In compiling The Hottest Startups Of 2013, I noticed organizations from real estate agents to
nonprofits calling themselves startups because of the lure of innovation attached. (For more on
philanthropic startups, read A New Nonprofit Model: Meet The Charitable Startups.) To be a startup
is to claim a freshness that suggests a finger on the pulse of the future. The label may even help
companies to cash in on a cool factor when hiring, allowing them to snap up qualified staff on the
cheap who are attracted by the promise of innovation and a ping-pong table.
Still, founders protest that a startup is a culture not delineated by metrics, and that a startup can
remain so at all ages and sizes.
It stops being a startup when people dont feel as though what they are doing has impact, said
Russell DSouza, co-founder of ticket search engine SeatGeek. I dont think the tipping point is a
certain number of people, but an atmosphere that people individually and collectively cant will the
company to success.
But keeping that dynamic culture at a company gets much harder with every new employee and
with every year that passes, noted Matt Salzberg, CEO and cofounder of dinner set delivery
service Blue Apron.
Many founders would also disagree that acquisition negates startup status. Although the terms of
acquisitions differ, an acquired startup becomes part of a bigger company and necessarily a
different entity. Similarly, a company contemplating an IPO or one that has already gone public is
far from being a startup. And if youre flying first class and wearing a suit to work, youre likely no
longer a startup, either.
If you are generating revenues below $20 million, have less than 80 employees, and remain
resolutely in control of the company you started, youre likely running a startup. Likewise, if youve
just set up a tiny for-profit enterprise and are intent on it becoming big enough to take over the
world even if youre still working from your bedroom youre probably a startup founder.