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Letter from the Editor: What is a Startup?
Mailbox: Letter from the Editor

Welcome, and thank you for being a part of Starting Up North!

Starting Up North is a place where we can tell the stories and share the knowledge of Minnesota’s startup and innovation community. Starting Up North is a new way to break down knowledge silos and shine a light on the people and issues that deserve to be talked about. But above all, Starting Up North is a labor of love.

Up north here we’ve got a pretty special place, one that deserves to be a hub of business, innovation and startups for years to come. While MN may already be home to 18 Fortune 500 companies (not to mention the largest privately held company in the US), there’s an opportunity to increase the talent and dollars coming to our region by continuing to grow and connect our startup ecosystem. Minnesota’s large companies can find opportunities to strategically invest in the future of their industry and de-risk their efforts in new and emerging industries. By staying engaged with our local startup scene, their employees can find innovative and fun solutions for their work or personal life, and even potential future investments.

For this growth to occur, our business community needs to know what’s going on in our own backyard. We need to hear stories like that of Dario Otero’s efforts to increase entrepreneurism, or the U of M’s efforts to bring cutting-edge technology to market via new startups, or the working reality for startup employees who are not the founders.

Starting Up North will bring you all of these stories, from longer feature pieces that give insight into the broader community to short profiles of specific companies to how-to guides contributed by experts at local startups. You can read more about how our content is structured and sorted on our about page.

Before I get to the meat of my letter (and it is meaty), I’d be remiss if I let this opportunity to say thank you pass. Thank you to Jeffery Bennett, Sarah Kalhorn, Graeme Thickins, Beth Meyer, Bill Brown and many others for the belief and encouragement that you have given me since the birth of this idea. Thank you to our writers and contributors for taking a leap of faith with me.

Lastly, thanks to you, reader, for visiting the site and taking time to read hopefully not only this but many of the articles you find here. Your willingness to read our content, share our links and give us feedback about Starting Up North is critical to our success.

In fact, I’m going to ask for your input, right here at the start, on a kind of important question when it comes to our coverage.

What exactly is a startup?

More than any other question or challenge with Starting Up North, I have struggled with a concept that, one could argue, is central to deciding what to cover. What exactly is a startup?

If all startups are business enterprises that are new, does it follow that all new business enterprises are startups?

To the vast majority of people I’ve spoken with or read the opinions of, age is not the only factor that defines a startup. Up until a few weeks ago, I would have told you with conviction that no, that new dentist’s office isn’t a startup, that new franchise isn’t a startup, and that coffee shop down the street isn’t a startup. But I have to wonder … why not? What test do they not pass?

I’ve spoken to many people and even asked social media to weigh in, and I’ve put together a list of the factors that people have brought up in trying to answer this weighted question. For basically every attribute I’ve run into an argument, most often in my own head, as to why it is too inclusive or not inclusive enough.

So I’m opening it up to you to help us discuss and define this term. While I may have opinions (some of them quite strong) on the different attributes listed below, I’ve chosen not to include them, so as not to influence you unduly. I couldn’t resist including several discussion questions, though. Take a look at the attributes below and let us know what you think:

Age — How long a company has been in business. Is a startup only a new venture, and when does it stop being new?

Team — The total number of employees (minimum and maximum). Do two people a startup make? Do you stop being a startup after your 50th hire? Your 500th?

Impact — The long-term goals and purpose of the company. Is impact always only financial?

Scaling/Growth — How big could the company get?

Revenue — A maximum average recurring revenue.

Valuation — A maximum valuation.

Funding — Specifically the mechanisms by which they are funded: venture, debt, bootstrapping. Are startups by definition venture funded?

Profitability — Does a startup cease to be a startup when it hits profitability?

Area of Focus — The startups we hear the most about and, often, think the most about are in “tech.” But what about those building a new consumer packaged goods brand, or creating social impact, or, I don’t know, building a new publication?

Product — Does a company sell products or provide services? And does one or the other indicate the company is a startup?

Maybe you think all of these factors should be considered, or perhaps only one or some small combination. This comment-versation will definitely influence the way that Starting Up North decides to define “startup,” and we’ll share our definition in the next issue. So please weigh in on the topic. Try to persuade us one way or the other, and, while you’re at it, check out the other content that covers just some of the interesting things happening here in Minnesota.

Enjoy the reads,

Stephanie

View Comments (5)
  • I think of startups as any venture where an entrepreneur is building something entirely new. This could be a new tech, new product, new store, or new business model. In my mind, it really is that broad. You probably stop being a startup once you either get an exit, or IPO, although I’m willing to be argued out of that. There are certainly businesses that haven’t gone public or sold that are not startups (Cargill comes to mind). I don’t have an easy answer to the reverse, though, startups that IPOd and are still startups.

  • On the spot, if I had to come up with a quick litmus test, I think if a company experienced really substantial growth last year (let’s say 100% to make it easy?), and it could do that again for the next three years (if successful), I think that might be a quick way to test it?

  • I think a startup can be defined by “If this doesn’t work we can’t make payroll and loose our jobs.”
    Eventual a startup becomes a stable lifestyle business, acquired, or is growing and waiting to be acquired (going public realistically doesn’t happen). When those things happen a startup is no longer a startup, but we will forgive them for continuing to use the word to attract talent and PR.
    When the biggest account calls with an issue there’s a heavy stone of despair that forms in the founder’s gut. “Will this be the call that ends it?” When that feeling goes away then the startup phase is over.

  • To me, “startup” implies aspirations to reach a specific inflection point (usually leading to rapid growth), as compared to a lifestyle business, sustainable business, or something else.

    I don’t refer to The Invisible Network as a startup because I want to grow it into a sustainable business. The business model all hinges on trust, and with that, taking funding would imply a goal of a future exit, which could potentially negate all the trust and goodwill I’ve built up to that point.

    This is a very loaded topic, but I look around at businesses that are old and new, funded and bootstrapped, and all of them, in my mind, are startups. This is a really hard question to answer 🙂

  • For me it would have more to do with the scale of the founder/s ambitions. Something that is driven to only be local/regional I would have a hard time calling a startup. However if the plan is to be a national/global player than I think we are in “startup” territory. I also don’t like the Valuation or Funding aspects since there are a lot of great startups which are outside of the funding arena (and I hate the term lifestyle business, it feels so demeaning to our ambitions). I also think you stop being a startup once you reach a scale of those ambitions (or get acquired, have an IPO, etc). There obviously will still be room for increased revenues, but at some point you are just a business. That part is fuzzier to me, but I don’t think it is time bound. But my guess is that if you do IPO you haven’t really been a ‘startup’ for at least a couple years.

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