What is a startup? Is it such a small tech company?

Even before going to college, my friend and I established a "startup". I liked to say it very much because people around me usually reacted with great interest. They asked us what our idea was, whether I knew how to get financing, and whether I had checked if no one else had come up with something similar. However, the more I repeated the word startup, the more I wondered what it really meant. The key moment for me at that time was the question, my friend, what is the difference between a startup and a small company, e.g. such a neighborhood shop? The only thing that came to mind was an answer in the style that only a technology company created thanks to numerous grants can be called a startup.

Startup definitions

Starting with the analysis of many startup definitions from the dictionary English to definitions of various researchers and ending with entrepreneurs and precursors of methodologies such as lean startup or customer development, I believe that the easiest way to understand what a startup is is by learning about the purpose of its creation. According to Startup Coomons, startup organizations cease to be startups when they obtain the so-called Business Model Market Fit. That is, obtaining a scalable business model that, through its value proposition, matches the real needs of the customer.

Following this line of reasoning, we can therefore define a startup as a kind of temporary organization that strives to obtain the Business Model Market Fit.At the moment of reaching this stage, startups then begin their expansion, often noting rapid growth. This is the moment when a startup transforms into a company with a proven business model. With this assumption, a startup will differ from a company in that it aims to create a new, unique business model that did not exist before. The process of product development in a startup, therefore, consists in constantly verifying and shaping a business model that is ultimately to provide such a solution to customers for which they will be willing to pay. In the case of the establishment of a company, e.g. an insurance office, local shop, or restaurant, most often people conducting such projects repeat business models that have worked well before.

For some simplification, in order to understand the challenges of a startup that aims to build a scalable business model, we can imagine that we are in the middle of a dark maze in which there is absolutely no light, it’s completely dark. Our goal is to find the light switch along with the map leading to the treasure. The only thing we have is a pack of matches and information that in some places there are candles that we can light. Our goal is to light up as much space as possible with these candles and find the switch with the map. A similar situation occurs in a startup organization. Knowledge about the customer's true need is a dark maze; the number of matchsticks is the organization's money, and each lit candle is a kind of feedback. The more candles we light, the more we know. However, finding the switch and the map is finding the solution, i.e. "Problem Market Fit". It can be easily noticed that the conditions in which they are located are not entirely favorable for startup founders. Apart from the information that there are candles somewhere, they know nothing more. Like, for example, how big is this labyrinth, whether are there any traps in it, how many matchsticks will be needed, etc.

I believe that people who, despite such demanding conditions, are able to find a way out deserve appreciation. However, it is worth protecting yourself against such a trip into the unknown, e.g. by learning the methods and techniques of surviving in such a maze. There are many methods and techniques in the startup environment that can certainly help in finding Product Market Fit. It is also worth noting that if they are helpful in such uncertain conditions, then with more information they can turn out to be surprisingly effective.