Wait, what's a startup again?

Last week I attended the first instalment of That Startup Show, hosted live on the south end of Bourke St in the heart of Melbourne. I believe its establishment means a lot to the Australian startup ecosystem for a number of reasons, but primarily because That Startup Show has the potential to serve as a broadcast platform that scales the reach of startup jargon outside of the tiny silo that is the Australian startup community.

That Startup Show started pretty well. They managed to combine the comedic genius and stage presence of Dan Ilic with some of the country’s most prominent startup and technology personalities like Alan Noble from Startup Aus and Google (just in case you weren't familiar with the company that's basically taken over the world), Seb Eckerlsey-Maslin from Blue Chilli and Bronwyn Clune from Startup Smart. All personalities were pretty well qualified in the startup arena.

But, one of the first talking points was a question, and a question that concerned me ever so slightly.

The question that was put to the panel was "so what exactly is a startup?"

Each panelist had an answer, and Eckersley-Maslin somewhat quoted my favourite definition. But the question itself serves as a clear reminder of the immaturity of the startup ecosystem as a whole in Australia, and in this regard, we are far from alone.

The confusion surrounding what a startup actually is, and what is does not only exists in the general consumer market, but also within certain enterprise environments.

The spectrum of understanding is of course very broad, however in the consumer market, I believe the general consensus is that a startup is the same as a Small to Medium Business (SMB), which just isn't the case (some might even say there is no clear distinction between the two in the eyes of Government).

My favourite definition of what a startup actually is comes from Steve Blank, author of The Owners Startup Manual and Godfather to the Lean Startup movement.

Steve defines a startup as a temporary organisation designed to search for a repeatable and scalable business model.

I prefer to think of a startup slightly differently by defining it as a temporary organisation that must learn its way to a repeatable and scalable business model.

Both definitions are very similar, and my adaptation merely exists because it makes more sense not only in my mind, but also when I articulate it.

I believe there are two key takeaways here;

1. Startups are temporary

The only thing that matters for a startup is getting to product-market fit, because once you have it, you can go crazy, scale and build a real company.

*It is however important to keep in mind that once product-market fit is attained, it must be sustained. This is another battle entirely.

2. Startups are designed to search (or learn)

Startups are startups because they don’t have a business model yet. It’s the job of a startup team to test hypothesis so that they can conclusively validate whether or not they do or don’t have a business model, and a good one at that. The faster a startup learns, the faster it can attain the somewhat illusive and ideal state of product market fit.

This is the basis by which the Lean Startup gained its prevalence; by providing a framework that increased the speed of any given feedback loop and accelerating learning around a specific component of a business model or product iteration.

When I first came across Steve's definition, it was almost revolutionary. And, since this internal revolution of mine there have always been two very clear, distinct characteristics of a startup: 1. They are temporary and 2. They exist to learn.

These key insights provide a framework by which startups can be easily understood, and also provide insight into the behaviour and nature of a true startup.

I hope some of this provides you as much clarity as it did me :)

Image credit: Steve Blank