There Are 3 Kinds of Startups

Recently I came up with a new taxonomy for startups with three categories I call Astronauts, Infills, and Accretives.

I’m not yet sure if this taxonomy is complete or will stand the test of time—apply it to your startup and see if it gives you ideas on how to build a stronger pitch.

Astronauts are companies aiming to conquer new worlds. Successful examples include OpenAI, Airbnb, Bitcoin, Tesla, and Mosaic (Netscape). The success of any of these was speculative, but their impact is extraordinary.

Once they have shown the way, there is a rush of Infill companies whose pitch is based on the success of the Astronaut. Most recently, of course, OpenAI’s success with ChatGPT has set off one of the most remarkable Infill land rushes of the modern tech era. But each of the companies I listed above—and dozens more—created entire economic sectors.

Infill can follow non-startup Astronauts. The iPhone was a product from an established company. Covid functioned like an Astronaut, suddenly illuminating all manner of opportunities that companies rushed to fill. Donald Trump, the Covid of politicians, is also an Astronaut. His infection of the body politic has created a number of Infill business opportunities.

The final group I call Accretives. These are companies in industries that keep growing over time, and Accretives simply offer variations on the theme to continue serving demand. No Astronaut kicked off the party, at least recently; there’s just a strength in numbers. Innovations in pharmaceuticals, supply chains, and semiconductors are Accretion plays—the broad category is accepted, there’s money to be made, and innovation keeps getting rewarded.

What does all this have to do with storytelling? Well, every startup is a bit Astronaut and bit Infill/Accretive. True Astronaut businesses are high risk (and potentially very high return). Given the high profile and high returns of Astronauts, and given the easy drama of ‘revolutionary’ and ‘game-changing’ framing to which startup pitches often default, everyone wants to found one. Astronaut startups are the ones we all know by name.

But they’re highwire acts, and Infills and Accretives are lower risk. No matter how bold and speculative your vision is—no matter how Astronaut—it’s in your interest to make yourself sound like one of the other categories, particularly when fundraising. (When presenting at your industry conference, feel free to go into full Astronaut mode.)

The fundamental thing you had to believe about Airbnb to invest in their seed round was that normal people would allow complete strangers to stay in their homes. That was very Astronaut—but their seed-round deck took pains to point out that people were already using Craigslist to offer their homes for rent. If that is the case, then Airbnb is but an infill opportunity to provide a marketplace platform for this proven behavior.

Last year I did a deck for a company using radiofrequencies to reduce brain inflammation. Imagine wearing a headband for 15 minutes and suddenly your long Covid vanishes. Totally Astronaut! To make it sound more Infill or Accretive, however, we made sure to draw on research and related innovations that made the idea of exposing your brain to radio waves seem like incremental innovation.

I’m currently working on a deck for a company that is developing scientifically rigorous microbiome tests—imagine going to the doctor and in addition to blood pressure and blood panels, they order a microbiome test to assess your health. It’s an astronaut business if we present it as a novel opportunity; it’s Accretive if we describe how other biomarker tests, including genomic ones, have proven a thoroughly analogous business model.

Clean energy, particularly breakthrough new energy sources, are another area where I see a lot of Astronaut talk where Infill or Accretive positioning would more successfully soothe investor concern.

The biggest area of Astronaut decks? Quantum computing. Like AI, there’s no effective analogue we can point to. Everyone intuitively understands that quantum computing has the potential to be an absolute blockbuster, but, like AI, it would so fundamentally rewrite entire swaths of the economy that it’s hard to predict the first-order effects the technology would have, much less second-order impacts, or how the structure of the economy changes, or which companies thrive in the transition. There’s just not much you can do to make a quantum computing startup feel like anything other than pure Astronaut, and that limits the potential investor pool.

So: which category does your startup fit into, and is your pitch optimized to allay investor concerns through Infill or Accretive framing?