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What is a Startup?

by Scott Yates | Jun 15, 2017 | Startup Accelerator | Startups |

What is the sound of one hand clapping?

Did D.B. Cooper Survive?

Are you experienced?

Is there a Santa Claus?

Throughout history, we’ve been intrigued by questions that are unanswerable on their face.

Those questions don’t invite answers. Instead, they provoke thought, spark discussion, and help the asker reach a deeper understanding.

To that list we can now safely add:

What is a startup?

It's a question that's launched o n e - z i l l i o n blog posts, and created many hearty arguments, usually over craft beers at startup gatherings held in brightly lit, open co-working spaces by men with intricately crafted facial hair.

Unpack that question just a bit, however, and it's easy to see why it's such an unanswerable question.

Consider:

  • Is Uber a startup? Its market cap is well north of profitable transportation companies that have been around for 100 years, and yet people still call it a startup.
  • Is a local pizza parlor that just opened a startup? What if it has its own app? What if it has only locally sourced and artisanal ingredients? What if the proprietor gathered community members together and crafted a manifesto with lots of words like “meaningfulness”? What if it is doubling in sales every year?
  • To get more specific, what about a company called BlogMutt? I’m a founder and was the CEO for five years. It uses crowdsourcing, Software as a Service, and other business buzzwords unheard of a decade ago, but it never took VC, was profitable from the earliest days, and now the company is in its sixth year and is still growing fast. Is it a startup?

(In America, by the way, anyone can say they are a “startup.” In India, anyone can apply to the government for official designation as a startup. Seems like about the least startupy thing a company can do, but…)

The question behind the question

Why is this even a question? Why are we even talking about this?

Because startups are awesome.

I’m not being ironic here. Startups really are awesome! The things that people believe about startups are in many cases true.

What are the parts that are so great?

  • Startups are an engine of innovation
  • Startups have employees fully engaged in the business
  • Startups disrupt markets

All those things are true, even though people inside of startups will tell you that the reality of startups is defined more by things like:

  • High chance of failure
  • Lack of revenue, let alone profit
  • Exhaustion and burnout

Eric Ries literally wrote the book on startups — indeed he’s written several — and his definition of a startup is this:

“A startup is a human institution designed to deliver a new product or service under conditions of extreme uncertainty.”

Do you see the split built into that quote?

Imagine reading that to a room full of employees in a giant corporation. They would all nod their heads and think that they fit into that definition… until the last word: “uncertainty.” At that point, they would look at their shoes, and then nervously glance around the room to see other reactions.

Nobody ever got ahead in big companies by getting excited about uncertainty.

Why this matters

Every business that wants to grow — in other words, every business — would love to embrace a startup ethos when that ethos is all about innovation, engaged employees, and entering new markets. It’s understandable that they are not as excited about failure and uncertainty, but more and more they seem to understand that the two go together.

Why? In part because business leaders, economists, and even some politicians are beginning to realize that without startups, the whole economy starts to falter.

That’s why even politicians are taking notice. They can’t help but notice that startup hubs like Boston, San Antonio, Denver and San Francisco have unemployment rates that are essentially zero.

So with all this attention, with Shark Tank a top-rated show and people integrating startups like Google and Facebook (?) into every hour of their waking lives, you would think that this would be a magical time for startups and new business creation, right?

It turns out to be wrong. It’s all hype. We are actually at historic lows for new business creation in the United States right now, and it’s been going downhill for a while.

Let me say that again, and underline it with the research: We are at historic lows for creating new businesses in the U.S.

In short, the experts say, without startups, the whole ball of wax falls apart.

And millennials, for all their hype, are the generation that is least likely to start a new business.

That’s why this matters. The whole future depends on new business creation and success.

What works

If what we need is more new businesses, and we need those new businesses to succeed, there are some things that we know work, and I’m happy to report that CableLabs is in the middle of doing some of the things that work.

For instance, I’m writing to you as one of the first class of “Innovators In Residence” at CableLabs. Based on the Entrepreneur In Residence model that started with investment firms, and has spread to corporations, universities and even governments, the idea is that established organizations invite people with a history of new business creation in, and then allow them the latitude to try crazy new ideas, to “fail fast” and to create more of a startup environment.

It’s like getting a booster shot in startups -- 20 CCs of innovation delivered directly to the corporate bloodstream.

And that’s only the newest program at CableLabs to encourage startup success. The UpRamp Fiterator program is quickly developing a reputation around the country as one of the most successful accelerators because of its unique approach captured in the on-the-nose hashtag: #DealsNotDemoDays. Participants in nearly all accelerators emerge with a great pitch, which is really helpful for a demo day but has a shelf-life that would make even Wonder Bread blanch.

UpRamp companies definitely fine tune their pitch, but more importantly, with actual DEALS with service providers in video-broadband-wireless. These companies touch the home and work lives of huge swaths of people around the world.

Having started three companies, I can tell you: That’s what startup success looks like.

Other organizations are catching on, and if we keep talking about it and then if that talk can turn into action, hopefully we can turn the corner and get back to new business creation numbers that can be “up and to the right” once again.

Yes, Virginia, there are startups

Taking a look at our list of questions that started this post, the one that resonates the most for me is the one about Santa.

The most famous answer to that question came in a New York newspaper’s response to an 8-year-old girl, who wrote to ask if there was a Santa Claus.

That answer, in part, was:

Yes, Virginia, there is a Santa Claus. He exists as certainly as love and generosity and devotion exist, and you know that they abound and give to your life its highest beauty and joy. Alas! how dreary would be the world if there were no Santa Claus. It would be as dreary as if there were no VIRGINIAS. There would be no childlike faith then, no poetry, no romance to make tolerable this existence. The eternal light with which childhood fills the world would be extinguished.

If anyone ever asked me if startups even exist, given that even hours after a company is formed it’s no longer a startup, but an existing company, I might say this:

Yes, Virginia, there are startups. They exist as certainly as T-shirts and IKEA adjustable desks and kegerators in the breakroom exist, and you know that they abound and give to your life its highest hipness and awesomeness. Alas! how dreary would be the world if there were no startups. It would be as dreary as if there were no startup weeks. There would be no stock-options then, no exit-events, no office ping pong tables to make tolerable this existence. The innovation and excitement with which startups fill the world would be extinguished.

Scott Yates is the founder and former CEO of BlogMutt, a blog writing service, his third startup. He previously brought to market a legislative tracking service now known as BillTrack50, and before that a traffic information service for which he was awarded a patent. That company is now part of Microsoft. He has a journalism degree from New York University and lives in Denver with his wife, son, dog, and dictionary collection, and in his spare time is trying to fix Daylight Saving Time.

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