When a Start Up Company is No Longer a Start Up

Some of my most intriguing conversations start the same way. A friend calls me about another friend, and it seems to snowball from there, leaving me with a legitimate question to ponder.

This time, a friend called me as “the tech guy” and asked if I knew of an opening for a friend of theirs. This friend wanted to work for a start up company with a salary of about $150,000 to $200,000 a year, and they were looking to work for a D.C. start up like living social. (I’ve written a post about my own opinions of partnering with group buying sites, but this was for a salaried position.)

When I took the salary requirement out of the conversation, I started to wonder, “What is a start up company?” The first thing that struck me is that I don’t believe this has anything to do with the age of the company. I’ve seen start up companies that are a year old, and they feel slow and stodgy to me. Then there are other companies that have been around for 20 to 40 years, and they still feel new and vibrant. They’ve kept that “start up” mentality.

Eventually, I came to the conclusion that the real definition of a start up company has to do with funding. Once you’ve raised over $100 million, you aren’t a start up.

Start ups have a scarcity of resources. They’re brand new. Starting from scratch. A scarcity of funding can push a company to operate from that very scarcity of money. A lack of resources can exist in a start up company that makes $40,000 of revenue, where it truly exists, to $40 million of revenue, where projects can artificially be limited by resources. But money removes that barrier. I don’t look at, say, e-Bay as a start up company.

On the other hand, Amazon and Google feel more like a start up company to me based on the way they operate. They still push themselves. They still have that eagerness and freshness to create and bring changes to their market. They may not have a scarcity of resources, but there’s something else that pushes them the way start up companies push themselves.

Of course, you can take all of this with a grain of salt. It’s from an outsider’s perspective. But what do you think defines a start up company?