Originally published in the September 2017 issue of iBi Magazine.
by Randon Gettys, Director of Startup GP
Startups are different from business starts and new small businesses.
I often wonder what hearing the word startup evokes for those who hear it. What sort of a construct does the listener’s subconscious mind conjure up? What image pops into their head?
Our readers should feel free to let their minds wander for a moment, as they insert themselves into a vision of entrepreneurship glory. Elon Musk is texting, “Can we meet?” but they don’t respond. Their inbox is filled with solicitations from the highest-profile VCs, with terms sheets in hand!
For me, the word startup evokes the picture of a small founder team, dividing up work and getting down to business. They commiserate their setbacks and celebrate their milestone achievements, like getting a potential customer to return a phone call. But it is a team. Always a team.
The E Myth, a famous small business entrepreneurship book by Michael Gerber, tells the story of a baker who decides to open her own bakery. The book gets a little franchise-y in some spots, but Gerber generally does a pretty good job of getting across his primary theme: a business is a system. Not an invention. Not a product, nor a skill. A business is a system designed to make money, and entrepreneurs are systems builders.
In my time with Startup Peoria (now Startup GP) and the Greater Peoria EDC, there has been a lot of discussion about what the word startup means. Because there is no standard definition, it’s quite hard to discern statistics or shape policies, programs and initiatives that are meant to support startups and founders.
I thought it would be useful to at least establish a working definition of the kinds of companies that Startup GP is charged with serving. That way, we can more easily understand who our target client is and what they are going to need from us. And when our dear readers return from their fantasy of entrepreneurship glory, perhaps they will let me know if they know someone who fits the working definition, because it is my job to know them all and help where I can.
But first, let us clear up a few misnomers. Startups and business starts are not the same thing. A business start is any new incorporation—a declaration to the taxman that one intends to do business in the State of Illinois. A startup is a team of people discovering whether (or not) a novel business model is repeatable and scalable.
I also differentiate between new small businesses and startups. An entrepreneur who is doing something for the first time and an entrepreneur who is doing something that has never been done have different problems, and therefore require different solutions. A new bakery is a small business, regardless of how hipster-y it is. A software team trying to leverage blockchain technology to achieve supply chain transparency is a startup.
Two Questions for Startups
The working definition of startup that I have adopted can essentially be boiled down to a couple of things: growth-mindedness, and scalability/novelty of business model. Our website (StartupGP.org) lists four or five bullet points that essentially reflect two ideas:
- Does the founding team intend to grow this new business as aggressively as possible?
- Does this business model support a high-growth opportunity to realize millions of dollars of revenue?
Startup GP and its people and programs are concerned with founder teams and companies who can answer yes to both of those questions.
I had a conversation recently with one of the founders of Mobile Mount, the latest winner of Startup GP’s $10,000 Keystart grant. To bootstrap and grow organically, or to take on investors and aggressively go after market share? That is the question. I sure hope they choose the latter. Stay tuned!