Mark Drapeau (Washington, DC) –
The prominent startup blog TechCocktail.com recently published a piece titled, Startup Weekend e-Government DC Produced 13 Innovative, Public Sector-Focused Startups. DC-based technology journalist Alex Howard publicly commented that presentations by teams at the end of a 54-hour startup weekend hosted by Microsoft do not constitute “startups,” and that TechCocktail’s headline was misleading. Are the products of startup weekends and hackathons actually startups? What exactly is a “startup,” anyway? And how are rapidly-failing startups good for America?
Is an idea enough to constitute a startup?
According to Wikipedia, “A startup company or startup is a company or temporary organization designed to search for a repeatable and scalable business model. These companies, generally newly created, are in a phase of development and research for markets.” This definition is sufficiently broad to include newly formed, temporary groups conducting “research and development” (which could mean almost anything) in order to determine if an idea has the potential to be a business within some market.
The entry goes on to point out that the term “startup” is most commonly used in tech circles among programmers, hackers, investors, and similar, implying that this particular industry has a unique culture and norms of thinking about where ideas come from and how they become, or don’t become, businesses.
(For those readers who abhor Wikipedia, even for simple terms, here’s the definition from Steve Blank / ReadWriteWeb: “a startup is an entrepreneurial-driven organization formed to search for a repeatable and scalable business model.”)
By this simple definition alone, I think it’s fairly clear that groups of individuals hacking on a tech-oriented project at a multi-day hackathon or similar competition under a unique name/brand could reasonably constitute a “startup,” however temporary or ultimately successful. In fact, within the tech community, calling your group a “startup” (and getting credit in a publication like TechCocktail) is not only not misleading, it is a badge of pride, a way to proudly represent your achievements to your peers, and a shorthand for relating what you’re passionate about.
What Jeff points out, I think correctly, is that the 54-hour process of forming teams, creating names and brands, brainstorming ideas, and designing a novel product or service within a vertical (in this particular case, the government vertical/industry) and then presenting your efforts to a panel of distinguished reviewers/judges prior to having a revenue model can be considered a “very early stage startup.”
Another way to think about it is this. If that isn’t considered a very early stage startup, at what point does this…idea? concept? storyboard?…become a “legitimate startup”? Alex Howard had some thoughts on that. I refute them here.
Must a startup be formed as a legal entity to be real?
In his first attempt at a critique of Startup Weekend GOV entities being called “startups,” Alex Howard posited that an…idea? concept? storyboard?…becomes a startup when its founders register as a business entity with a state.
In my opinion, that’s an unnecessarily stringent definition of a startup. Must something be registered as an LLC or Inc. to be considered a startup? Most any startup spends quite a decent amount of time as an unregistered entity; in effect, a…demo? project? hobby?…of the creators.
Further, there is no particular pressure to register as a legal entity in many cases unless one is (1) selling a product or service, or (2) taking investors’ funds in a formalized manner. And technically, an entity can sell and make revenue without formalizing itself; it can actually make quite a lot of money while existing as (say) just an app for sale by an individual person.
It seems like an entity does not necessarily have to be registered as a business entity with a state to be a “startup,” nor is that in the spirit of the definition of the term as stated above.
Must a startup have an “actual product or service” to be real?
In his second try at a critique of Startup Weekend GOV entities being called “startups,” Alex Howard posited that an entity must have created an “actual product or service” to be considered a startup.
To me, if someone designs an app, website, or something along those lines during a 54-hour hackathon, that is an “actual product or service” that can constitute the foundation of a tech startup. If it is not “actual,” what would make it actual? Having a business plan involving it? Monetizing it?
When “The Facebook” first launched, was it an actual product or service? Initially, it was just a website that Mark Zuckerberg put a lot of effort into designing, with one initial profile. Slightly later, hundreds of people used it. Later, thousands, and still later, millions. At what point did it become actual?
Must a startup have revenue to be real?
Is generating revenue, or even having a model for generating revenue, a prerequisite for having a startup? That’s an interesting criterion, considering the very platform he’s using to type the critique – Twitter – spent years not talking about revenue, not expecting revenue, and certainly not generating revenue. And I think we can all agree that Twitter was a legitimate “startup” long before it began projecting revenue.
Clearly, generating revenue or even knowing how your new entity will do so is not necessary for having a startup.
Must a startup exist for a long period of time to be real?
Finally, O’Reilly Media reporter Alex Howard suggested that if an entity ceased to exist roughly a week after a hackathon, then it was not a legitimate startup. He had an interesting back-and-forth with TechCocktail writer Jeff Tong about this, copied below.
If your startup only exists for the duration of a hackathon and for a few days after, was it never a startup? Does its short duration of existence somehow diminish the value of it?
If one agrees with the premise that entities emerging from hackathons and similar events are startups at that moment, it seems to me that the duration of their existence is somewhat beside the point. Of course, startups can only blossom and create new products, jobs, and opportunities over a duration of time (certainly one longer than a week). And it’s impossible to build a successful startup in a weekend or in seven days. But there is a huge difference between meeting the definition of a “startup” and being a successful startup.
Most startups fail anyway – is it somehow more valuable to postpone that failure? Is it more “honorable” to work harder and longer and then fail in exactly the same fashion, for exactly the same reasons (see exhibit: extinct giant sloth, left)? “Fail early, fail often” is a common saying in startupland. I say, “Fail very early, fail very often” is equally legitimate. It certainly doesn’t, in my view, make your startup illegitimate.
I don’t think there is a minimum period of time that a startup has to be a startup to be a startup.
What is the spiritual value in starting a startup?
Is the value of a startup designing a new product or service, creating jobs, or generating revenue?
Each and all of these are valuable, of course. New products and services can be valuable to society. They can also generate revenue for a company and its employees and/or shareholders. Successful companies also create jobs and internships, which is great for the jobholders, and presumably also adds value for their employers.
But I think the true spiritual value of a startup is very simple: mastering how to start something new. This quality is rare in society. Most people follow. Few lead. Starting something new is scary. Doing something no one has done is challenging. Designing something no one has conceived of before is difficult. There is value in this. This skillset is not taught well in school, if at all. It is the basis of entrepreneurship, innovation, and America’s place in the world.
What is a startup? A startup is a person’s raw idea struggling to become a reality.
The kind of person who spends 54 hours locked in a Microsoft office building on a beautiful weekend should be celebrated. They are the ones who will build the next revenue-generating, job-creating, valuable American brand. Why discourage them? That spirit needs to continue to burn, and burn strongly in America.
Not every startup has to be a 3,000 pound marlin.
Right now, the most important skill a young person can have is the ability to learn new skills. Whatever they ultimately go on to do, I suspect that the people taking chances on building new startups are some of the best prepared of all to deal with an uncertain American future.
Dr. Mark Drapeau is part of the Microsoft Office of Civic Innovation, based in Washington, DC. You can follow him on Twitter at @cheeky_geeky.
Post title borrowed from Guy Kawasaki’s book, The Art of the Start. Here’s a link at Barnes & Noble.