Startup = Growth by Paul Graham

What is a startup?

Not all new businesses are startups
Startups have the distinct feature of fast growth
Startups have two focuses:
- (A) Create something a lot of people want
- (B) Ability to serve and reach all those people
A barber shop is not a startup because it can’t service a ton of people. Their constraints are their location and 1-to-1 relationship with their customers.
Google is a startup because it creates a product everyone wants to use AND they can allow all those users to use their product
In startups, you face massive competition because the market you serve is so large and so are the benefits.
You’re going up against incredibly smart, talented, and ambitious competitors.

How Fast Does a Company Need to Grow to be Considered a Startup?

There is no exact growth rate that determines a company to be a startup.
The real question to ask is “What growth rate do successful startups have?”
There are three phases to a startups growth (The famous S-curve)
- 1. No real growth as they are trying to figure out product/market fit
- 2. Massive growth once a product/market fit is found
- 3. Growth tapers off because of internal constraints and reaches the edges of the market you are serving.
The middle portion of the growth section of the three phases determines a startup.
Your growth rate is the most important number that startups need to know and focus on.
- Saying you’re getting 100 new customers a month is not a growth rate.
- You want to know how many MORE customers per month are you getting than the previous month. I.e. if you had 100 customers last month and this month you get 125 customers and next month you get 160 customers, your growth rate is roughly 26%.
- Founders should decide on a weekly (not sure if it’s just YC that does this) growth rate and HIT that number every week. All decisions that be made looking at hitting that number every week.

Nine times out of ten, sitting around strategizing is just a form of procrastination.

Founders, VC’s, and Acquiring firms make a natural ecosystem.
Founders want a huge exit so they need growth. They take VC money so they can control growth
VC’s want a huge capital gains exit through IPO or acquisition.
Acquiring firms purchase startups because they have real value AND reduces competition from the startup that could eat away at their market share.

*Notes: Startup = Growth by Paul Graham (Blog Post)