When Startups Stop Being Startups

Growth is one of the most difficult things for a business to achieve, especially startups who have a whole host of pressures to live up to in return for basking in the spotlight of popularity. Not to mention competing with every single one of their peers, who are all clamoring for the same elusive title of “unicorn”.

But challenges aside, when does a startup stop being a startup?

There’s lots of debate on this topic. Some set cutoffs by revenue. Some by customer base. Others by age or investment. For me, that’s all just semantics.

Very often the true definition of a startup comes down to its culture. Its hustle. Its agility.

When a startup loses the ability to “‘get sh*t done” and test new ideas on the turn of a dime… they stop being a startup. Plain and simple.

Their bureaucracy-to-action ratio has shifted in favor of the former, causing a horribly detrimental decline to the latter. Will this impact their growth story? Maybe. Maybe not.

Will it make them uninvestable? Probably not so much.

So why should they care?

The answer is simple. Without continually fostering a mindset that enables innovation, not just in product but in process as well, you can quickly outgrow the ability to find new and better ways of doing things, for faster and cheaper than your competition.

I don’t know about you, but I wouldn’t want my business to suffer that sort of rot.

I talk with a lot of business owners and a lot of startups, and the people who make them great. Sometimes, I even offer suggestions when I spot something I think they might be missing; even when I don’t have a business relationship with them, because I believe relationships are a lot like savings accounts – the more you put into them over time the more interest you earn. But that’s a topic for another post.

I was engaged in one such exchange recently and it left me absolutely floored. In the interest of maintaining the relationship, I won’t share the particular idea or the company name here, however, the response needs to be shared for the benefit of all.

In short, I’d sent a message to someone I know at a high-growth, high-profile startup of which I happen to be a fan. I walked them through my idea, which has the potential to help them scale in a way that would move their particular needle, without requiring very much effort on their part, compared to other strategies they could be implementing. It made sense to the person I shared it with and he’s also in a position to be able to action the idea, or at least bring it to the attention of someone who could.

In the course of the pitch, I also suggested that they start the process by doing something that is, unfortunately, very uncommon in the world of tech startups – picking up the phone and calling the contact that I suggested as part of the idea.

In response, I was told that they don’t have the resources to reach out by phone to people on a case-by-case basis, and would test an automated version of the idea sometime in the following quarter.

I’m sorry, but that’s just shocking.

Bear in mind that we’re talking about calling, by phone, one person. And that this is a business with a sales and marketing team, millions of dollars invested, and dedicated business development people on staff.

So what happened here?

I don’t believe it’s the fault of my friend. Or any particular individual, really.

No. This is a larger cultural pandemic that everyone in tech is facing. And I truly believe it is a symptom of our now exclusively data-driven mindsets and the divide it creates between the people building a solution and the actual customer or client who uses it.

It’s very safe and cozy behind a screen, looking at dashboards and databases and responding to emails and slack chats. And at scale, those are absolutely the only way you can manage growth and keep a handle on your business. But we’re not talking about anything at scale.

We’re talking about having the fortitude to get out of your comfort zone, pick up a phone and make a human connection with someone who you think can potentially do something of value for your business.

Something that might be significant and impactful for your bottom line.

By falling back on the defaults of automation and data-driven decision making – both of which I’m huge proponents of, by the way – before doing some quick and dirty validation on any potential process or system, using the fastest method possible – talking with another human being in real time – you lose the ability to strategically focus your efforts. The likelihood of falling into a “build it and they will come” pit-of-failure skyrockets. And your ability to optimize for outcomes from the get-go plummets.

Maybe the idea sucks.

Maybe it just works well on paper.

Or maybe it’s amazing and is just the silver bullet you’ve been looking for.

The truth is you’ll never know until you try.

So that any company would initially devote a whole host of team resources and the costs associated with that, both in time and money, to an untested idea as the first step seems like madness to me. Especially when weighed against the marginal cost of a few hours’ time by one or two employees using a phone line or Skype account.

It’s quite possibly one of the most un-startupish things a “startup” could do.

So for me, the answer to when a startup stops being a startup is clear. It happens when they put bureaucracy before action. And I’d advise any business, whether they are a brick and mortar, a professional services provider or a hot new startup, to always test small before you test big.

You might not get the right answer right away, but at least you’ll know you’re going in the right direction.

 

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