"A startup is a company designed to grow fast. Being newly founded does not in itself make a company a startup. Nor is it necessary for a startup to work on technology, or take venture funding, or have some sort of "exit." The only essential thing is growth. Everything else we associate with startups follows from growth."
Yes, this is what every venture capitalist says. You aren't doing a startup unless you want extreme growth, which requires our services and cuts us in. Building in a capital efficient way that generates substantial wealth for founders, but without giving VCs a cut of the pie, is, of course, "not a real startup," and often also slandered as a "lifestyle business" for low-ambition people.
PG is great in many ways but he's not the person I'd turn to for an unbiased opinion on what counts as a "startup."
The founders I'm particularly impressed with are the ones who have such a nuanced understanding of capital efficiency that they do not require VC, and only take money much later in the cycle when they can basically dictate terms and want hundreds of millions for liquidity or whatever (see, e.g., Joe Mansueto).
It is the definition of the word. Nowhere does pg say you can't start a non-startup business.
>The founders I'm particularly impressed with are the ones who have such a nuanced understanding of capital efficiency that they do not require VC, and only take money much later in the cycle
That isn't "understanding capital efficiency" it is called having enough capital already.
Your comment seems to suggest that you don't see any difference between "capital efficiency" and "having capital."
The terms mean very different things. Capital efficiency is measured by metrics such as the cash conversion cycle. It's possible to design a business model in such a way that you have negative cash conversion cycles, which cause you to actually generate cash as a function of growth (even when unprofitable by GAAP!), which is the opposite of most VC funded businesses whose burn rate is roughly a function of their growth rate.
>It's possible to design a business model in such a way that you have negative cash conversion cycles,
This seems like it would only be possible if your DPO is greater than the sum of your DIO and DSO. In other words, you are so tardy in paying your invoices (or good at negotiating payment terms, I suppose) that you manage to sit on cash worth more than the value of your inventory + outstanding receivables. That is... one way to run your business.
Maybe I am missing something but this seems like a house of cards. Eventually you need to pay your invoices, and time shifting that a bit doesn't actually make your business profitable.
Quite willing to accept I have missed something though.
"A startup is a company designed to grow fast. Being newly founded does not in itself make a company a startup. Nor is it necessary for a startup to work on technology, or take venture funding, or have some sort of "exit." The only essential thing is growth. Everything else we associate with startups follows from growth."