The concept of a start-up (new business in Greek) has gone through dozens of definitions and debates regarding its actual content.
The good news is that the confusion surrounding what a start-up is not a Greek phenomenon: It is part of a broader confusion that reaches even the USA.
In simple terms, we would say that «start-up» is any business activity (the first corporate form of implementing an idea) that has three basic characteristics:
- It is new
- It is innovative
- It has rapid growth or has prospects of rapid growth
It is noted that start-ups often resemble falling stars. «They die» within the first 12 months of life (it is estimated that only 1 in 12 start-ups end up becoming successful businesses, see source here).
’ At this point the following question naturally arises: When we say start-up, do we always refer to a small business?
The answer is no. According to Steve Blank, there are essentially 4 types of entrepreneurship:
Small businesses that usually receive funding from family, friends, small bank loans and usually do not maximize their profit. They simply exist and grow while maintaining a small turnover.
Start-ups with the expectation/target of rapid growth that usually receive high-risk funding from venture capital funds (VC's), wanting to achieve continuous and recurring sales. It is the model we find in Silicon Valley, New York, Israel, Bangalore, Shanghai, i.e. in the cradles of innovative start-up entrepreneurship.
Existing/large businesses that develop new activities.
Social entrepreneurship with a usually non-profit character.
An old story and the myth of the start-up «garage»
Through the distinctive culture and the history of start-ups, a misconception has arisen: At the sound of the word start-up, many people's minds automatically go to a group of young unruly programmers (geeks), which, having a …garage as its base, develop the over-software, isolated from the outside world, against gods and demons.
But is it really so?
The answer cannot be unambiguous and, of course, is not limited to the above unambiguous «image» that we have for start-ups.
In reality, if we go back with a mental time machine to the point of birth and launch of start-up culture, we will understand many things better.
Everything started from the USA and specifically after the B’ World War.
Frederick Terman, dean of the engineering school at Stanford University, to increase the university's revenue and create job opportunities for graduates, proposed leasing the university's facilities and converting them into a scientific park (the reason for today's Stanford Research Park).
Terman, who is also called «father» of Silicon Valley, found venture capital (business investment funds) to finance tech startups that were started by private individuals.
Here comes and “sticks” the story of the garage: Under the guidance of Terman, the Stanford graduates, William Hewlett and David Packard, worked feverishly from the latter's garage before moving to the Stanford Research Park shortly after 1953.
All the rest is history: Over time, their company, the well‑known Hewlett‑Packard, became the world's largest computer manufacturer.
The real moment for the explosion of start-ups, however, and the transformation of Silicon Valley into a cradle of their emergence and creation, came with a famous dispute.
In 1957, the employees of Shockley Semiconductor broke away from its founder and co-inventor of the first transistor, William Shockley, and created Fairchild Semiconductor. The company achieved great success, while some of its founders as well as many of its employees left to create new start-up businesses of their own.
Over a period of roughly twenty years, 1/8 of the employees of the old Shockley Semiconductor founded 67 companies, with the start-up phenomenon expanding ever since like an avalanche in the famous Silicon Valley (Σίλικον Βάλεϊ).
In reality, however, the term “start-up” began to be discussed internationally during the so‑called dot‑com bubble period between 1997‑2000 (dot-com bubble/dot-com boom/Internet bubble/Information Technology Bubble) when a rapid growth of companies in the Internet space (the so‑called dot com companies) was observed.
The start-up…furnace
The history of start-ups and as analyzed above, perhaps it establishes the perception that most of them operate in the software/IT field.
Despite the undeniable abundance of technological start-ups worldwide, the actual object of a company does not determine whether it is a start-up or not.
The start-up «gene» has to do with the very philosophy of a nascent company.
A characteristic is the example of the oven, as discussed in a related article by Dimitris Tsiggos, President of the Hellenic Association of Start-ups:
«Let's say someone starts a neighborhood bakery. Is it a start-up? Probably not. But if this bakery starts by producing high-quality bread with pure, traditional ingredients, if it takes care to communicate the development of this product to the market in a smart, effective way, and if it has studied a business model so that gradually from one oven it creates a network of bakeries with modern distribution and promotion means for the product, then yes, it is a start-up».
A startup, therefore, is a company that brings an innovative imprint: the reason for its existence is to offer a solution to a specific problem or a desire of its customers and aims to grow quickly and dynamically, creating value for the customers, shareholders, and its employees.
