What is a startup?
In one sentence
A startup is a new business searching for a model that works, under a lot of uncertainty.
The simple version
A normal business knows what it sells and to whom — like a bakery. A startup doesn't know yet. Its first job isn't to make money; it's to figure out what works. Think of it as a search, not a plan.
Why it matters
If you act like an established company (big plans, big budgets) before you've found what customers want, you burn time and money on guesses.
How to do it
- 1Write down your biggest guesses (who the customer is, what problem they have, what they'd pay).
- 2Turn each guess into a small test you can run this week.
- 3Treat every result as learning, not as success or failure.
- 4Only scale up once the tests keep saying 'yes'.
Real-world example
Before Dropbox built its full product, it released a simple demo video. The flood of sign-ups proved people wanted it — a cheap test of a big guess.
What the books say
“A startup is a human institution designed to create a new product or service under conditions of extreme uncertainty.”
“There is only one valid definition of business purpose: to create a customer.”
“Planning is guessing.”
Common mistakes
- Writing a 40-page business plan before talking to a single customer.
- Hiring a big team before anyone wants the product.
- Confusing being busy with making progress.
Questions people ask
Is every new business a startup?
Not in this sense. A new café copying a proven model is a small business. A startup is trying something unproven and is aiming to find a repeatable model it can grow.
Do startups have to be tech companies?
No. Any new venture facing big uncertainty about its customers or product can use startup methods.
References
- [1]
- [2]
- [3]
More books on this in the library
Who: The A Method for Hiring
Geoff Smart and Randy Street's systematic approach to hiring top talent. Essential for founders who need to build great teams but haven't hired much before.
Startup: An Insider's Guide to Launching and Running a Business
A startup-focused business book (paperback edition, ISBN 1703385454) that provides practical guidance on launching and operating a startup, covering planning, funding, operations, and growth from an insider’s perspective—positioned as a hands-on resource for aspiring and early-stage founders.
Who
Written by Geoff Smart and Randy Street, 'Who' focuses on the importance of hiring the right team members for startups. It presents a 4-step method for successful hiring and includes interviews with high-profile leaders, aiming to help businesses avoid costly hiring mistakes.
How to Prosper During the Coming Bad Years in the 21st Century
Personal finance and economic trends book focused on protecting and growing wealth in turbulent times; tangentially useful for founders thinking about macro risk, but primarily about investing rather than startup building.
Money and Love: An Intelligent Roadmap for Life’s Biggest Decisions
A practical guide by labor economist Myra Strober and social innovation leader Abby Davisson that provides a step‑by‑step 5Cs framework for making major life decisions by jointly considering money and relationships. It focuses on work–life balance, financial choices, and partnership dynamics, helping readers navigate career moves, family planning, and long‑term security with both head and heart. While not startup‑specific, it is relevant for founders navigating high‑stakes personal and financial decisions alongside building a company.
The Millionaire Fastlane: Crack the Code to Wealth and Live Rich for a Lifetime
Challenges conventional paths to wealth, advocating for building scalable businesses over slow wealth-building strategies, targeted at entrepreneurs seeking rapid financial freedom.
Learn next
Minimum Viable Product (MVP)
The smallest version of your product that lets you learn whether you're on the right track.
Customer discovery
Go and talk to real potential customers to check that the problem you want to solve actually exists.
Product-market fit
When you've built something a real market badly wants — and you can feel the pull.