Upstarts: Please don’t call them Startups

Businesses, start your engines

Since I founded resurrected Upward Media late last year, we’ve been plainly telling folks that we only work with a fairly-specific niche of folks: Small-Businesses, Non-Profits and a new breed of folks I like to call “micro-businesses”. These are the folks who have a great idea and want to sell it to you, in the form of a product or service. The qualifying factor is that they’re not a large company or even a small company: They are just starting out, typically out of their home. Some of you may have heard these groups called “startups”; indeed, it’s a popular thing these days, and seems to be a sure-fire way to success.

Except that I wouldn’t dare call these folks “startups”. And in fact, I’d hate it if you applied that label to them. Here’s why.

Startups or Upstarts?

Startups are a wild and crazy group. While the idea of being involved in one can be exciting, it’s often filled with misnomers and in my opinion, can lead you to do some really dumb things with your business. Startups are rarely the businesses of tomorrow, because of some of the characteristics that they tend to have:

Startups hold too high a priority on getting Venture funding. By far, this is likely the worst characteristic of a startup, and probably the largest reason for their failure. When you have a startup and you go after funding, you’re removing control of the company from your hands. You’re now at the mercy of the shareholders. The person writing the checks will be the one making the decisions, regardless of whether or not they’re cool enough to “just let you do your job.” If you’re not providing the numbers they want to see, they likely have the ability to replace you with someone who can. How would you like to get fired from the company you founded? Happens all the time.

The other part of venture funding is that it allows you to take your foot off the gas. When you have your money, you don’t feel the pressure to ship. You can hire like crazy, but nobody’s doing anything, because there’s no pressure. You can take in customer feedback, but you’ll wait until that next round of financing to implement them, because it’ll give you something to report to the shareholders. Starting off with the goal of getting funded is the way to build a great flash in the pan, but not a lasting company.

Startups are often built on hype, not real need. The easiest way to back this up is to look at the sheer volume of Task Management Apps out there. They all do roughly the same thing – help you keep track of your tasks – but the way they execute them is different in nearly every one. Every month or so a new one comes out, claiming to have some new twist to this age-old dilemma of just remembering what you need to do. For the most part, they are building on the idea that everyone needs a better way to manage their productivity, so let’s capitalize on it and make a profit. Lasting businesses build on an idea or a need – something the probably used themselves and someone else noticed.

Startups rarely have long-term goals. When you’re a startup focused on securing that next round of financing, you limit your ability to set five-year goals because you literally don’t know if you’ll be around 90 days from now.

Startups too often are just looking to be bought. It’s laughable to real business owners, but given how easy it is to start a business these days, there have been many startups launched purely on the goal of getting bought out by Google or Facebook or Twitter. You can tell when they launch a service that seems to integrate seamlessly with that hopeful buyer. Not always the case, but often enough that it gives people the false notion that if they just launch and sell, they’ll never have to work again. Yeah, good luck with that.

The folks I work with are not startups. They didn’t move to Silicon Valley – they started in the basement of their rural home in the midwest. They didn’t start this business to take the world by storm, either – most of the time, their “upstart” happened out of necessity – they were fired, down-sized, laid off or otherwise yanked out of their comfortable routine that was providing their majority income, so they really didn’t have much choice. They were uprooted and upstarted, not startups.

Unfortunately, so many of these “upstarts” I come across are facing exactly the same challenges as every other business out there, and making many of the same mistakes, purely because they don’t have the resources of a Fortune500 company. Upward Media exists to alleviate some of that pain, because we’ve been there. Learn from our mistakes, and let’s upstart this thing together.

So much more to share, folks. Look for more on “upstarts” soon.