# What Is a Startup, and Which Companies Deserve the Name? - URL: https://girisimcikafasi.com/en/blog/what-is-a-startup-and-which-companies-count/ - Published: 2023-07-28 - Updated: 2026-09-29 - Category: Starting and growing a business - Publisher: Girişimci Kafası On 7 February 1769, Matthew Boulton, a Birmingham maker of buckles and buttons, wrote to a Scottish engineer. The engineer's name was James Watt, and that same year he had patented the separate condenser, which made the steam engine far more efficient. Watt's partner, John Roebuck, had made Boulton an offer: he could have a share of the profits on the engines, but only on those sold in the counties of Warwick, Stafford and Derby. Boulton turned it down. In his letter he wrote that he had two reasons for offering to help Watt: his love for him, and his love of a money-getting, ingenious project. Then he summed up the matter in a single sentence: it wasn't worth the trouble to make engines for just three counties, but it was very well worth making them for the whole world. His plan was clear, too. He would build a factory beside the canal, train good craftsmen and produce the engine twenty per cent cheaper than would otherwise be possible. The difference in precision would be as great as the difference between a blacksmith and a maker of fine instruments. For five years the engine got nowhere in the world. In 1772, Roebuck, in financial trouble, handed over his share of the patent to Boulton against a debt of 1,200 pounds he owed him. In 1774 Watt moved to Birmingham. In 1775 Boulton got an act through Parliament extending the patent to 1800, and the two men became partners. They didn't charge customers for the engine up front; instead they took a third of the coal saved compared with the old engines, spread over the years. ## What is a startup? The distinction Boulton drew between "three counties" and "the whole world" is exactly the line that separates a startup from an ordinary new company today. In the broadest sense, a startup is a young company looking for a new solution to a problem, with no guarantee of success, and designed to grow fast. Two definitions capture the idea well: - In 2010, entrepreneur and academic Steve Blank defined a startup as "an organisation formed to search for a repeatable and scalable business model". - Paul Graham, one of the founders of Y Combinator, opened his 2012 essay with this sentence: "A startup is a company designed to grow fast. Being newly founded does not in itself make a company a startup." The key word is "search". An established company executes a model it knows; a startup searches for the model itself. That's why a startup's first product is often a hypothesis. ## Which companies can be called startups? Whether a company counts as a startup isn't decided by its age or the vibe of its office, but by a few questions. ### Is it designed to grow, or to make a living? To use Graham's example, a newly opened barber's shop is not a startup. It's a worthwhile business, but it isn't designed to grow fast; a search engine is. A pizzeria opening in your neighbourhood is like the barber's; even if it adds branches, its model stays the same. ### Is geography a boundary? This was Boulton's question. A startup's product doesn't stop at the borders of the city or country where it was founded. If a software company founded in Istanbul has a product that can be used in Berlin the same week, there is no boundary, only a starting point. ### Stage, not age A one-year-old company and a five-year-old company can both be startups. By Blank's definition, what counts is that it is still searching for its business model. Once the model is found and starts being executed again and again, the company has left the startup stage behind. ### Model, not sector Most startups emerge in technology, but that isn't a requirement. You can build a scalable model in finance, logistics, design or food too. Boulton and Watt's steam engine business was itself a manufacturing venture founded in the 18th century with the aim of selling to the whole world. ## How do you start a startup? 1. **Define the problem.** Be clear about who has which problem, and how often. 2. **Try the smallest solution.** Test your hypothesis with real users as quickly as possible. 3. **Choose your growth metric.** According to Graham, weekly growth of 5 to 7 per cent during the Y Combinator programme counts as good; you can't grow what you don't measure. 4. **Plan funding by stage.** Bootstrapping, angel investors, crowdfunding and venture capital are tools for different stages. 5. **Learn from failure too.** The stories of startups that closed teach as much as those that succeeded; the [Startup Graveyard](https://girisimcikafasi.com/en/startup-graveyard/) is a good place to start. ## The mushroom that springs up overnight The verb "start" comes from the Old English "styrtan": to leap, to jump up suddenly. The sense of "to begin something" settled in much later. In the 1550s, the word "start-up" wasn't used in today's sense but to mean the same as "upstart": someone who leaps suddenly from a lowly position to power, wealth or rank, a kind of parvenu. By the 1590s, such people were being compared to mushrooms that spring up overnight. From the day it was born, the word carried both admiration and suspicion, just as it does today. In the eyes of big companies, a startup is still something of an upstart: a leap that barges into the market uninvited and breaks the rules. Some spring up like mushrooms overnight. Others become part of the forest that same night. ## A final word In 1776, the English writer James Boswell, touring the Soho factory, wrote that he would never forget what Boulton said to him: > "I sell here, sir, what all the world desires to have: Power." Here, sir, I sell what the whole world wants: power. "Power" here meant both the power of the steam engine and power in the sense of influence. Is what you're building for three counties or for the whole world? Whichever your answer, does your plan fit it? If you want the broader definition of entrepreneurship, the article [what is entrepreneurship](https://girisimcikafasi.com/en/blog/what-is-entrepreneurship-who-is-an-entrepreneur/) covers the other half of this question.