Posts Tagged ‘contractor’

What is a startup?

Monday, December 12th, 2011

All this talk about startups, and I often wonder if people really understand what a startup is.

A bakery is not a startup. A consulting company is not a startup. Anything that requires multiplying the number of people in the business to scale, is not a startup.

A startup is a company that has an idea where doubling income does not require doubling staff. It is a business where scaling to add another 1000 clients requires very little additional hardware.

A software company is a startup. After writing that first copy, selling 1000 more has only slight incremental costs. Selling 10000 more requires only slightly more resources than that. A subscription web site is a startup. The difference between 10 paying subscribers and 1000 paying subscribers in terms of the labor to produce the site is minimal.

If you start a business and you are primarily responsible for earning the income through your direct efforts, you are an employee, not a business. A consultant is not running a business, s/he is a contracted employee with many employers. A software developer that sells his product and can take three days off without materially affecting his income is a business.

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