What Kind of Startup is your Company?
DOUG: We have introduced the concept of a scaleup now. How exactly is a
scaleup different from a startup?
ROLAND: That is simple. A startup is a venture that is still looking for
product-market-fit. A scaleup has already found product-market-fit and is
looking for product-market-dominance.
DOUG: I’m confused, what about Lyft, Dropbox, AirBnB, Spotify? All these
famous startups that have long “hit it” and are growing like crazy? Do you not
call them startups?
ROLAND: No, I would call them scaleups. Lyft and Dropbox, at the time of
writing, have not reached product-market-dominance. Spotify is close and AirBnB
arguably has reached product-market-dominance, so I would call them incumbents
DOUG: How does our definition differ from how other people use the word
ROLAND: The classic Silicon Valley definition of a startup is: any
venture-funded company pre-exit. Meaning that the company has not sold itself
or launched an IPO. I find this definition not incorrect, but problematic in
First, it puts disparate development stages of a company into one “startup”
bucket. Second, the pre-exit stage is much longer than it used to be. That
compounds the first problem.
DOUG: What is the problem with putting disparate development stages of a
company into one “startup” bucket?
ROLAND: Many founders infer from this a black-and-white thinking on how to
manage companies. “The Startup Way” pre-exit and “the Traditional Way”
DOUG: Why is that so problematic?
ROLAND: Because this confusion causes more founders and growth companies to
There is a vast difference between:
leading a startup , pre product-market-fit
leading a scaleup, post product-market-fit.
One is a small team looking for a match between their product ideas and a
market. The other is a large team racing towards dominance of their market with
a proven product.
My point is that each stage has its own recipes for success. If founders are not
conscious of how demands on them change with scale, they will fail. What worked
for them in one stage will damage their results in the next stage.
DOUG: Can you give us an example?
ROLAND: The book–Scaling Silicon Valley Style is full of examples, of
course! But I can highlight a common situation. Successful early startups have a
stubborn hands-on founder. They delight early customers with detailed command of
the customer experience.
In scaleups, founders who remain hands-on become bottlenecks. Their need to
decide everything blocks the growth of the organization. This is a common cause
for scaleup implosion.
Roland Siebelink regularly speaks and writes about leadership in fast-growing
tech startups. You can find more of his insights, including free chapters of his
book “Scaling Silicon Valley Style.”