[timjahn]

I think today, startups and businesses are two different things.

A business makes money. You see them all around you. Restaurants, companies that sell products (online and offline), web design firms, etc.

These businesses impact the rest of society. Real, everyday people buy from these businesses and often rely on them. Your family interacts with them, understands them, knows them.

A startup is a game. You play by the rules of the game. You (traditionally) spend a lot of time seeking VC money, get enough VC money to spend the next few years working on whatever you want, regardless of the results, and then either sell the startup, get acquired, or shutdown (exit).

The players of the game are often the only ones involved. They're the founders, the customers, the VCs. The game has very little impact on the rest of society.

[dave_sullivan]

I enjoyed the article, never liked the term startup vs business, and nothing (not even hn) can really prepare you for what to expect when you actually go for it and start one.

But it's not a game. When people's businesses (even startups) fail, there's real harm done, maybe harm that will take years to repair. I guess when it's OPM who cares... but that attitude can be a precursor to irresponsible spending/investment and there seems to be a bit of that going around these days.

[HalibetLector]

"there's real harm done"

Not really. Having been a low-level employee on several of these sinking ships in the past few years, the pattern is despicably predictable. Everyone who works for a startup knows the game they are playing. Many of the experienced ones will even see the writing on the wall and bail early. The laid off employees have no trouble finding their next job. Just like in Vegas, there's always another game starting up in Silicon Valley.

The VPs plan for failure going in. They may lose some money, but they'll cover the loses with some of their other investments. They play the odds.

I think the only real harm is to the state of California when hundreds of people are suddenly on unemployment for a month or two between jobs.

[dave_sullivan]

You should put that on your next pitch deck: "VCs-- If you invest in me, you can expect to lose money! That's your business model, right? Take it from me, I'm practically making a career out of jumping off one sinking ship to another! Yeeeeee haw!"

[fedd]

if vcs don't risk (avoid failure[by all means]), they wouldn't be rewarded. anyway they sometimes say 90% of startups fail... moderate income may be better than complete failure

http://www.brighthub.com/office/entrepreneurs/articles/78553...

i heard people say that the Valley beats other places of the world in creating Suns, Googles and Facebooks because [one of the reasons] it risks more and considers failure as experience

(harm too, but not that deadly)

[untog]

While I agree with most of what you said, the one outcome you haven't mentioned is the startup becoming a business. Start off spending VC money while putting together your business model and monetising. Exit your startup 'phase' with all of that in place, and making profit.

[AznHisoka]

One thing I don't get... someone please enlighten me..

If a VC puts money and a startup doesn't get acquired, or goes to an IPO, but becomes profitable, the VC doesn't get anything, right (assuming no dividends)?

So making profit in that sense is still not considered success. So there's some validity to the idea that startups are a game. You're betting on a bigger fool acquiring it, whether it's another company, or the public market. Sort of like buying stocks.

[wtvanhest]

VC's and experienced angel investors use a clause in the funding agreement which can force you to sell. That clause is probably never used in real life but its presence in the world of VC explains itself.

Really it is unlikely that you will create a lifestyle business which is funded with venture money and is one of the things that vcs avoid since it is a failure from their standpoint.

[badclient]

In that case, everything is a game. When I throw money towards a milkshake at McDonalds, I am betting that I will derive some pleasure from consuming it. Sometimes I do, sometimes I don't.

So, everything's a game - with varying odds of winning?

[AznHisoka]

that wasn't the bigger point I was trying to raise. I don't care a penny about semantics and the engrish language.

[bh42222]

If VC money is involved and all that happens is a regularly profitable business, then is not really different from total failure.

To not be a failure you business must be a HUGE success, grow and profit like only startups like Google and Facebook have.

[kayoone]

mh, dont startups most of the time have customers/users of some sort too ? I bet most startups have more people interacting/relying on them (users/customers) than your local restaurant or web design firm.

[elemeno]

I think you're missing out on an important point - Users are not the same as Customers.

Customers pay you money, they are what you need to build a business. Having millions of users who don't provide any revenue is only useful if your goal is just to be bought by someone else.

I personally think that it's a sad state of affairs that most startups don't seem to be interested in building businesses, but instead just want to play the acquisition lottery instead.

[kayoone]

For many startups users are also customers because they pay in one form or another for the startups services. Of course there are a few startups that have enough funding to not care about monetization at all but thats an exception imo. I see much more web app service startups, mobile Apps, Games etc that actually charge something even if its not upfront. I run a games startup and our users are customers as well.

[PakG1]

But every now and then, one of them will be able to have enough of an impact to be considered a gamechanger, though these are probably outliers. Pun intended. :D

[badclient]

These businesses impact the rest of society. Real, everyday people buy from these businesses

So either Facebook/google etc. were never start-up or they are making imaginary money(in billions, I must say) from imaginary customers.

[timjahn]

You bring up a good point. Real everyday people aren't Facebook's customers, they're actually Facebook's product.

But Facebook does impact the rest of society. Families are sharing photos with loved ones, important news with those far away, etc.

Facebook's situation doesn't change my opinion though. It's an exception, not the rule.

[herval]

I thought "startup" was a PHASE of business in which it STILL doesn't generate revenue and/or is trying a business model...