When does a Startup Graduate?

I've been discussing this with some colleagues and it's an interesting question with a difficult answer. When is a startup no longer considered a startup? What metrics do you use to determine graduation into a mature, albeit young, company?

Someone had mentioned that until you ship your first product you're still a startup. Technically we have shipped a product. Really it was just a small iPhone app that I wrote on the side and ran it through the company. It's a golf scoring app called "Fore!" and it's done pretty well in sales. Still, I don't consider shipping Fore! as bringing us out of startup status. Conversly if you've been in product development for 3 years and have 3 more to go in order to ship, you might have a hard time convincing someone that you're still a startup.

Others have used metrics such as benefits, team size in relation to growth plan, and whether or not you're still pirating software. At Uber we have excellent benefits, have leveled off growth according to plan, and recently dropped $10,000 on Perforce licenses (after several months of evaluation extensions of course). Still, there's nothing there to make me feel less like a startup.

You could base it on profitability but I've known game companies that have operated for a decade without showing any profit. Having revenues doesn't really indicate anything either since it simply means you're doing some form of business. Someone said you need cash in the bank for X months of operation. That, too, would disqualify some companies that have been around for a long time living paycheck to paycheck.

Here are some stats and facts regarding Uber after 9 months of operations:

• Uber Entertainment, Inc. was born in March 2008
• Since inception we have secured seed and debt financing, as well as some technical contract work
• Finacially secure for at least a year with other deals in the works
• 8 employees not including a part-time book keeper and several contractors
• Last Friday we moved in to a beautiful 2700 sqft office in downtown Kirkland overlooking the lake
• Premera Blue Cross health insurance
• Dental via Washington Dental Service
• Vision coverage through VSP
• Matching 401-K
• Free Soda (or Pop as they call it here)

It's a fuzzy question with a fuzzy answer. At the end of the day I think the company will decide for itself after reaching some internal goals. While we're definitely showing signs of a maturing company I still place us firmly in startup land. Perhaps when we graduate from folding tables to proper desks we'll do a new evaluation.

Comments

[AzureReaver]

I think having a product that you're proud of is the key moment. The product doesn't have to be finished or for sale yet, but it needs to be in a state where you can see the project will most likely be accomplished.

Maybe the idea of being a startup needs to be delineated more - you're no longer a start up for iphone apps, but you're still a startup for non-iphone games.

Don't give in to their 'pop' ways. It is soda. Soda pop if you have to compromise.

[Chris Blackwell]

I think it's when everyone in the office doesn't know everyone else :)

[Dawne]

Ah.. I personally think it's when you have started sending out more then 5 automatic rejection e-mails a day to aspiring new talent. :D
Soda? Oh man.. One of THOSE people.. It's always been pop didn't you know? The word just got diluted on it's way through the states.
Because of course, everything started in Washington... :P