When does a start-up stop being a start-up?


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    Bryan Valentini

    Bryan Valentini, a co-founder of Brooklyn-based startup Kinisi, in the company's startup-sized office.

    - Sally Herships

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    One sign of a start up - technology in development around the very-small office.

    - Sally Herships

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    Green-desk, a co-working space in Williamsburg, Brooklyn

    A hallway at Green-desk, a co-working space in Williamsburg where Kinisi rents space.

    - Sally Herships

One way to tell a company if a company is a baby start-up? By its location. The farther an address is from the subway in New York – and therefore the cheaper the rent  the more likely the start-up will be a youthful one.

Which is the case with Kinisi. The company, which makes an environmental sensor to gauge problems like air pollution, was founded in June. You can measure its age like a baby's – in weeks.

Bryan Valentini, one of the company's five co-founders, says there are other quick ways to spot the youngest of young start-ups. “You can ask them, 'Do you have business cards?'  Something simple like that," he said. And the answer for me would be 'not right now.'"

Does Kinisi have a human resources department? “You’re looking at it," he said.

Valentini says, for him, one sign a start-up has stopped being a start-up "is when you come in, you’ve started something and it stops being fun.”

What would older start-ups have to say? To find out, we stopped by Columbia Business School’s Startup Lab, hosted at co-working space WeWork in SoHo, an open-plan office with high ceilings, long tables and lots of entrepreneurs with laptops. You can practically smell the IPOs.

Columbia Business School’s startup lab in Soho

Working in a co-working space? Still a start up. Entrepreneurs at Columbia Business School’s startup lab in Soho.

“I’m not sure that a start-up ever stops being a start-up," said Benji Jack, a co-founder of start-up BoardRounds, which aims to improve follow-up for emergency room patients. His company has been around for a year, and Jack says start-up-ness is a frame of mind  being able to innovate and change quickly.

"I don’t think one can point to Google and say 'on this date, Google was no longer a start-up,'” he said. 

Just a few SoHo blocks  but many years of start-up experience  away, are the offices of ShopKeep. Founded in 2008, CFO and co-founder David Olk described the company as a "petulant teen." "It’s a little bit more mature," he said, "but it doesn’t mean it’s not going to have its problems, issues and stumble to grow up into a normal human adult."

Olk says he agrees with Jack – that plenty of public companies are run like start-ups. “We’re a start-up," he said. "Look, we have a pool table, we have a kegerator, we have a Foosball table, we have free food.”

Olk said Shopkeep is a mature company and a start-up. Now his focus is on day-to-day business. He doesn’t have to worry about capital like he used to, But he said the company retains its start-up qualities, like employees’ ability to make decisions and to take ownership of their jobs.

But then again, although ShopKeep has 130 employees, with offices in the UK, New York and Portland, it’s no Microsoft.

The problem with gargantuan companies, said Hayagreeva Rao, a Stanford professor and author of "Scaling Up Excellence: Getting to More Without Settling for Less", "is the larger you become as a company, the more likely are smart people inside the company to become dumb.”

Rao said he doesn’t mean smart people become stupid. Instead, he cited the work of anthropologist Robin Dunbar: “He studied a number of species to find out: What is the optimal size of a tribe or a social grouping?"

The magic number is around 150 people. Beyond that, Rao said, your tribe is going to break apart. The bigger a company is, the harder it is to know everyone’s name, let alone what they do.

Imagine you're the founder of a start-up that’s grown from two employees to 2,000: "You go to a meeting and you see a lot of people you don’t know – that’s like definitely a warning sign.  You go to a meeting and say, 'who are these people? What the hell are they doing here?'" he said.

In other words: Once a company becomes successful, it can become its own enemy.

Rao said large companies like Google and Facebook are not start-ups. As they grow, he said, it’s nearly impossible to hold on to their original start-up-y culture. That’s why companies like Google give venture capital money inside the company  to try to stay Google-y.

At Columbia’s Startup Lab, Liz Wilkes, a founder of Exubrancy, an office health and happiness company, is working on her laptop. She says a start-up stops being a start-up when it stops feeling like a family and becomes an organization with hierarchy and systems. But she also says start-up-ness is cultural, which can, if a company isn't careful, be bad for business. 

“You know when you meet that guy who’s like 40 and he’s wearing  a backwards cap and he’s at the bar with your friends who are in their 20s?" she said. "And you’re like, this guy might be a little too old to be here? I do feel like there’s some of that in the start-up scene. Where a company, potentially to its detriment, has not formalized and organized in a way that they should."

Start-ups can get stuck in their teenage years, but they don't have to, Wilkes says. 

Liz Wilkes, a founder of Exubrancy.com

Liz Wilkes, a founder of Exubrancy.com at work at Columbia's startup lab.

Growing up, while retaining just the right youthful qualities, for people or for companies, or for both, is tricky.

Cyrus Massoumi, CEO and founder of the physician location service ZocDoc,  said there are three attributes that define startups: the first he says "is relative to speed, how quickly can you get decisions made, how quickly can you get new products and services." The second, creativity - "are you building new products and processes, are you growing?" And "of course, the last one is fun."

Even with over 600 employees, ZocDoc remains a start-up, Massoumi said. He pointed to the shag carpet skateboard near his desk. "Maybe that’s what makes it not a start-up, he joked. "When your team doesn’t let you ride your shag carpet skateboard around your office for fear that you're going to injure yourself."

"If you want to retain the attributes of a start-up as you get bigger, you absolutely need to focus on it. And it needs to be a top priority or you will lose it."

He nodded toward a stuffed monster, given out as inter-office award. Then, to a large bean bag chair, "we have the world's largest beanbag sitting here," and finally a ping-pong table in the cafeteria. "Ping-pong," he said, "is an important part of what we do."

 

 


 

CORRECTION: An earlier version of this story misidentified David Olk's title. He is CFO and co-founder of ShopKeep. The text has been corrected.

About the author

Sally Herships is a regular contributor to Marketplace.

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