James Sinclair says a startup stops being a startup when it reaches profitability and no longer needs outside investment. Modern venture-backed companies like Uber and DoorDash grow fast while losing money per customer, staying startups until their economics work without subsidies.
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When you no longer a startup. I think two things here, the term startup has changed dramatically. It used to be the intent of a startup was to get to profitability and be able to self sustain as quick as humanly possible. But the the venture capital market has changed to actually say let's aggressively give you money, let's scale. Let's scale even at a loss per user, at a loss per customer, at a loss to your business. Let's get as many users land grab as quick as possible and then we'll work out profitability later. I don't love that model, but I understand it. You know, that's the Uber Postmates doordash kind of model that you've seen fly around. I think that you are no longer a startup when you can, if you choose self sustain and you no longer need outside investment. Need is the key word here. And the reason I think that is until you've proven your economic model and you can meet profitability, you technically don't have product market price fit. Technically, your business model doesn't actually work or isn't actually proven because you've had to give a discount to the user to take an Uber, you've had to give a discount to the user to order from Postmates. So you don't have product market price fit. Your economic model isn't sustainable and doesn't actually work. So for me, that's why I believe you're a startup until that point that you can self sustain. Then if you choose to take money during that journey to do everything to scale, good for you. Amazing. You're no longer a startup. That's my position. I'd be interested to hear someone else's.
