This is because startup is now a buzzword, everybody wants to be a startup, from the guy in his bedroom that created the ultimate todo list app that only 5 people will see, to the huge companies that want people to keep talking about them.
Having a startup now is like being the cool kid of the neighbourhood. Some people might see it as annoying that everyone wants to "have a startup" but I think it's fine, it actually makes it easier for me to recognize those who are dedicated to what they do and those who will just waste my time.
Yesterday I saw a "startup" on /r/startups that was a twitter account that retweets oil prices. People are calling a twitter account a "startup" now. WTF?
Regardless if an organization has a business model or if they're still searching for one, the organization must be a business because businesses have business models (non-profits have/need business models too). Some business models fail, some prosper.
A model, generally speaking, is a lot like a map in that it serves its purpose as being a guide. What do I mean? Let's say I want to travel to France. I can look at a globe and get a pretty good idea of where France is and thus where I need to go. However, once I arrive in France, let's say Paris, that globe is not very useful anymore. I need a more narrow map to help me navigate Paris, so I buy a new map, or rather, I make a new model.
Models are meant to help us think about how to navigate a problem, and they change over time because models are not absolute truths. In that sense, since both startups and businesses have business models, perhaps the right logical segmentation is something to the extent that startups are merely a subset of businesses.
Then again, none of this really matters. I just tell people I'm starting a company.
I agree, a startup is like a subset of the term business. However the term is used in so many different ways, it's losing the whole idea that you should be gearing up to become a business.
In the sense that most startups, like most enterprises, fail without returning a positive reward to its owners or investors, then yes, I suppose startups do indeed look like hobbies.
However, in the sense that a startup is an enterprise, which aims to employ people, seek an exit through acquisition or IPO, or simply to scale to a large profit-driven enterprise, it is not like a hobby. Even if these startups fail, the intent is to create an enterprise that generates return to its shareholders, rather than something done simply for the personal interest or enjoyment of its owners. Of course...
Hobbies of course can become startups, and startups can become hobbies (once they give up on the enterprise aspect). And many startups are indeed run for the personal interest or enjoyment of the startup. So, it's quite possible you can only really identify a startup as a hobby either in the short-term (pre-revenue / pre-success) or in hind-sight (after they have proven to have failed).
A startup without any clue on how to make money is an expensive hobby. Color burning it's current capital without any idea on what they're doing as well. The whole first two versions of their product could have been tested in spare time, and sure scaling could be an issue then.
Color would be a startup, because it has the intention to make money, and has attempted to make money (i.e., through ads).
The lack of success is not determinative of whether a venture is a business. However where the line is blurry (i.e., for a business operated out of a home), it could be the factor that tips the scales toward treating the venture as a hobby.
You quoted a pretty good definition of a startup. So why not do the obvious thing, and call something a startup iff it meets that definition? Why encourage using a different and more generic word "business", if that doesn't clarify anything?
Next we're going to get a blogpost claiming that a startup with massive growth but no revenue model shouldn't get to call itself a business (because real businesses make profit!!). And so we go in circles again and again.
Yes, many people don't know the difference between a business, a business spin-off and a startup. The solution is to label things accurately, and to explain the difference when you notice people are confused. The solution is not to use a less accurate label in protest of people using labels inaccurately!
A business is pretty clear in what it is, right? You create value for other people and make money with it. In order to make a profit more money needs to come in than leaves again. Sure there are exceptions, but this should be the basic definition of a business. Not sure if that is less accurate.
In your blogpost you said that you used to refer to what you were doing as a startup and don't anymore. So either your organization wasn't a startup in the first place (and now you started labeling it correctly) or your organization is a startup, in which case that's exactly what you should call it.
We reviewed our products as seperate startups. And when we used to pitch them like that, it was fine. People heared us in saying, we're trying to set up multiple businesses. Now people don't know what we mean by startup. It's semantics, yeah, but in general it's far easier to explain what a business is than what a startup is.
Legally, a venture which is not intended to make money, or which has no plans for earning revenue, is not a business. If the venture is not a business, it is generally treated as a hobby, meaning, among other things, that expenses are not deductible except to the extent of revenues earned.
A "business" without a revenue model could be, and in various courts has been, treated as a hobby. Thus, with startups, the lack of a plan for generating revenue could very well be the demarcating line between a business and a (very expensive) hobby.
This reminded me of someone who called restaurants 'startups.' Probably an expensive hobby but intended to be a going concern.
Don't we have any budding taxonomists here? Surely we can come up with a taxonomic way of classifying human endeavors such that folks with anal-retentive properties can comfortably discuss them.
Having a startup now is like being the cool kid of the neighbourhood. Some people might see it as annoying that everyone wants to "have a startup" but I think it's fine, it actually makes it easier for me to recognize those who are dedicated to what they do and those who will just waste my time.