I’ve been enjoying my current class, Startup Engineering, from Coursera. My own fascination for startup culture preceded the “Dot Com” era; I always admired people like Nolan Bushnell[1], Steve Jobs[2], and Bill Gates[3]. But I came of age during “The Bubble” and hearing all of the sensational stories made me excited with what I might be able to become a part of as a young technologist. Even after the party ended and it seemed so obvious that most startup emperors had no clothes, I was still under the spell of people like Paul Graham whose essays and work at YCombinator[4] have influenced so many of us in our thinking about building businesses.

One of the key points made by the Startup Engineering professor, Balaji Srinivasan, is that there is a difference between a “small business” and a “startup.” The major difference has to do with the size of the market. According to the lecture notes: “Startups Must Exhibit Economies of Scale.”

When I think about the companies I admire I realize that many don’t have enormous markets in a traditional sense[5]. I find myself admiring companies like Wolfram Research for products like Wolfram Alpha or a gaming company like Paradox Interactive for publishing niche titles well known for their sophistication and obsessive community rather than mass market appeal. Both, if I’m not mistaken, are privately held which means that while neither is “small,” neither has to kowtow to short term demands of shareholders.

Although I’m in learning mode at present I hope one day to build my own business selling software. It is, after all, the reason I took the course. But from a philosophical and temperamental side, this has helped me clarify my interests in something smaller than a conventional startup. I would rather take on an ambitious goal[6] in a small market than making a conventional concept “mainstream.” Worse yet, I wouldn’t want to build a sand castle product that is just designed to get a buck rather than make an impact.

 

[1] The First Quarter : A 25-year History of Video Games is a great history of early gaming.  It was later edited and republished as The Ultimate History of Video Games: From Pong to Pokemon--The Story Behind the Craze That Touched Our Lives and Changed the World but I've only personally read the former.

[2] Folklore.org is a great resource for stories around the early days of Apple and the building of the original Macintosh.

[3] Steve Jobs, Bill Gates, and many others are chronicled in Robert Cringely’s excellent book Accidental Empires: How the Boys of Silicon Valley Make Their Millions, Battle Foreign Competition, and Still Can't Get a Date. 

[4] According to Graham, the valuation of companies incubated at YCombinator as of June 2013 was $11.7 billion. 

[5] By this I mean a lot of people. I’m aware of companies with a smaller market that achieve their revenues with higher prices.

[6] Like Johan Andersson’s: “to create believable worlds.”