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There’s no such thing as “a startup”

The first thing to know about startups is that there’s no such thing — startups are a category, and that category is so broad as to be nearly meaningless.

At one end of the spectrum, you have a ragtag group of <10 people, working to build a first product and sell something (anything!) to someone (anyone!). And at the other you have Stripe, a $74 billion behemoth that employs 4,000 people and took in $7.4 billion in revenue in 2020.

In this post, I’ll help you understand all the subspecies of startups — consider this your Startup 101 education.

To simplify things, we’ll divide up the “startup” category into four stages: Drunken Walk, Product-Market Fit, Hypergrowth, and Scale.

For each stage of startup, we’ll talk about what it’s like to work there, how much equity you can expect to get as an employee, what kinds of fundraising are available, and far more.

⭐ Make sure to scroll all the way to the end — I’ve recorded a video that covers examples of each kind of startup. ⭐

Drunken Walk is the craziest stage of entrepreneurship — you’re blindly rooting around in the dark, hoping that your intuition about where to search is well-founded.

In a word, this stage feels volatile. With every win, wild elation; with every loss, crushing defeat. There was a day in the early history of my last startup where I thought I was going to win $1 million — but won $0 instead, and my co-founder quit to join Facebook the next day. That was par for the course: high highs, low lows, and little in between.

If you join a company at this stage, you are part of the founding team. You’ll be asked to do a little bit of everything, you’ll have to be an independent worker, and you’ll know what every other person is doing. You and your teammates will probably all have lunch together; and at this stage, teammates feel more like family, as you’re all fighting to stay alive together, often every minute of every day.

The goal of a Drunken Walk-stage startup is to find a product that people want, and to recruit the core of a team that can build it.

I expect most Outsiders know that product is important, but recruiting as a primary goal may be surprising — but if you think about the long-lasting impact of hiring those first employees, it makes sense. Patrick Collison (Stripe founder) said that the first ten people you hire are important because:

[you] aren't just hiring those first ten people, you are actually hiring a hundred people because you think each one of those people are going to bring along another ten people with them. And [you need to decide] exactly what ninety people [are like] that you would like those first ten people to bring on.

Hires at this stage normally come from the extended networks of the founders, and are given a substantial equity stake in the company in exchange for taking the risk of joining so early. Startups this early aren’t for everyone, but if you have the financial stability, risk tolerance, and/or burning desire to bring a particular piece of technology into the world, they can be exciting and career-shaping adventures.

The second phase of startup growth begins once you have a product in the market, you’ve raised some real money to pay the salaries of your newly-recruited team, and it’s time to prime the company for rapid scaling. ...