How do startup companies compare to conventional business model?

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With television shows like Silicon Valley and Halt and Catch Fire highlighting the culture surrounding startup companies, public interest in the lore of these often times unconventional environments continues to rise. With these 21^st century companies rejecting the status quo of uniformity and a homogenized workforce, millennials entering the “working world” are regularly drawn towards these companies. But what is the difference between conventional companies and their younger brethren, startups?

Although startups vary in size, they are usually considered smaller than conventional companies. Startup companies often rely on venture capital and angel investors to begin operations. Investors exchange seed money for an equity stake in the company based on a hard-working team of co-founders, a strong risk/reward profile, and the likelihood the company will expand and become profitable. A company may cease to be labeled a startup for a number of reasons – whether because of an Initial Public Offering on the stock market or being purchased by a larger company.

sample startup risk chance road map — sample startup risk/chance road map

Social media company Snapchat is a perfect example of a startup turned large company. Established in 2011 by Evan Spiegel, Bobby Murphy, and Reggie Brown, their selfie app soon became a worldwide phenomenon, which now is estimated to be worth $20 billion.

Another stark contrast between startups and larger companies is the culture. Whereas conventional companies require suits or dress clothes and are known for having a sea of cubicles, startups are known for a more laid-back environment. Hoodies, graphic tees, and gym shoes are a commonality in meetings; this is a far cry from the professionalism often seen in larger businesses. There are exceptions to the rule, however; Google, which had a revenue of $89 billion in 2016, is known for its lackadaisical environment.

*startup entrepreneur; casual dress code*

Traditional companies differ from startups because they have a sustainable business model. Companies are focused on the needs of the customer, as opposed to startups, which focus on an idea or invention that may or may not work. Companies are also legal entities, and are protected by laws and contracts. Startups are not, and often spend months or years developing their business plan or product before it is offered to the public.

But which is better? The answer, simply put, is up to you. Although being part of a startup is incredibly risky and requires putting forth labor that may or may not be fruitful, there is room for colossal success – just ask the founders of Snapchat, and even the three men who started Apple, Inc. in their garage.