Startup = Growth

Paul Graham’s essay Startup = Growth provides the clearest definition of what a startup actually is: a company designed to grow fast.

The Definition

Being newly founded or working in technology is irrelevant. Growth is the defining characteristic. This distinguishes startups from ordinary businesses like barbershops or restaurants.

A restaurant in one location can be great, but it’s not a startup. A restaurant concept that can be replicated rapidly across hundreds of locations might be.

Scalability Requirements

For rapid growth, companies need two things:

1. Creating something many people want
2. Reaching those people efficiently

Technology typically enables the second by overcoming distribution constraints that limit traditional businesses.

Measuring Success

Growth rate—not absolute customer numbers—matters most. Graham recommends measuring weekly growth as a percentage:

• Healthy during YC: 5-7% weekly
• Exceptional: 10% weekly

This metric becomes a compass for decision-making: “anything that gets you the growth you need is right.”

The Power of Compounding

Small growth rate differences create dramatically different outcomes:

• 5% weekly growth → 12.6x larger annually
• 1% weekly growth → 1.7x larger annually

This explains why startups attract venture capital despite high failure rates. The winners win big.

Three Growth Phases

Successful startups typically experience:

1. Slow initial growth (finding product-market fit)
2. Rapid expansion (scaling what works)
3. Deceleration as market limits approach

This forms an S-curve pattern.

My Takeaway

The growth lens is clarifying. It forces you to ask: can this scale? If the answer is no, you might be building a great business, but not a startup. Both are valid—just don’t confuse them.

How do you think about growth in your work? I’d love to hear at persdre@gmail.com.