Start-Up Vs Scale-Ups: What’s The Difference And Why Does It Matter?

Start-Up Vs Scale-Ups: What’s The Difference And Why Does It Matter?

The general impression of start-ups is that they’re innovative, agile and disruptive in their respective markets. Naturally, many companies adopt the “start-up” label, even if they’ve well and truly moved beyond that phase and become “scale-ups”. So what’s the difference? Let’s find out.

Two saplings image from Shutterstock

There are companies that have been in operation for years that still cling onto the start-up label because it’s something that comes with many positive associations. Start-ups are often viewed as exciting and innovative, able to change course on its business quickly to respond to customer needs and is a breath of fresh air compared to larger organisations.

But at some point in a successful start-up’s journey, it turns into a scal-eup. The difference between the two was explained by David Glickman, an entrepreneur with 20 years’ experience, on Recode:

“A start-up is on the quest to find product-market fit, developing and iterating its product or service, experimenting with customer segmentation and working toward a positive contribution margin.”
“A scale-up, on the other hand, has already validated its product in a market, and has proven that the unit economics are sustainable. A scaleup’s quest is to continue on that upward climb.”

Why is this important? Because the management and leadership skills required for a start-up and a scale-up are very different. Head over to Recode to read the tips Glickman has for start-ups that are morphing into scale-ups.

[Via Recode]