You may want to be an entrepreneur. Starting your own blog-shop or indie game development studio makes you an entrepreneur. However, your goals may differ from other entrepreneurs. With contrasting goals, the strategies and resources required will vary.
As Steve Blank has suggested, there are 6 varieties of start-ups, and owners of any of these are still entrepreneurs: lifestyle, small business, scalable, buyable, social and inside a large company. Although lifestyle and buyable businesses may have similar structure and internal capabilities as small business or scalable start-ups, the objectives of entrepreneurs differ.
Lifestyle Startups: Work to Live Their Passion
On the California coast where I live, lifestyle entrepreneurs are like surfers, teaching surfing lessons to pay the bills so they can surf some more. Lifestyle entrepreneurs live the life they love, work for no one but themselves and pursue their personal passion. The Silicon Valley equivalent is the journeyman coder or Web designer who loves the technology and takes coding and U/I jobs because it is a passion.
Small-Business Startups: Work to Feed the Family
The overwhelming number of entrepreneurs and startups in the U.S. today are still small businesses. This category consists of grocery stores, hairdressers, consultants, travel agents, Internet commerce storefronts, carpenters, plumbers, electricians, etc. They are anyone who runs his or her own business.
Small-business entrepreneurs work as hard as anyone in Silicon Valley. They hire local employees or family. Most are barely profitable. Most small businesses are not designed for scale — the owners want to own their business and feed the family.
Their only available capital is their own savings, what they can borrow from relatives and banks. Small-business entrepreneurs don’t become billionaires and don’t make many appearances on magazine covers. But in sheer number, they are infinitely more representative of “entrepreneurship” than entrepreneurs in other categories—and their enterprises create local jobs.
Scalable Startups: Born to Be Big
Scalable startups are what Silicon Valley entrepreneurs and their venture investors aspire to build. Google, Skype, Facebook and Twitter are just the latest examples. From day one, the founders believe that their vision can change the world. Unlike small-business entrepreneurs, their interest is not in earning a living but rather in creating equity in a company that eventually will become publicly traded or acquired, generating a multi-million-dollar payoff.
Scalable startups require risk capital to fund their search for a business model, and they attract investment from equally crazy financial investors – venture capitalists. They hire the best and the brightest. Their job is to search for a repeatable and scalable business model. When they find it, their focus on scale requires even more venture capital to fuel rapid expansion.
Buyable Startups: Acquisition Targets
In the past five years, the cost and time required to build Web and mobile apps has plummeted. You can get to product/market fit and a million users with $100,000 to $1 million. Many of these startups bypass traditional VCs by using crowd or angel funding. In some cases, while they might be able to build a billion-dollar business, the lack of traditional venture-capital investors (and nosebleed valuations) takes away the pressure of the “swing for the fences” liquidity goals. This class of startup is likely to be sold to a larger company for $5 million to $50 million. The founders and investors walk away with millions but not billions.
Social Startups: Driven to Make a Difference
Social entrepreneurs are no less ambitious, passionate or driven to make an impact than any other type of founder. But unlike scalable startups, their goal is to make the world a better place, not to take market share or to create to wealth for the founders. They may be organized as a nonprofit, for-profit or hybrid.
Large-Company Startups: Innovate or Evaporate
Large companies have finite life cycles. And over the past decade, those cycles have grown shorter. It’s already becoming clear that lean startup practices are not just for scalable and buyable startups.
Corporations have spent the past 20 years increasing their efficiency by driving down costs. But simply focusing on improving existing business models is not enough anymore. Almost every large company understands that it also needs to deal with ever-increasing external threats by continually innovating. To ensure their survival and growth, corporations need to keep inventing new business models. This challenge requires entirely new organizational structures and skills.
Venture capital firms and angel investors often regard all start-ups as smaller versions of bigger companies that seek to grow. This has shown that not all start-ups are the same, and every start-up has its own financial goals and competitive strategies.
You may decide to start your own indie game studio. Do you develop to earn enough to fund your passion in video game development? Do you want to grow as a studio to develop the next AAA game title? Do you want to develop make-or-break games to be noticed by the big firms so that your business and/or development team will be bought over? Or do you just want to make the world a happier place with your entertaining, or perhaps educational, video games?
Sidenote: For blog-shop owners, here is a simple comparison between Brick and Mortar business and online (or pure e-commerce) business start-ups. The start-up costs and marketing strategies differ, and there are significant advantages for each of them. Either type of business still fall under one of the 6 categories of start-ups.