My neighbor at 1871, who I love to death, came in this morning and asked me, with a distressed look on her face, "Why do you guys call yourselves a startup? You're not really a startup, are you?" I was shocked... "How are we not a startup?" I asked. While she had a hard time explaining her rationale, it became obvious that, because Breakwater Chicago is not a technology startup, she didn't see us as a startup at all. I spent the rest of the day thinking about what we define as a "startup" and realized that, at least here in Chicago, we think of startups purely in the sense of tech and sometimes healthcare. If you're not building a new mobile app, developing SaaS products, or doing something that is at least tech-enabled, then you're not really working on a startup.
My guess is, as soon as you read that paragraph, you realize that it's kind of absurd. Startups can include lots of different types of businesses, right? - Of course. Duh! Obviously...
Well let's ask a harder question, then: What does it mean to be be working on a startup?
If you punch that question into Google, the first result comes from Investopedia; they define a startup as: A company that is in the first stage of its operations. These companies are often initially bank rolled by their entrepreneurial founders as they attempt to capitalize on developing a product or service for which they believe there is a demand. Due to limited revenue or high costs, most of these small scale operations are not sustainable in the long term without additional funding from venture capitalists.
Based on that description, which makes no mention of tech or healthcare, I think of so many stories from the journey of Breakwater Chicago that relate:
A company that is in the first stage of its operations. - Istill remember when I first came up with the idea of a remote, floating vessel that could provide an island-like experience on Lake Michigan. People thought I was nuts! Apparently I was convincing enough that those folks would at least indulge me, sharing their advice or feedback, which I used to further develop and bolster my case. After six or eight months, I noticed that people were finally getting really excited about the idea when they first saw it. Like so many other startups, tech or otherwise, it was a turning point where a crazy idea had been developed into a real business concept... which is just the start!
These companies are often initially bank rolled by their entrepreneurial founders... - When I first started working on the Breakwater Chicago concept, I was living with my parents in Plainfield, IL. After spending almost every day in meetings around downtown Chicago, I got a job at a bar-restaurant in Old Town called Wells on Wells, and was able to use those funds to make ends meet. I was a mechanical engineer with a Harvard MBA and I was clearing dishes, checking ID's and moving tables. As most entrepreneurs would probably agree, you do whatever needs to be done to bring your concept to reality, no matter what the price.
...as they attempt to capitalize on developing a product or service for which they believe there is a demand. - This is the leap of faith that all startups go through. You see signs that your idea is going to be a success, you hear the excitement in people's voices as you tell them about it, and you have faith that all of your sweat, blood, and tears will equate to that home-run you dream about every night when you attempt to get a few precious hours of sleep. The magical moment for Breakwater Chicago was when we made our public announcement on June 9th, 2014. I'll never forget my very first news interview, with Sandra Guy from Sun-Times and later with reporters from several other newspapers. Sandra was covering a multi-billion dollar business merger in Chicago that had just been announced, so when we got on the phone, she said she had just a few minutes to chat. I could not have been more nervous! Next thing I knew, we had been talking for an hour and Sandra had invited me over to the Sun Times office to record a short video clip about our story. She was the nicest lady ever and even gave me a full tour of their offices. I knew then that Breakwater Chicago was going to be big news.
Due to limited revenue or high costs, most of these small scale operations are not sustainable in the long term without additional funding from venture capitalists. - If you don't like asking people for money, then the startup environment is not for you. In my opinion, this is the least fun part of the journey, but it also happens to be the most critical. Whether you like it or not, you must raise capital out of necessity, so you get comfortable with it and eventually you get good at it. Breakwater Chicago closed on a series "A" round recently, and it was an amazing feeling. After a sigh of relief and a bottle of champagne with the team, we immediately started working on building the next Offering Memo for our series "B" round that would come just a few months later.
So if you agree with Investopedia's definition of "startup," then you can see that Breakwater Chicago is as much of a startup as any other young company at 1871, the mostly-tech incubator where our offices are located. Hopefully, as the startup community in Chicago continues to grow and evolve, we'll find that "startup" will begin to mean businesses that sprout from an idea, are built into a concept, executed upon, grown, and eventually funded to success... no matter how much or little code was written in the process.