Work: Start-up v. Established Firm — Thoughts on Inflection Points

Scott Berkun wrote a great post that discusses how he encounters the start-up inflection point in companies. This is the point where the company has to make that brutal transition from the fast-and-loose dynamic of the true start-up to the more established and “normal” business methods.
This week, Niall Kennedy provided an example of someone who gave an established firm a try, but decided that the start-up world is more to his liking.
The object here is not to decide which is best, the start-up or the established firm, but to discuss the transition that occurs when moving between these two phases; and the direction of travel is always one-way, to the established firm. For all their talk of “thinking like a start-up”, established firms are what they are.
I have made this transition twice now. The first time was during the exuberance of the 1999 bubble world with a company that had just gone public. Here the transition was initially hidden by the exponential growth and overly optimistic predictions made by the executives. When reality stepped in early in 2001, the true effect of the transition became clear: this was no longer a start-up, and there were people who were more than willing to make the tough decisions. Whether, in the long-term, these were the correct decisions is a question that I am not willing to answer; I was merely an observer.
I was an observer when a similar change occurred at my current company. A start-up in the sense that it was still a VC-funded private firm, this company had (and still has) an excellent product developed by some top-flight technical talent. The issue now was to take that foundation and build a team that could execute. Again, I can’t say whether the decisions that were made were the correct ones, but the team that was built during that time has lead the company out of the wilderness and in a very solid direction.
These are simply my experiences. In my experience, there are start-up people and established company people; and there are the rare folks who can slide in and out of both worlds. Me, I fall into the start-up category. When a company starts edging toward 200 employees, I begin to feel a bit edgy. In a very quick exchange I had with Niall Kennedy on Tuesday, he said that he set a magic number whan a company became a “189” “187” (a number he also mentioned was police slang for homicide).
Is there a magic number? Or does it depend on the company? What defines a start-up? What defines an established firm?
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