The 8 Types of Startups
Over the years, I’ve seen a few patterns emerge when looking at the outcome of a given startup venture.
In this article, I share my thinking on these patterns based on my own experience, readings, and commonly described definitions.
Importantly, each startup type can only be identified in hindsight.
This may seem obvious, but it is the underlying uncertainty that comes with building something from nothing that all founders must accept.
While we could use valuation as a method for comparing types of startups, I prefer a more practical, measurable, yet still familiar metric of annual recurring revenue (ARR).
The other key distinction between the types is the amount of control the founder (or founders) retain over the company. The measurable metric we’ll use for this is equity.
Below is a visual of each startup type, mapped along the axis of ARR and equity. The rest of the article goes into detail about each startup type.
A couple notes:
- In this post, and the website as a whole, I only focus on online businesses. This is in contrast to more traditional, local businesses, which primarily operate within a given geographic region (e.g., dentists, plumbers, restaurants, hotels, etc.).
- The ranges I provide for annual recurring revenue (ARR) are not meant to be exact, and use order of magnitude fermi estimation to convey relative differences, not absolute truth.
With that in mind, let’s dive into the different types of startups.
1. 💀 Dead On Arrival (DOA) Startup
“Anyone can have a solution, but if no one cares about it, unfortunately, you are not going to have a very big company.”
– Melanie Perkins, Co-founder of Canva
This type of startup has a fundamentally flawed idea or execution. It never gains traction or makes any significant amount of money, no matter how hard the founders try.
The startup is a time and money pit.
Attributes
🎯 Goal: Survival (often short-lived)
📈 Growth: None
💰 Funding: Usually none
🧑💻 Team: Varies
👑 Founder Control: Usually full
💸 ARR: Less than $1k, if any
Examples
Scroll through Product Hunt, Reddit, or Indie Hackers long enough and you’ll come across thousands of these.
If you’ve ever spent months (or years!) building something and launching it to crickets, you’ve built a DOA Startup.
Nobody wants this kind of startup.
2. 🧟 Zombie Startup
“A Zombie startup is neither dead nor alive and can be a fate worse than a failed product because success always feels just around the corner.”
– Ash Maurya, author of Running Lean
This is a company that continues to operate despite having little to no hope of success.
It might be barely surviving on minimal funding or revenue, with no clear path to profitability (sometimes for years). They often lack direction or a clear strategy.
A Zombie Startup is the most dangerous for founders (even more so than a DOA or Bust Startup) because it’s tempting to “just keep going a little longer”. Oftentimes it’s best to simply move on.
To avoid becoming a Zombie Startup, you need to design a working business model.
Attributes
🎯 Goal: Survival (despite poor prospects)
📈 Growth: Slow or none, unsustainable
💰 Funding: Minimal funding, potentially bootstrapped
🧑💻 Team: Varies
👑 Founder Control: Usually full
💸 ARR: $1k - $10k
Examples
It’s difficult to find examples of Zombie Startups due to their lack of traction.
However, if you’ve ever started a company that never made much money, and always felt like success was just around the corner, you’ve experienced them firsthand.
Once identified, it’s best to run away from these as quickly as possible.
3. 🚀 Lean Startup
“The only way to win is to learn faster than anyone else.”
– Eric Ries, author of The Lean Startup
These startups prioritize rapid growth and scalability, often seeking external investment to fuel that growth.
It’s what many of today's most popular startups are.
They aim to scale quickly and efficiently, often with the goal of achieving a significant exit (acquisition or IPO). They are often trying to become Unicorn Startups (a valuation of over $1 billion).
Lean Startups are valued based on their growth potential and expected development, not always their actual financial performance.
Founders exchange equity and ownership control in exchange for funding. This puts pressure on the founder to deliver – often in a short period of time. Many Lean Startup founders choose to be the public faces of their companies (e.g. Elon Musk, Mark Zuckerberg, Steve Jobs, etc.), or seek attention from the startup news industry in publications like Techcrunch, Venturebeat, etc.
They’re dominated by hustle culture, “move fast and break things” mentality, and tech bros. Television shows like Shark Tank, Silicon Valley, and the movie The Social Network embody this mentality.
While not always, they can lead to burnout, growth over profitability, and disregard for ethical considerations.
Attributes
🎯 Goal: Growth and achieving an exit (acquisition or IPO)
📈 Growth: Fast to rapid
💰 Funding: Multiple outside investors, venture capital (VC)
🧑💻 Team: Co-founders and employees
👑 Founder Control: Partial
💸 ARR: Typically falls between $1m and $100m
Examples
These startups are all over the startup news airwaves.
Because a list of them would likely be outdated in a matter of months, I’ll simply say that many of these become either Bust or Unicorn Startups within a few years.
This is the nature of seeking funding. Go big, or go home.
But that doesn’t mean there isn’t any value or important lessons to be learned from the lean startup methodology.
It’s been instrumental in the success of countless companies, trillions of dollars in economic growth, and provides a valuable framework for navigating uncertainty and building innovative products in a systematic way.
But it’s not the only way to build a startup.
Before getting into alternative methods, let’s first cover two subtypes of the Lean Startup.
4. 💥 Bust Startup
“Like Achilles, the hero who forgot his heel, or like Icarus who, flying close to the sun, forgot that his wings were made of wax, we should be wary when triumphant ideas seem unassailable, for then there is all the more reason to predict their downfall.”
– Dwight Longenecker, Catholic priest and author
This type of Lean Startup raises significant funding. It continues to hit investor milestones and raise money, but never becomes profitable.
Eventually, it implodes.
The only way to reach this sky-high level of debt is with venture capital (VC) funding and massive valuations.
What makes them different from a DOA Startup is that Bust Startups have investors when they fail (sometimes spectacularly).
Attributes
🎯 Goal: Rapid growth at all costs (leading to implosion)
📈 Growth: Rapid, unsustainable
💰 Funding: Significant outside investment, venture capital (VC)
🧑💻 Team: Varies, often with experienced executives
👑 Founder Control: Partial
💸 ARR: Varies
Examples
- Theranos. Once hailed as a revolutionary blood-testing company, Theranos, founded by Elizabeth Holmes, was valued at $9 billion at its peak. However, investigations revealed that its technology didn't work as claimed, leading to fraud charges and the company's collapse in 2018.
- WeWork. The coworking space provider, WeWork, experienced a dramatic fall from grace in 2019. Its planned IPO was derailed by concerns over its governance, business model, and the behavior of its CEO, Adam Neumann.
- Quibi. This short-form video streaming platform, launched in 2020 with $1.75 billion in funding, shut down just six months later. Despite big names like Jeffrey Katzenberg and Meg Whitman at the helm, Quibi failed to capture an audience.
- Bowery. The vertical farming startup shut down in 2024 despite raising over $700 million and a $2 billion valuation. Like other vertical farming companies, Bowery failed to convince consumers to pay premium prices for its produce. A questionable $150 million debt decision further hindered the company, ultimately leading to its closure.
The story of Icarus flying too close to the sun best encapsulates what happens to these kinds of startups.
While it’s quite a ride, nobody wants this at the end of the day.
5. 🦄 Unicorn Startup
“If people around you don't think what you're doing is a bit strange, maybe it's not strange enough.”
– Patrick Collison, Co-founder of Stripe
These are a rare type of Lean Startup (hence the name).
In the venture capital (VC) world, they are defined as privately funded startups that have a valuation of over $1 billion. It should be noted that some VCs believe the unicorn term has become too diluted due to ever increasing (misplaced) valuations.
Once a unicorn goes public, it's no longer considered a unicorn, even if its market capitalization exceeds $1 billion. It then becomes a publicly traded company.
Attributes
🎯 Goal: Achieving a valuation exceeding $1 billion while private
📈 Growth: Rapid
💰 Funding: Private funding, venture capital (VC)
🧑💻 Team: Varies, often with experienced leadership and large teams
👑 Founder Control: Partial
💸 ARR: $100m+
Examples
- Stripe. Irish-American financial services company. If you've purchased something on the internet, chances are they were involved in processing your payment.
- Canva. Australian graphic design platform.
- Zapier. The web automation tool that only raised $1.2M from one round of funding prior to becoming a Unicorn.
- Uber. Disrupted the transportation industry by leveraging technology and a lean approach to connect riders and drivers. Unicorn prior to going public in 2019.
- Airbnb. Revolutionized the hospitality sector by creating a platform for people to rent out their homes, demonstrating the power of the sharing economy. Unicorn prior to going public in 2020.
While certainly very impressive, as indie founders, we’re not chasing unicorns. One founder’s unicorn is another founder's dead horse.
6. 🏖️ Lifestyle Startup
“I'm a business, man!”
– Jay-Z, 24-time Grammy Award winner
These startups are designed to support the owner's ideal lifestyle, prioritizing freedom, flexibility, and personal fulfillment over rapid growth.
They are typically known as a lifestyle business, often with the goal of replacing a 9-5 job.
The owners of these startups usually have a strong personal brand (they are the company). They are referred to as solopreneurs, bootstrappers, creators, or indie hackers. Intertwining the company brand with the founder certainly has its benefits, but requires them to be the face of the company, which isn’t for everyone.
They don’t rely on investors and may not have many employees. Because of their low startup costs, they’re a great side hustle while working a full-time job.
They are often location independent, passion-driven, and foster a more personal and meaningful relationship with their audience.
The downside is that their scalability is intentionally limited to prioritize lifestyle. Growing beyond a certain point would require a tradeoff in freedom, negating the “lifestyle” goals of the business owner. There are of course outsize exceptions to staying small, though they are considered more of a celebrity at that point.
Attributes
🎯 Goal: Personal fulfillment and supporting the owner's desired lifestyle
📈 Growth: Slow to fast, inconsistent
💰 Funding: Typically bootstrapped, self-funded
🧑💻 Team: Single founder, rarely has employees
👑 Founder Control: Full
💸 ARR: $10k - $100k (sometimes $1m+)
Examples
- Content & Media. Create and distribute content (text, audio, video, images). Bloggers, YouTubers, podcasters, writers, photographers.
- Coaching & Consulting. Provide expert advice and guidance. Business coaches, life coaches, marketing consultants, financial advisors.
- E-commerce & Sales. Sell products or services online. Online retailers, affiliate marketers, digital product creators.
- Skilled Services. Offer specialized skills and services. Web developers, graphic designers, virtual assistants, personal trainers, therapists.
- Teaching & Training. Educate and share knowledge. Online course creators, tutors, workshop facilitators, speakers.
- Influencers & Celebrities. Build a personal brand and leverage it for various income streams. Social media influencers (across various niches like travel, fashion, gaming, etc.), actors, musicians, athletes, media personalities.
A Lifestyle Startup has a lot of benefits for the owner, but needing to be the public face, and the inconsistent growth, may not appeal to everyone.
7.🌲 Quiet Startup
“Until you dig a hole, you plant a tree, you water it and make it survive, you haven't done a thing. You are just talking.”
– Wangari Maathai, Nobel Peace Prize winner
This type of startup incorporates the best elements of both a Lean Startup and a Lifestyle Startup (and is what we as quiet founders aim to build).
It’s first and foremost a founder-led company, retaining complete control and avoiding the external influence of investors.
They blend efficiency, data-driven decision making, and iterative development with financial independence, personal fulfillment, and sustainable growth.
Tending to avoid the spotlight, they prefer to grow quietly behind the scenes, prioritizing craft over attention through evergreen, long-lived content and processes.
Attributes
🎯 Goal: Immediate profitability, long-term financial independence, personal fulfillment
📈 Growth: Slow, sustainable
💰 Funding: Bootstrapped, self-funded, no outside investment
🧑💻 Team: 1-3 founders, sometimes has employees, relies heavily on technology and contractors
👑 Founder Control: Full
💸 ARR: $100k - $100m
Examples
- Plausible Analytics. Google Analytics alternative that's open source and privacy focused. Launched in 2019 by Uku Taht and Marko Saric. Based in Estonia.
- StoryGraph. Goodreads alternative co-founded by Nadia Odunayo and Rob Frelow in 2019. It’s 100% independent and ad-free. Based in the UK.
- Coolors. Color palette generator created by Fabrizio Bianchi in 2014. Based in Italy.
- Smallpdf. Suite of PDF related tools founded in 2013 by Mathis Büchi, Lino Teuteberg, and Manuel Stofer. Based in Switzerland.
- BuiltWith. Tool for discovering the technologies companies use to build their websites. Founded in 2007 by Andrew Rogers and Gary Brewer. Based in Australia.
With a Quiet Startup, there's no pressure to scale to the moon or build a massive team.
But if that’s something you aspire to, there’s nothing stopping you from doing so. It just may take some time, and brings us to our last startup type…
8. 🐦🔥 Phoenix Startup
“Our greatest glory is not in never falling, but in rising every time we fall.”
– Nelson Mandela, 1st President of South Africa and Nobel Peace Prize winner
This mythical startup is a special kind of Quiet Startup.
Like the Unicorn Startup, they are rare and require exceptional financial discipline and strategic planning.
They are defined as having an ARR of $100M+, but unlike Unicorn Startups, Phoenix Startups do not have investors and do not rely on inflated valuations to reach their mythical status – they are fully founder controlled.
Attributes
🎯 Goal: Bootstrapping to $100M+ ARR
📈 Growth: Slow, sustainable
💰 Funding: Bootstrapped, self-funded, no outside investment
🧑💻 Team: 1-3 founders, some employees, relies heavily on technology and contractors
👑 Founder Control: Full
💸 ARR: $100m+
Examples
There are very few examples of Phoenix Startups as it’s exceptionally difficult to bootstrap a company to this level of success.
Some have even said it’s impossible.
But it turns out these types of startups do exist. Here are a few examples:
- Valve. Bootstrapped since 1996, Valve is a massive player in the video game industry that was founded by Gabe Newell and Mike Harrington. They develop and digitally distribute games through their Steam platform, and own franchises like Half-Life, Counter-Strike, and Portal.
- Mailchimp. The email marketing software giant founded in 2001. The founders, Ben Chestnut, Dan Kurzius, and Mark Armstrong, bootstrapped all the way to selling to Intuit for $12 billion in 2021.
- Cloudinary. Founded in 2011 by Itai Lahan, Tal Lev-Ami, and Nadav Soferman, Cloudinary is a cloud-based image and video management platform for developers and businesses.
- Patagonia. Founded in 1973 by Yvon Chouinard, Patagonia is an outdoor apparel and gear company with a strong focus on environmental and social responsibility.
- Spanx. Founded in 2000, Spanx is a leading shapewear and apparel company. The founder, Sara Blakely, bootstrapped the company with $5,000, and sold it in 2021 for $1.2 billion.
- Craigslist. A text-based classified advertisement website. Founded by Craig Newmark in 1995, it initially started out as an email distribution list to friends. Eventually, it grew to become one of the most visited websites in the world.
In order to achieve this remarkable status, these startups prioritized profitability and sustainable growth over rapid expansion. They demonstrated exceptional resilience, strategic acumen, and a deep understanding of their respective markets.
With ever increasing automation, globalization, and AI, more and more companies will join this elite club.
While bootstrapping to $100M+ ARR is challenging, it’s not impossible.
Bringing it all together
A startup's journey is often one of transformation, shifting from one type to another over its lifetime.
While the default path for many founders has historically been seeking investors and becoming a Lean Startup, this isn't the only way.
There's nothing wrong with this approach, as long as it's the right fit for the founder.
As quiet founders, we take a different approach to building our companies.
One not beholden to investors. One where we can remain independent and focused on our vision indefinitely.
This is the promise of the Quiet Startup.