Should your next startup be a firm? In conversational usage, the terms are synonyms, so the question might seem odd.
Economically speaking, a firm is a for-profit entity detached from market solutions of the day. The label implies some sort of innovation is happening behind the business’s doors, whether through novel production techniques, new organizational patterns or previously unseen products.
To be clear, the terms aren’t mutually exclusive. Some startups are firms, but certainly not every startup qualifies. Only startups that do innovative things that cannot fully be done through simple buying and selling are firms. Startup-turned-superpower Uber, which sought to change how consumers hail taxis, is a firm because it presented the market with a new solution. Uber clone Juno may not be and future ridesharing services certainly won’t be. They’ll rely on bots and others’ experiences to outsource, so they’re not firms.
Firms come in all shapes, sizes, and industries. Henry Ford’s automobile company revolutionized manufacturing, while podcast startup Gimlet Media is bringing native advertising to radio, marking both as firms.
So if you’re ready to bring innovative ideas to the world, then consider the firm. Here’s how to put yourself on firm footing: