pg's definition of a startup is a small business that intends to get big. He says that this is the ordinary Valley definition. This is the kind of business that needs the funding and connections that are available in the valley. So the question becomes: why do people want to start that kind of business?

your definition of small business seems to be the logical/literal one, which includes all businesses that start small, including lifestyle businesses (nothing wrong with that; it's just a different definition of the word, and a different kind of business).

/me rides off into sunset