Let’s start with a basic question: Do you want to build a company or do you want to be in a startup?
If you want to be in a startup to get a special kick from the proud feeling of telling everyone “I run a startup”, from the sense of self-importance – don´t waste time reading this (or anything else similar for that matter). Firstly, get a shared desk in a coworking with a table tennis table and beer kegs. Then urgently start looking for events with names like “Thursday's Beer, Pizza and Networking for Startups”. Attend as many of those as you can. You'll find a lot of like-minded and very understanding people there. It is them with whom you can discuss your amazing journeys of startup founders, ambitions and pitfalls, give each other psychological support to get through difficulties of being a visionary in a backward world and much much more. Your kind of people. Done. You are in a startup.
If you goal is to build a company, then once you got over this woozy feeling of “oh, cool, I've started a company”, try to understand where you are in the journey. Then focus on the goals of each step because that's the only way you can build something rather than do a lot of “busy work”.
“Busy work” is a phenomenon present in any part of life. It can be anything: building a product, meeting people, making slides, building a logo or even buying office supplies. The main criterium is that it keeps you busy without much result. Busy work can take up all of your time, especially in early phases of a startup. And it often doesn’t need much planning, very helpfully showing up from around the corner in a very natural way and bringing a satisfying feeling of constant busyness, lack of time, a lot of efforts, hard work and an occasional feeling of achievement. The thing it rarely brings is results - as per definition.
An alternative is articulating the next goal clearly and focusing on it. That significantly increases the chance of getting something achieved (note I chose to write “achieved” vs “done”).
“If you don't know where you are going, you'll end up someplace else.”
A few important points:
So let’s look at the phases of an early stage company and the most important goals during them. I can’t stress more strongly how important it is to know which phase you are in, identify the next goal and fanatically focus on it. Get this point wrong and you may be doing a lot of stuff that doesn’t matter…
This one is simple and happy in its oblivion. Maybe you want to start something, but you have no idea what. I will not spend much time on this phase for obvious reasons. Let’s go straight to having an idea of what you want your startup to do.
“Let there be light: and there was light. And that was good”. This slightly modified phrase from probably the most famous fantasy book is how it’s unlikely to happen for you. Instead let me inform you that puppies are born deaf (ears closed) and blind (eyelids completely shut). This fact is more relevant than the quote above because it is much more representative of you in this phase.
Like a newborn puppy in a dark room, without sight and hearing, you are looking for anything that may turn out to be a light switch. You don’t really know how a light switch looks like. The facts that you have paws with no opposable thumbs (can’t grab things), don’t walk well yet (can’t move around too far) and are rather small (can’t reach things much above you) are not helpful. But you have to explore the room, check out anything that may even remotely resemble a source of light and try to figure out how to get it to function. If it works, great. If it doesn't work, continue to the next suspect.
If you are super lucky, you will find a proper switch giving you a brightly lit room. But you are more likely to find a single match or two giving you the ability to create bleak light spots for short periods of time. Even more likely you will find one or two batches of different types of matches – and you will have to explore them as alternatives in the next phase.
The Goal: “find the first match”, aka “figure out what you might be able to sell and maybe even sell one unit of it”. This implies finding someone who wants to buy and understanding why they want to buy. More than one is better. Getting them to start a trial is worse, free trial worse yet, getting them to discuss and give feedback is even less helpful. But all of these qualify as successes. They lead to light.
How you know you got to the goal: you have interest from third parties.
In the beginning of this phase you undergo a transition from a newly born puppy to a headless chicken running around in a random pattern. You are using the matches found previously to try to fashion something that gives a more stable stream of light. To achieve that you try different matches (ideas on what you could sell to whom) and see how the targets react.
You can try to organize the chicken’s running trajectory (and you should!), but in reality, you have to be super sensitized to feedback you receive as you try things. You are looking for the answer to “What am I actually selling?” And the answer cannot be “this technology” or “that widget”. It should be about the utility of your technology or widget - why people want it, how they use it and why they would want to pay for it. So, you try one option at a time and observe.
As you collect feedback, you form initial hypothesis on what your product is and what its value to potential customers is. That is the equivalent of moving from matches to a torch, albeit a rather crude one, but nevertheless the one that you can use to light up different parts of the room in an intentional and predictable fashion.
Armed with the torch (hypothesis) you review your MVP (minimum viable product) and start trying to sell it repeatedly. You are likely to still have variations in the hypothesis (“some people buy ease of use, others buy speed”), but you are now moving along the tracks that are set out by you. So random trajectories of a headless chicken are gone (well, almost). Try, observe, see who bites, which part they bite most, count them, and confirm the hypothesis. Congratulations, you have discovered your fire. You now have an MVP and initial sales.
Goal: confirm hypothesis, form MVP, start explainable selling.
How you know you got to the goal: you have 2 or more of those who bought the same thing for the same reasons. You can sell the same thing to client number N+1, maybe not easily, but you can.
This step is easier than the others, although it involves very similar actions. The main difference is that the dark room is gone and you now can see – as a result you can act in a much more conscious way. You are fleshing out your value proposition and product, selling it and getting to the point of (hopefully) easier repeat sales. You are learning how and to whom to sell to best and easiest. Once you have this understanding (i.e. feedback from the market in the form of buyers who react to your sales pitch in a reasonably predictable and similar way), you know you can go into scaling.
Goal: Product ready for repeat sales. You can predictable sell it. You know the value of what you are selling, how and to whom you can sell it.
How you know you got to the goal: you have multiple clients who bought the same thing for the same reason (or several clusters of similar clients)
Once you have a product that you can sell in a replicable way, you start thinking about how to scale your sales. This has a myriad of aspects, from sharpening value proposition/product so that any good sales person could sell it, doing all kinds of classifications (customer targets, channels, features, etc), building playbooks, introducing a product management function, hiring a bigger salesforce, spending more on marketing and lead generation - the list goes on and on. For simplicity I assume that at this stage you have one product, although that is not always the case. I have put dealing with multiple products into later, more mature, phases of the company.
The ultimate goal of this phase is that the company starts selling in volume and, importantly, without you or without dependency on any one person. If your CRO gets hit by a bus, as sad as that would be, the sales should not stop.
Goal: A functioning sales machine.
How you know you got to the goal: sales orders are coming in and ideally you hit sales targets.
This one is as non-linear as they come. Company has moved into a stage of real growth and is now looking to expand into new markers – either geographically, or by adding new products, doing M&A, or in any other way. Goals can be numerous – basic diversification, opportunistic desire to get more sales, wanting bigger scale, addressing competitive threat, etc, etc, etc. You are scaling the company now.
Goal: Functioning sales machines (note plural) in several desired areas
How you know you got to the goal: overall: growth in revenue and profits. Each direction: separate goals
Well, this hardly needs much commentary. A kaching moment for all involved or a subset of them. This is a mandatory step if you have investors on board. For world domination without an exit, either fund the company yourself or build a structure where you replace one set of investors with another set.
Goal: sell the company (fully or partially), make some money
How you know you got to the goal: kaching sound and zeros in the bank statement.
For completeness, this is one of the possible outcomes, which hopefully won’t be your case. But sometimes it happens under the influence of forces beyond your control or it just has to be done. Either way, if you are in this phase, focus on the goal as much as you do in the other phases, get it done and move on.
Goal: close the company as cleanly as possible
How you know you got to the goal: you will have legal documents proving that the company is closed. You are not likely to not notice or misinterpret this one…
The above looks at the company lifecycle mostly from the point of view of product and sales. There are many other sides to startup life that are important and that are not covered above. Some of the most notable ones are running the company/operations, management/board structure, funding. In my view, as important as they are, they are secondary to the stuff above. If you don’t have a product that people want to buy, there isn’t much to manage or finance. So these are omitted on purpose and will come elsewhere.