EM360 Digital Blog

08 Sep 2015
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Stages of the startup lifecycle

Birth, growth, repro­duc­tion, and death. In the same way as humans go through life stages, star­tups go through phas­es that entre­pre­neurs should be aware of in order to effec­tive­ly guide their projects.

Max Marmer, founder of Start­up Genome, presents six. It seems essen­tial to know how to face each of them so the start­up survives:

Dis­cov­ery

Your first task as an entre­pre­neur is to con­sid­er how you would like to change the world. Iden­ti­fy a prob­lem, come up with a solu­tion and see if any­one – espe­cial­ly poten­tial users and clients – might be inter­est­ed in your idea.

Beyond the pos­si­bil­i­ty of get­ting accept­ed in a start­up accel­er­a­tor and gath­er­ing funds from fam­i­ly and friends, this first phase requires devel­op­ing the min­i­mum viable prod­uct (MVP) that will enable sur­vey­ing the mar­ket and get­ting a sense of the project’s acceptance.

This is what Drop­box did at the begin­ning. The cloud stor­age web­site pub­lished a video explain­ing its ser­vice using an MVP and, fur­ther­more, the appear­ance it would have. This video was one of the strate­gies that enabled the com­pa­ny to reach 75,000 users whilst in beta form.

Val­i­da­tion

A startup’s ser­vice or prod­ucts go from being hypo­thet­i­cal solu­tions to a prob­lem to hit­ting the street and look­ing for the first clients ready to pay for it. At this stage, mon­ey will be the only way to effec­tive­ly mea­sure whether the pub­lic val­i­dates your project.

This is pre­cise­ly what grow­ing num­bers of tech­no­log­i­cal com­pa­nies do when start­ing crowd­fund­ing campaigns.

Peb­ble, the record-break­ing smart­watch, man­aged to raise $10million in Kick­starter. This is an impres­sive exam­ple of crowd­fund­ing val­i­da­tion. Peo­ple want­ed a smart­watch, and they were will­ing to pay for it in advance.

Effi­cien­cy

In order to suc­cess­ful­ly over­come this third phase, the best allies will be mar­ket stud­ies and, more than ever, the advice of a good investor. Lis­ten to the voice of experience.

At this point, the entre­pre­neur has to analyse char­ac­ter­is­tics and vari­ables of every­thing that sur­rounds the start­up (mar­ket, clients, etc.) in order to find the busi­ness mod­el that adjusts best to the environment.The aim is to increase the cus­tomer base in the most effec­tive way pos­si­ble, pre­vent­ing growth from sti­fling the project.

Scale

It is time to prove the business’s scal­a­bil­i­ty – its capac­i­ty to grow in a sus­tain­able man­ner (keep­ing costs down). The start­up has to be ready to fight in inter­na­tion­al mar­kets and offer great mar­gins of ben­e­fit. It is time to step on the gas and push the growth aggres­sive­ly – it is time for the larg­er fundrais­ing rounds.

That is how Airbnb and the con­tro­ver­sial Uber have man­aged to grow to the point of being present in count­less cor­ners glob­al­ly. A cou­ple of fundrais­ing rounds of over $1billion in the first case, and around $0.5billion in the sec­ond, show how these are good exam­ples of internationalisation..

Main­te­nance

Once the step has been tak­en to reach oth­er mar­kets with sup­port of large fundrais­ing rounds, it is time to shore up the project’s bases so the struc­ture that youhave put so much effort into build­ing does not collapse.

Max­imis­ing ben­e­fits and fac­ing prob­lems derived from the glob­al dimen­sion that the start­up has acquired are key in this phase. The great­est risk is tak­ing for grant­ed that, hav­ing reached cer­tain suc­cess, every­thing is done. Don’t stand by to admire your prod­uct; there are prob­lems that can put the longevi­ty of your busi­ness project at risk.

Sale or renewal

Your busi­ness mod­el works, or is at least cred­i­ble. You have the fund­ing need­ed to inter­na­tion­alise the com­pa­ny, and you have car­ried it out suc­cess­ful­ly. Now what? Expe­ri­ence tells us that there are two ways: to sell the start­up to a giant (Google, Face­book, Apple…) or to go pub­lic and try becom­ing one of the ‘uni­corns’.

Only in this way you can acquire the huge resources that the brand will need to con­tin­ue grow­ing, renew­ing its prod­ucts, and rein­vent­ing itself con­stant­ly in order to con­front a dynam­ic market.

[From unconvention.eu]

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3 comments

  1. Thank you so much for your arti­cle. I am run­ning a start-up and real­ly need valu­able advice like this. Please give more arti­cles on this issues. Thank you!

    Reply
    1. You’re wel­come. I’m glad to help and share my opinions.

      Reply
  2. This is a very inter­est­ing post!

    Reply

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