3 Stages of Startup Development
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As mentioned in earlier articles, Startup Genome project found that startups generally pass through 6 milestone-based stages of development.
Specifically, startups typically progress through stages of Discovery, Validation, Efficiency, Scale, Sustainment, and Conservation.
The first 3 stages — i.e., Discovery, Validation, and Efficiency — encapsulate the period during which time a startup validates the core assumptions of its main business ideas and product.
Let’s look at the first 3 stages in a bit more detail:
•Discovery stage: focus = ensuring that the primary customer pain that the startup intends to solve is a) substantial enough to fuel the growth of a new company and b) monetizable to the point where the business can eventually turn a profit and scale. In other words, finding a problem/solution fit is the most important concern.
•Validation stage: focus = achieving a product/market fit. Product/market fit means creating an in-demand product that satisfies the needs of a market that is large enough for your startup to grow into a full-scale business down the road. As we've discussed previously, as a founder you must be “absolutely sure that a market actually exists for the solution you intend to offer — otherwise, your startup won’t ever earn the money it needs to [scale or to] do [any] good in the world”.
•Efficiency stage: focus = optimizing the business model so that the startup can eventually become profitable. This ultimately involves developing a repeatable and scalable business model.
In general, once a startup has successfully progressed through these 3 stages it’s then time to start spending money aggressively so as to expand and scale operations.
Successful companies are distinguished from the vast majority of all other wannabe businesses that ultimately fail by the former’s commitment to remaining hyper frugal with their spending throughout the beginning 3 stages of the startup lifecycle.
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