By: Joe Procopio
Originally published on medium.com
Most of us entrepreneurs chase success like a dog chases a car — we don’t know what to do with it when we catch it. That’s because most of us have at least one weakness in our growth game. And that’s because we don’t get a ton of opportunity to practice. And that’s because if we mess up it can be game over.
That can all be fixed.
There are no guarantees in startup, but we can improve our chances for success by breaking down the growth game into five parts, each of those requiring a slightly different plan of attack but all of which are rooted in the skills that got us here in the first place.
The Growth Stage Means New Problems
I’ve been through the growth stage more than a dozen times. I’ve learned that success in startup is a moving target. It shifts while we chase it and then the bar gets raised as soon as we reach it. There really isn’t an endgame, outside of an exit — and that’s only the end if we walk.
In other words, we never leave the growth stage, we just move the goalposts.
The growth stage starts with an extraordinary win, some kind of event that meets or surpasses where we had planned for our company to be in terms of its lifecycle. This can be landing outside funding, it can be a deal with a major partner or customer, or it can be an market land grab — that’s when our product launch performs way past our expectations.
Once we hit the growth stage, everything changes, in good ways and bad ways, whether we want it to or not. There’s no roadmap to scale our product or grow our company. But there are strategies at each part of the growth stage that we can practice and master, ultimately gaining confidence in the decisions we make.
If we do that, we’ll eventually be driving the growth stage, instead of it driving us.
Part 1: Launch — Focus on managing chaos
There’s a reason why the primary metaphor for the growth stage is a rocket. Like a rocket launch, there’s a boatload of planning and preparation, sometimes years in the making, that goes into a new company or a new product, all of it coming to fruition in one short moment when we put the rocket in the air.
At that point, we lose almost all control over arc, velocity, and direction. Whatever we programmed the thing to do, well, we just hope we were right. Or close.
We actually do have quite a few things working in our favor this early.
For one, we have plenty of time to recover if our trajectory was off. So don’t be afraid to make mistakes.
Also, the brute force of the blast is more of a requirement than finesse, meaning control isn’t a huge requirement yet. So be bold and worry about control later.
And finally, a launch usually comes with support, maybe from the VC that led our round, or maybe from a champion within the large customer we just sold. Don’t be shy, make sure you lean on that.
The secret to a successful launch is not to blast it as far as we can, but to set ourselves up for the next stage.
Part 2: Momentum — Pull signal from the noise
A launch is just a noisy and public proof of concept. Just because we got the rocket into the air doesn’t mean it’ll stay there. We need to get it into orbit, and for that, we need momentum.
There will be a ton of noise from a launch.
Externally, we’ll see a lot of false positives and probably some very compelling wild goose chases. Customers will buy our product, but that doesn’t mean that they’ll buy it again or that more customers will buy our product.
Internally, everyone will get freaked out. In efforts to sustain new growth, there will be overspending, second-guessing, forced formality, and an uptick in complaining. I’ve never seen a launch where all of those things, and more, didn’t immediately follow.
This is the time to take very measured chances, make very recoverable mistakes, and make very serious decisions on course correction.
I recommend establishing a product team, dedicated to pulling signal from noise. This will be a benefit externally, where we’ve now established an independent entity that can act in the best interest of product success. It’ll also help internally, taking some of the growth responsibility off of the rest of the org and centralizing it in one place.
Part 3: Narrowing — Focus on big decision making
Once we achieve momentum, we have the luxury of becoming proactive about what it is we’re building instead of being reactive all the time. This is the part of the growth phase where some big, risky decisions need to be made.
We’re narrowing the scope of our company by defining our attack on markets and refining the options of our product.
We may decide to broaden our market approach, or narrow it, or pivot and chase an entirely new market altogether. As we make those decisions, we’re also settling on the evolution path of our product. We’re looking at maximizing margins while increasing usage — difficult to do at the same time.
We’re going to be making a lot of decisions without a lot of data, and making a lot of assumptions about risk vs. reward:
- Do we trust that the market conditions are right to take some big and bold steps?
- Do we go after a particular set of desirable customers at the risk that they may dictate the future of our product and even our company?
- Do we start chasing our B-story now: The risky path that’s going to lead to bigger growth and insane valuations?
- Do we back off and raise (more) money in hopes of gaining a stronger foothold to attack a larger portion of the market?
To make these important decisions, we’re going to need some help.
I’d recommend tightening the executive process here, making a formal distinction as to who on the team should be giving input and calling the shots on the future of the company, and who shouldn’t.
I’d also formalize and start leaning on an advisory board and a board of directors. If we’ve chosen the right people, they’ll have enough experience in their rearview to guide us through the ramifications of each decision.
Part 4: Targeting — Construct Your Best Pitch
Targeting is where we know what we are, we can see the goal, and we’re making small moves that have enormous implications. Back at launch, all we needed was a big blast that wasn’t a disaster. Here, it’s all about accuracy.
When you see those startup companies that look great on paper, raise big money at massive valuations, maybe even become a part of the culture, and then stall and fall off and eventually shutter, it’s because they couldn’t manage targeting.
At this point, our pitch should be perfected, our market should be established, and our product should be robust. We’ll begin accelerating hard towards our eventual goal — could be market domination, could be acquisition, could just be a secondary offering.
I’d recommend creating relationships with any org that could buy us, invest in us, or with whom a partnership could potentially increase our size by at least 50%. At the very least, we just want to make sure we’re on their radar if we’re not already. That said, there should already be some inbound interest as well. Pay close attention to this inbound, as it will give us an idea of exactly where our value lies for the next step.
Part 5: Exit — Focus on negotiation
The closer we get to the goal line, the harder it is to cross it. The best entrepreneurs are the best at negotiating the endgame.
The good news is that by this time, we’ve had plenty of practice at negotiation with orgs large and small. We’ve probably lost a few deals and also landed a few that we didn’t deserve. All that practice comes into play now.
I’d recommend always starting high and negotiating down, and not just in terms of money, but also in terms of what we saw as the eventual purpose and outcome of the company we’ve spent so much time building.
It doesn’t matter if it’s an acquirer, a partner, a customer, an investor — we’ll want to make sure we get the best terms on the deal we’re making, because we’re likely not going to get a second chance at negotiating.
And Then Let’s Play Again
My first time through as a sole-founder entrepreneur was after having been through several growth stages as an employee and as an executive. Even then, I got through most of the later parts of growth stage with a lot of pluck and a little help.
But I’m going through a growth stage right now, and these days I’m pretty confident about every part of the process. It took time and practice, and once I started breaking the growth stage down and focusing on the specific demands at each part, everything got easier.