How to Get from Innovation to Acceleration and Avoid the Startup Valley of Death

The following is adapted from One to Ten by Rags Gupta.

“The first $10 million is the hardest.”

— Jason Calacanis

Here’s what they don’t tell you about going from Zero to One: that’s the easy part.

Most startup tech founders create something out of nothing, raise their first institutional rounds, convince some early adopters to pay for their product. They grow the kernel of what could become a real business.

Then they hit a wall.

They struggle to progress past customer pilots. To transcend founder-led sales. To go from a scrappy group pitching in to build out an executive team and a well-functioning organization. To find the right role for each founder. To execute their first reorganization. And, especially, to get to $10 million in revenue.

The going gets messy during the One-to-Ten phase, that awkward adolescence when a startup scales beyond its first customers, its early team, its first million in revenue.

The result? Bridge rounds. Employee attrition. Scathing Glassdoor reviews. Revenue misses. Executive team shake-ups. Founder breakups. Dilution. “Landing the plane” via an acqui-hire. Or worse, perishing in the startup valley of death.

Any of this sound familiar to you?

I, for one, have seen this movie play out many times during my twenty-odd years in tech. And yet, it’s a phase rarely discussed in the startup world. Plenty is written about finding product–market fit or navigating “blitz-scaled hypergrowth,” but the transition phase is rarely talked about. I’m here to change that and help you through each step of the One-to-Ten phase.

What do I mean by One to Ten? Let’s first abstract the startup journey into three phases. Take a look at the following chart for a basic understanding of each phase.

Zero to One: Innovation

In the beginning, you leverage your entrepreneurial insight to create something that other people want. This phase, all about finding product–market fit, involves lab work, prototypes and alpha products, maybe your initial 1.0 product. You and your co-founders are landing your first customers, whether they’re called pilots, beta users, or design partners. This stage is all about innovation, about doing things that don’t scale.

One to Ten: Transition

Going from One to Ten requires different muscle than what got you from Zero to One. It requires transitions that you’ve likely never encountered before, much less imagined the right strategy for. You’ll see changes from shipping alpha and beta versions to general availability, from doing things that don’t scale to putting in processes and protocols to reliably service multiple customers, from founder selling to productive reps who can sell without you. You’ll build out your management team and key functions during this stage, which itself will be a major transition for you and your early employees.

Ten to X: Acceleration

Once you’ve proven repeatability of sales and product, this phase is about accelerating growth and finding new S curves of growth, building on the foundation you have in place. This may involve new products, new ways of selling, new markets, and new teams.

To get to Ten, every business-to-business (B2B) startup needs to nail product readiness, to build a repeatable sales machine, and to scale their human capital. These form a three-legged stool with each leg needing to be in harmony with the other two. For example, you may achieve product readiness and have a great team built out but you’ll flounder without repeatable sales. Another common failure mode is to prematurely scale your org way ahead of product maturity.

Once you do get to Ten, the sky’s the limit. As Jason Lemkin, founder of Echosign and SaaS guru investor, put it, “If you can get to $10 million in revenue, you can get to a thousand million.”

Ready?

Let’s do this.

To learn more about the steps you should take to get your business from innovation to acceleration, One to Ten is available on Amazon.

A serial entrepreneur and operator, Raghav “Rags” Gupta has worked with a number of startups and scaleups and achieved multiple exits, including being part of the founding management team at Brightcove (IPO), Chief Commercial Officer at Videoplaza (acquisition), GM EMEA at Ooyala, and COO at Humatics. He is currently President of Butlr, the breakthrough proptech startup, as well as Venture Partner at Hyperplane Venture Capital. Rags is an active angel investor, mentor, board member, and advisor working with the likes of MIT Sandbox, Harvard Launch Lab X, Dvinci, Elucidata, and Asylon, among others. Rags studied operations research at Princeton University and lives with his wife and two children outside of Boston.