Two Phases of Startups: Learning & Scale
Real startups don’t go from idea to success in a straight line. Great founders know they’re building under conditions of extreme uncertainty and consciously separate their venture into two phases: the Learning Phase and the Scale Phase.
The Learning Phase
The goal of the Learning Phase is to create a topography map of the people you care about and their problems. What are the peaks of opportunity and the valleys of zombie startups? Who are the people who know this community best?
A founder’s job is to become, for a brief moment, the world’s leading expert in the particular problems of the people she cares about. Carefully select those people - they will be with you a while. And their support is what will make you a success.
Now - what are the fundamental shifts that are going to change the life of the community? Once you’ve learned so much so that you can describe the life of the next person in that community better than they can, you’re nearly ready.
The Real Hard Part
Transitioning to the Scale Phase is where the “solutions” come in, but it’s also where your problems start. To get VC funding, you need “traction”. But to get traction, you need something you can scale.
To start - a solution doesn’t have to be a full-fledged software product (sometimes it’s just a blog or a Facebook group), but it must solve a problem and be small enough that people can wrap their heads around it quickly.
Continue funding your business cautiously, and keep your overhead low. You’re still in the Learning Phase.
The Scale Phase
At some point, you’ll have a solution to a problem that is acute enough that adding one increment (a user, a company, a post, a comment) results in two more, and then you’re ready to scale.
At that point, pumping new investment (cash or technology) into your product results in a seeding of that machine, and leapfrogs you into the Scale Phase.
You never stop learning, but now you must be 99% focused on scaling.
The Big Mistake
Say you’re a founder considering an elaborate Machine Learning component, and in you’re heart you know your users need it.
In the Learning Phase, you don’t have enough data to build it properly, so your developers make a bunch of guesses about what it might do.
You’ve built for scale, when you should have built for learning. And now you have the dragging weight of a complex system.
Or, you have just gone through an amazing three months in TechStars, and you realize that each sale is getting easier just by being introduced to better connected people.
But you don’t raise that Series A because you don’t want to give away too much of your company. Now your startup is starved for cash and for the marketing talent you need to get to a zillion customers. You’re stuck in the Learning Phase when you should be Scaling.
The Transport Solution
Start with a bike, and when you’re ready, add a motor to see if it takes off.
But if you’ve built a car, changing it to a bus while you’re driving is really hard.
Build a bike. And then a rocket.
This post was happily coordinated with the launch of the new Originate website and cross-posted there. Thanks for the support!
