I recently completed a stint as a Ninja with xGenesis. I would recommend this program to any entrepreneur that is in the beginning stages of identifying an opportunity that they want to pursue as their next focus. Tom Higley and team produce an excellent event.
In the program, they focus on the left side of the new venture bow tie – the idea generation and evaluation time before a venture launches. At this stage, there is no need for a solution, team, paying customers, product, etc.
In the program, we spent a lot of time focusing on the concept of Founder Opportunity fit. This aligns founder interests and capabilities with need and value. Opportunities are powerful insights into where and how a current system or market can be changed for the better. Finding the right one for a CEO’s next venture is key to preventing false starts and burnout on a new endeavor.
This got me thinking about what other stages come between the early Founder-Opportunity fit and when a venture is ready to accelerate growth and profits. Here are some ideas I’ve been investigating. I expect there will be some iteration between these steps. I would expect that at least steps 1 and 2 should be solid before a company is started and investors get seriously pitched:
- Founder-Opportunity fit: Founders should pursue opportunities they are passionate about and good at solving and that society needs and will pay for. (based on Ikigai)
- Problem-Market fit: Regardless of how solved, determine through specialist interviews, focus groups and/or prototypes, whether customers need and will pay for solving the problem.
- Is it a top priority problem for a large group of potential customers
- Is it urgent enough that they would adopt a solution now if available; have they tried to solve it themselves
- Would customers accept and get value from a solution enough to pay for it
- Product-Problem fit: Business has a core group of happy and referenceable customers using an early version of a solution that addresses the problem. (also called Solution-Problem fit)
- Working version of the product
- Initial customers use the solution
- At least some customers pay for the product
- Product-Market fit: Business is in a good market with a product that can satisfy that market.
- Adoption by a set of customers in a large market
- Repeatable, proven sales and marketing with revenue growth
- High customer satisfaction, product usage, and retention
- Path to a profitable business model
- Business Model-Market fit: Scale-up stage companies that are ready to accelerate commercial activities to grow fast.
- Scalable sales with predictable revenue and growth
- Focused go to market with identified buyer personas
- Strong customer development, success, and support specialists
- Leveraged channels to reach customers
- Able to pursue new markets and adjacent optionality in their business
What other stages of start-up growth have you identified? What are their characteristics?