8 stages every Startup goes through and how to survive them
One of the greatest fears that people have to face when starting a new business is the statistics on failure. Knowing that 90% of all companies fail, and the 30% of US companies will fail in the first three years and 75% of Mexican companies in the first two years, isn’t exactly encouraging when you’re thinking about starting a company. But it’s not about being optimistic or pessimistic, it’s about being realistic.
Paul Graham, founder of YCombinator, developed “The Start Up Curve,” a process that absolutely all Startups and new businesses go through. If you want to start a business and not end up being part of the statistics, knowing and understanding these steps is a must.
1. Day Dream. It all starts with that million-dollar idea. Your initial enthusiasm gives you the fuel you need to get started and dream about putting your product in everyone’s hands. You come up with an initial concept for the characteristics of your product and the reasons why everyone is going to to buy it from you, and then, you build it. You’re literally in the clouds.
2. Ugly Truth. The big moment has arrived! You launch your product and… your mom is the only person who likes what you’ve made. That’s reality slapping you in the face. Not only does no one buy you product, no one is even interested in it. Suddenly, the clouds part and you’re in a free fall. If you didn’t validate before building the product, the fall will be higher and harder.
3. Depression. After the fall comes depression. Everything you dreamed of, and the million-dollar idea you had, have left you with nothing but dept and doubts about why it didn’t work. Most companies will give up at this stage and fail, because they don’t do anything new or different.
4. Test Lab. The remaining businesses will pivot and test based on market research. They will get close to their costumers and get to know them better and will develop a product that is based on their research findings.
5. Deep Hole. So, you relaunched your product after implementing the improvements recommended by your costumers, and just when you thought that you couldn’t sink any lower, you do. It seems like all your efforts and investments were thrown away on a pipe dream, and this is when even more companies call it quits.
6. False Hope. The companies that keep fighting for their dream, and continue making efforts, improvements, and changes needed to achieve it, will start to see a glimmer of hope, just before taking another dive. More changes, more pitfalls. You go up and down, like a roller-coaster ride.
7. Product Market Fit. The promise land! All of the pivoting has given you the Product Market Fit, which basically means that you have let your costumers mold your product to their exact needs. Remember that kids’ game where you have to put different shaped objects into the corresponding holes? Your product was a square peg that you were trying to fit in a round hole, and its edges needed to be rounded off in order for it to fit.
8. GLORY! You have built the perfect product for your costumers. Now it’s time to scale up your business and take your product to potential costumers around the world. At this point, you can start designing your marketing and expansion plan. If you had done this earlier, you would only have been wasting resources, since you didn’t have the Product Market Fit, and no one would have bought it.
All successful companies and Startups have gone through these eight stages. Time is not a factor. Everything depends on finding the Product Market Fit. it takes some companies days; others, years. Check out the 10 steps to launching a strong product so that you can get through these stages as quickly as possible.
Statistics are made up of those who fail and give up.
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