Stages in the life of a b2b startup

Is there an innate growth pattern that is hardwired into the life of a b2b technology startup? Is it important to think about this question and gain an understanding around it?

I believe there is value in understanding this lifecycle, especially if you’re considering working in an early stage b2b startup or planning on starting one yourself. It helps you prepare (maybe?) for what lies ahead. :). I began searching for answers to this question by looking at a famous theory in Psychology - Maslow’s heirarchy of needs. Maslow articulated his observations of humans’ innate curiosity, and, his seminal paper on the subject led to a famous pyramid representation that allowed simple people like me to understand the hierarchy of needs for individuals.

A startup also has relatively clear stages of development and in each stage of its development certain fundamental approaches or strategies emerge.

High Level Concept:
This is really the aha-moment. The founders get together and brainstorm an initial concept focusing on a target audience. Friends and family could be the initial pre-beta customers. While there is a high level concept the initial team is also curious in multiple areas in this space so ideas flay around every few hours and yes they’re all probably being thought about seriously. The team really needs to be able to respond with early prototypes that address a pain point that your customers may be facing. Now, this is just one pain point out of many but atleast there is value in delivering the working prototype and showcasing it to your pre-beta customer for feedback. As long as every one in the team is aware that this experimentation phase has only just begun there will be less battered egos to work with as the company evolves.

Multiple Concepts:
Curiosity in multiple areas within your space will invariably give rise to looking at the problem from multiple dimensions and different angles. This gives birth to new ideas which when rapidly implemented will provide the team with multiple prototypes each solving a certain real world problem or a set of problems for your customers. With this larger scope of solutions you can speak to more pre-beta customers and possibly sign more of them onboard, this adds to the feedback loop and the framework is in place to understand the market needs and tailor a solution based on your own, now mature, understanding. Sticking to the fundamentals: always prioritizing stories, stories always delivering business value and doing the absolute minimum to make each prototype functional is key. If you’re in a startup and wondering how to keep your processes lean and absolutely doing the most obvious thing: you have to read what Amit has to say about Post Modern Software development (more on PMS :) - in a later post).

Base Concept:
This in my mind is the most important stage in the growth of a b2b startup. Having worked on multiple concepts, created prototypes and validated them with pre-beta customers there is an emergence of a base concept that not only satisfies a large part of the total addressable market in your domain but the business model is now in sync with your product vision. This is most definitely NOT the final product but it provides enough clarity to build out a base architecture on which your product will be built. You can now more consciously build strategic relationships with partners since you understand what the “core” of your business is. At this stage your technical team can really start to flex its muscle and build features that are production ready and that can scale to a 10x factor much easily. The pre-beta customers can now be migrated to your base architecture and the features that they were using in the prototypes must be migrated over seamlessly. The feedback loop from customers at this stage is almost constantly live and new features are being prioritized and the backlog starts to look real. The company has also evolved into a more complete entity with the ability to hire when necessary and can justify the added resources with a clear return on investment. More importantly the startup can also justify that every new member added on is doing justice to the Equity Equation.

Core Mission:
The startup has now passed the phase of esteem and reached self-actualization. Here  there is a clear focus in terms of feature set, serious prioritization sessions which have a clear impact on customers, your sales pipeline and customer support. Here the startup as a whole is an entity which is self-optimizing. Constantly optimizing customer needs, technology throughput, infrastructure scaling, market messaging and most importantly its own lean and agile internal processes.

Grokking these phases has helped me understand where to focus and when to get agitated for change. Building enterprise software in a large Fortune 500 company is literally light years away from building software in a rapidly changing business context in an early stage startup. I am not passing judgement on which is better or worse, or more efficient, just highlighting some of the obvious growth pains that are evident while you build a product and hoping to learn from other people who have also faced these (or similar) phases of growth in an early stage startup.