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Monday, August 3, 2020
Home Startup 5 Phases of the Startup Lifecycle

5 Phases of the Startup Lifecycle

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I had the chance to interview Morgan Brown, one of growth’s OG’s. He has served as the Head of Growth at Qualaroo, GrowthHackers.com, and a number of other high growth startups.

I found out that Morgan isn’t only a total badass when it comes to strategizing and executing growth plans, he’s also incredibly articulate when explaining the processes and frameworks that underlie his approach.

In the interview, I dug into the question of what growth looks like at different stages in a start up’s life cycle. So put your growth marketing pants on and let me walk you through Morgan’s take on the key stages, and related inflection points, in a startup’s growth trajectory.

Frameworks are Great, but They Aren’t Life

Morgan was the first to admit that a caveat was needed when talking about the “rules” for growth. Frameworks are great for teaching concepts but in the end life so often evades our best efforts to put method to madness.So, as neat and tidy as this framework looks, anyone who’s thrown their hat in the startup ring knows there are infinite variations on how the parts of this outline can be mixed, matched, layered and timed.




Though you can never be sure how the details of your startup’s life story will reveal themselves, you should recognize bits and pieces of this framework all along the way.

 

The Stages

1)       Problem/Solution Fit

2)       Minimum Viable Product (MVP)

3)       Product/Market Fit

  a– Language/Market Fit

b– Funnel Optimization

c– Channel/Product Fit

4)      Scale

5)      Maturity

 

STAGE 1:  FIND PROBLEM/SOLUTION FIT

You have an idea for a product that you just can’t get out of your head. Maybe it was even born from one of your own needs. You’re off to a good start.

At this point, ask yourself two questions: “What problem am I compelled to solve?” and “Does my proposed solution solve it effectively?” If you have a clear answer to the first question and a confident “Yes” for the second, then you’ve got problem/solution fit and a hypothesis, and it’s time to start pressure testing your idea.

TO THIS:

  • Study the Lean Startup framework and apply it to your discovery process.
  • Conduct problem/solution fit interviews like crazy.
    • Have a hypothesis about who the target user may be for your product.
    • Find people that fit that profile and talk to them. For inspiration, check out Episode 20, How to Get Your First 10 Customers, on Hiten Shah’s and Steli Efti’s The Startup Chat podcast.
    • Ask them tons of questions to understand how they view the problem and what they are currently doing to solve it.
    • Drill down into their specific pain points around the problem.
  • If possible, run demand tests
    • Use landing pages or even a crowdfunding campaign to test demand.
    • If people are biting, you may be onto something – it’s time to invest in building a more robust product.
  • Use your discoveries from interviews and demand tests to start cooking up your initial blueprint for your MVP.
  • Iterate on your proposed problem and solution as new information flows in.

STAGE 2:  BUILD YOUR MVP

The purpose of this next step is to test your product hypothesis with the smallest possible investment of time and capital, hence, minimum viable product. In this way you are proving demand and learning about customer behavior, while minimizing risk.  Once you put your MVP out into the wild, focus on getting users flowing into your product – this is where the seeds of initial startup growth are sown.

DO THIS:

  • Refer the Lean Startup Framework for best practices on building an MVP.
  • Keep in mind that an MVP for one company may take one day to build and for another it may take 6 months. There are many different types of MVPs and you must use your judgement to decide what an MVP looks like that will adequately test your idea.
  • Conduct a minimal amount of channel discovery to get some initial users using your product so you can measure retention.
    • Only do as much channel discovery as you need to get your initial users. You will be investing in more robust channel discovery later when you’re preparing to scale.

STAGE 3: WORK FOR PRODUCT-MARKET FIT

Your MVP gained traction, you’re learning and iterating, you’ve got paying customers, they buy again and keep using your product on a regular basis, maybe they’re even telling their friends about it. These are the telltale signs of product/market fit, that ever so elusive entrepreneurial carrot.

TAKE HIS WORDS TO HEART – ALWAYS MEASURE RETENTION RATE AND USE IT AS YOUR NORTH STAR TO NAVIGATE THIS WHOLE STARTUP GAME.

 

One caveat: the usual rules of searching for product market fit through limited customer acquisition and testing don’t apply if you have a network effects business or marketplace such as LinkedIn or Airbnb.

For two-sided market products like these, you need to achieve some semblance of scale, with liquidity on both sides, to actually test whether your product works and people keep using it.

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