<div><strong><em>Ajay Batra</em></strong></div><div> </div><div>I believe that “Startup” is a broad term that is used far too generously. In reality there are four nuances of this term, each denoting a specific stage of maturity of the entrepreneur and his/her organization. In reality, a Startup is mapped to one of these 4 nomenclatures:</div><div> </div><div> </div><div><span style="color:#ff0000;">IDEA</span>: An idea is not a startup. An idea of a startup is also not a startup. It is just what is – a thought. Sometimes the idea pertains to a feature (e.g. add voice search on corporate websites), solution (e.g. increase efficiency of petrol cars) or just passion in a broad area (e.g. school education). It is common to have many ideas – especially if the would-be-entrepreneur has a curious bent of mind and is comfortable asking “why not” questions. Unfortunately, in the world of startups, ideas in of themselves carry very little currency. Ideas are great only when they become useful. Although the entrepreneurial journey begins with an idea, we must understand it’s just one of the steps in the overall process.</div><div>Many entrepreneurs convince themselves that they have the next “billion dollar” idea, without understanding that it is the realization of the idea that generates its value. The billion dollar idea, if appropriate, if well planned and executed, may well become a 100 Billion business.</div><div>Eureka moments to change the world are great. But they have to be nurtured and morphed into something else. An entrepreneur is not only an idea generator, he or she has to be the executor of the idea. </div><div> </div><div>To proceed to the next stage, an entrepreneur has to ensure that the ideas is aligned with the entrepreneur’s passion, and he/she is happy to make its pursuit the purpose of his life.<br> </div><div>Ideas are easy. It's the execution of ideas that really separates the sheep from the goats. -Sue Grafton</div><div> </div><div><span style="color:#ff0000;">EARLY STARTUP:</span> If the entrepreneur/founding team engage with the idea for a sustained period of time, and wish to take it forward – they will adorn the identity of an “Early Startup”. These entities have an abundance of positive energy emanating from the belief in their idea. There is clear evidence of excitement and willingness to learn / unlearn. </div><div> </div><div>The focus of the team at this stage is to visualize how their idea could be converted into a solution (product or service), and to validate that their idea has potential. This entails identifying who could potentially benefit from their solution (potential customers), what pain will the solution address, what comforts will the solution provide – and is there anyone else who may already have implemented all or part of the idea. All this is accomplished by real conversations and experience-sharing with potential customers or users - with a fair amount of iteration.</div><div> </div><div>There is a clear focus on thinking “outside-in” and developing a robust business model for the idea. Often, coloured by their passion or egos, or both, founders convince themselves of the usefulness of their idea – without any real interactions with the real world. Having dispassionate and experienced mentors at this stage becomes critical for ensuring objectivity of observation and analysis. The one thing that founders must avoid during the process is the - “solution looking for a problem” syndrome.</div><div> </div><div>To proceed to the next stage, the entrepreneur has to have discovered the exact markets/market segments his idea/solution addresses, and how these customer segments are to be reached, and how the idea with morph into a viable business.</div><div> </div><div><span style="color:#ff0000;"><img alt="" src="http://bw-image.s3.amazonaws.com/startup-avatar.jpg" style="width: 650px; height: 311px; margin: 1px;"><br><br><br>VALIDATED STARTUP:</span> Possibly after multiple iterations in the previous stage, the founders have discovered how their proposed solution sits in the world of potential users and customers. They also have a tentative idea of how the startup will make money. </div><div> </div><div>So far, the founding team has not had the need to actually work on creating their product/service solution. That changes now. The knowledge gained in the previous stage is critical in developing a prototype of the proposed solution. The degree of functionality in this prototype will vary, e.g. quick wireframe of a proposed portal is much easier to make than a prototype of the new artificial limb. Hopefully, the founders will select an appropriate development methodology (e.g. rapid prototyping for software development) and will soon be able to have something that “feels and looks” like the final product. </div><div> </div><div>The prototype is shared with a select group of “representative” customers for their feedback on its functionality, physical attributes, accessibility and usefulness. Additionally, the team should inquire about the possible costs that the customer will bear for the solution [both one-time and repeat – if applicable]. These informative sessions are used as a feedback loops to continually refine their solution and the business model.</div><div> </div><div>Lest it conveys otherwise, the purpose of engaging with customers at this stage it not just to understand how much they “like” the product, but also to make some sales. </div><div> </div><div>Intense focus on adding the right features on the product, learning from the customers and convincing at least some of them to pay for it – makes this stage one of the toughest ones in the journey. This stage is also marked by encounters with nay-sayers; hence the founders need that extra dose of self-belief and perseverance in them. One common pitfall to avoid is to not spend extraordinary large amounts of effort and money in making the product/service so feature rich that it ends up overwhelming the customers, or makes the product unaffordable.</div><div> </div><div>To exit this stage, the startup must have a fairly well-defined solution that is being used by some paying customers – within the context of a working business model.</div><div> </div><div>You’ve invented something new but if you haven’t invented an effective way to sell it, you have a bad business – no matter how good the product is. - Peter Thiel</div><div> </div><div> </div><div><span style="color:#ff0000;">HIGH-GROWTH STARTUP:</span> With market validation of not just the idea / product – but the business model – the startups is ready for enhancing its presence in the marketplace. </div><div> </div><div>This stage is characterized by: further refinements in the product /service solution, intense marketing and brand promotion, increased focus on sales and building the organization that will deliver the high-quality products/services to customers continuously.</div><div> </div><div>The founders have a tight balancing act to play: they must ensure that new customers are being acquired, existing customers are being provided excellent experience, bringing-in new team members for specialized roles and “letting-go” of certain decision-making responsibilities. This phase is challenging for many founders from work-life balance and operational perspectives (e.g. many founders don’t like marketing/sales/managing people – but this stage requires them to all of these, and more).</div><div> </div><div>The next stage truly takes the entity out of the startup universe. It is ready to become a “Scalable Organization” that has built reliable systems for planning, execution, talent management and product innovation. </div><div> </div><div> </div><div><em>If we can keep our competitors focused on us while we stay focused on the customer, ultimately we’ll turn out alright. - Jeff Bezos</em></div><div> </div>
