Growing Up Is Hard: Stages of Startup Evolution

A few quarters ago, I was searching for a metaphor to describe to my team some of the challenges our relatively young company was facing. I settled on comparing us to an adolescent (or more specifically a middle-schooler): we were going through an awkward moment, but I knew it was just a phase. This description resonated with the team, who, as it turned out, had all once been adolescents themselves.

It got me thinking that the maturation of a company is not so unlike the maturity of a human being, each stage offering its own unique challenges and calling for different remedies. No matter how you feel about “corporations are people,” I think we can all agree that companies are organisms – like humans. There’s a lot we can learn comparing how these different organisms evolve and how we, as parents or leaders, are effective stewards of each stage. Over the next few posts, I’ll reflect on the key maturity stages from the vantage point of both roles.

Fragile Early Days

The first stage of life is infancy. While none of us recall this stage of our life firsthand (no, I don’t believe that memory you have from when you were four-months-old), some of us have experienced it (albeit somewhat heavy-eyed) as parents. These are fragile days. While babies are probably less fragile than parents think (especially new parents), they are still vulnerable little creatures. I have experience as a parent of a sick infant, and it’s helpless and painful to see your infant hooked up to medical equipment.

Seed stage startups are also quite fragile. At any moment, the company can dissolve. Maybe you have raised capital, but typically seed raises are small, offering maybe 18-24 months of runway. There’s typically no revenue at this stage, so you are essentially on life support constantly. Even if there is some revenue, things are typically so tight that each check matters. In my first startup, I recall having to walk customer checks down to the bank the second they arrived in order to pay bills. I recall delaying payroll by a day or so to stretch things out. Seed stage startups are actually more like a sick infant — your startup is fighting for its life.

Wonder and Drudgery

Fragility and stress notwithstanding, for startup and infant, early days are a time of wonder, great optimism, and focused curiosity.  At this stage, everything is a first. Newborns are in constant discovery mode, every day they’re able to do things that they couldn’t do just the day before. They begin to become more aware their surroundings and react in kind. But early days are also incredibly repetitive: eat, sleep, poop.  

This isn’t too far from what product-oriented startups experience, except here the repetitive pattern is: build, measure, learn. It can be a slog, but the goal is to iterate as rapidly possible. As you cycle through this loop, your startup becomes to get smarter and more aware. You’re constantly learning new things: you learn about your competition (e.g., companies you are being compared to). You learn about your users. You learn about the difference between buyers and users. You learn about your technology architecture and how it scales (or doesn’t). If your startup has people with whom you haven’t worked, you learn about them and your interpersonal dynamics.

Learning to Walk

The goal of an infant is to “graduate” to toddlerhood, the hallmark of which is walking. Most kids begin walking around 12 months, but I’d say don’t stress about the exact age, it’s of little import (ask science). Watching your kid learn to walk is a great lesson in perseverance and resilience: the journey to walking can take a while and involves a lot of crawling, wobbling, false starts, not to mention plenty of falling. I have a toddler now, and I know that his first steps were a source of pride for himself and for his parents.

For an early-stage startup, graduating takes you to what Jason Lemkin calls “pre-success”: getting 10 unaffiliated, paying customers. You often start this after a period of product development, and if you have 18 months of capital, it would good to start this at the latest around the 12-month mark, but again I wouldn’t get hung up on the exact date.

Once you begin the process, it’s lots of crawling and iterating. There are product changes. There are pitch/presentation changes. Some customers will want to try the product first, and you’ll need to manage that process. Even after all this, there are pricing conversations which need to be invented and adjusted. Yet, signing each customer brings tremendous joy.

Where Parenting and Product Diverge

A product-driven startup is a lot like an infant, but it’s actually a lot more fragile. It’s possible that you will find that your product has no place in the market, or that the timing isn’t right. You might one day wake up to find that there’s simply no cash left to keep going. You may decide to jump ship, because you’ve learned to fail fast, and sometimes you should. As a parent, that option isn’t there. Treating your startup like an infant, and understanding that infants are completely dependent beings can help you persevere. Hopefully, you can get a walking toddler, and then there’s a whole other set of challenges.

I’ll talk about that in the next post in this series.