Early Stage Priorities

During the very early days of a business, in stage one, decisions are made which determines the initial trajectory of a business. While you can always pivot and change direction, every pivot costs resources.

In the early stages of a business, you don’t have much in the way of resources, so limiting the number of pivots is directly related to efficiency.

Here’s some counsel I recently provided to a couple of engineers who have an early stage Big Data startup:

You are currently early in stage one here: www.IdeaToExit.com. You have made some preliminary decisions regarding the business model, but have yet to progress through the most important stage one section: market sizing.

The deltas between serviceable, target and relevant market sizes establish the characteristics and appropriate funding of the business model. For instance, a relatively modest vertical-stack products and services model might be appropriate for a very special angel but would not be a good fit for an institutional investor—the numbers just don’t work. A full-scale, greenfield, market-leading business model would be a good fit for an institutional investor.

Both types of external investment will start a clock and when that clock hits zero the investor(s) will expect a liquidity event.

I’ve personally built five companies, including data companies, and consulted to scores of tech startups. I’ve judged global business plan competitions and viewed literally hundreds of pitches.

You guys are at a familiar early stage of formation.

The bad news is that what lies ahead, from where you are in stage one to where you want to get to in stage six and seven, is a very, very challenging journey.

Entire books have been written about most of the individual bullet points on the Idea to Exit poster. This implies that even though you guys are hyper-intelligent and could probably figure out the whole business side of things along the way if you had to, if you choose to do so, you won’t be putting your brain power and energy into the product and you almost certainly will run out of time before you reach your goal. You can’t buy time, no matter how much VC money you take in.

The good news is that a startup is never more fun and more energizing than it is where you guys are right now. Everything is upside, everything is possible, everything—especially the business stuff—seems as if it will be easy. So, enjoy this time, enjoy these moments.

If you two choose to pursue this, things will get much more challenging from this point forward, so enjoy this micro-chapter while you can.

In closing, I’ll point you to some things that you need to avoid at the stage you are in:

First, if your market sizing or opportunity statements include this phrase, “If we only get X% of this market…,” you have not done enough work to size your opportunity or determine a real-world, go-to-market strategy. Trouble lies ahead.

And, especially these:


Your market is your world; it is where you will spend the next three to seven years of your life; it is what will determine your fate. You must know it – intimately.


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