Updated: Jul 22
Startup is creation. It involves a person becoming a founder, providing something of value to a particular audience, establishing a business that can self sustain (feed the mouth) and hopefully grow. Over time, you become a part of the ecosystem and accepted as trustworthy.
The three major stages of a startup are:
Stage 1: Preparation (10-20 years)
Stage 2: Launching and plunge (3-15 years)
Stage 3: Operation and grow (life cycle dependent)
Stage 1: Preparation
What it involves: a person goes through schooling, job, and work, establishing skills and reputations and social circles. Gradually goes from a good student to an advanced hobbyist.
This stage ends when someone decide to launch a business and further learning, leadership and creativity. Startup is higher life - soulful life, creative life, experience-trial-n-error life, and relational life. Startup is partner eco life.
For most people, this stage last the entire life time. You need to consciously go beyond the comfort zone of family, books, leisure, rest, work, and promotion. You need to learn the things that are never taught - business, products, marketing hacks, partners.
My suggestion is for people to practice and do "safe side hustles" to prepare. The number one reason people fail at startup is lack of preparation, which is the process of first failure. To "fail safely" would reduce future struggles.
When you plunge, you will meet sure failures. But success will come from it. You will focus, and find a brand new world by focusing. Don't focus on what you want to offer or what you "know", focus on who and what they want to buy. Before you quit your job and plunge, prepare and train. Startup is a skill, not a destiny. "To get rich with startup" is as reliable as "getting rich by buying lottery tickets". But you let yourself fail once, and the world will open for you because you finally understand how everything work, even you were a professor or accomplished technologist in the past.
The "build and they will come" era is over. It is "build it and sell it yourself". The world has surplus of everything.
We have great story of 19 year olds building 100 million dollar business in crowded apparels field. The world is full of business opportunities. If you have experience, you see opportunities EVERYWHERE with sure success. Good judgement comes from experience, which most likely come from bad judgement. Let yourself fail, get ready.
Just being an accomplished technical guy or professor is not enough. Just being a good student is not there yet. Full of ideas is not enough to break away from hobby amateur. You need to become niche market expert, build business smartly, and deliver value - which is enjoyment for the recipients. Never protect your idea. Choose one. Do it. Execute it.
Having a business is easy. Build something, and find the people who like to keep, instead of to look.
Stage 2: Launch
What it involves: based on a variety of motivations and a variety of prepared-ness levels, a person turns entrepreneur - continue to move beyond books, beyond job, beyond job, beyond security, beyond making a salary. A person visualizes a particular audience that he can serve better than the incumbents and establish a quality offering and a trusted relation over time, where the customers pay a price for obtaining his offering at a discount. His company would get revenue based on per item sales and the number of repeats.
Good judgement and decision comes from experience. Which initially comes from bad decision.
Launching a business is a multi-dimensional process - business, technology, money and cash, mission and objectives, story, investment, attracting talents.
The dive curve of a startup is to be understood clearly. A startup is the growth of three things: the business, the company, and the founder. The right right-step process should be followed, no matter how clever and how special you are. Startup always start from understand WHO DO YOU SERVE. It can be end consumer or business that services end consumers, or it can be large or small. No matter what, if you make something and hope someone would take it - then no one would.
A summary of rule of thumb startup numbers and costs can be found here [1, 2]. Remember quality takes money - it is relative to your competition and is never "cheap". Customers are very picky. If they like you, they will start to bargain hard.
Never assume you can "solve a problem" and get paid. People need to trust you with relation first before they allow you to try, even then they would not pay. Even if they pay, scoring profit is almost impossible. There are many examples of struggles[select Operation in the FAQ list].
The business world is connected - it does not accept minor changes. The market is only place where people buy and sell - and the market is boobytrapped and guarded. In 2020, 90% of price of a product is captured by market and channel. Market is not logical and does not make sense. It takes 1 part of work to make a quality product and 9 part work to sell it. The "build it and they will come" era is over.
Because a first failure is inevitable and actually mandatory, startup is actually a spiraling process. You must train, prepare, and continue to train and prepare AFTER THE LAUNCH. The launch of a company does not guarantee anything - it does not guarantee business, or profit, or survival. Most companies started does not find customer, does not make profit, and the founder struggles.
The key to success is to learn all ways of failure but does not get killed or run out of cash. If you don't quit and survives, eventually everything becomes easy.
Your first startup experience may be idealistic and wishful thinking. Your second one may be badly executed or not lucky. Then you learn to design ideas instead of just taking what "came up to you randomly". The key to profitability is multiple factors - the most important is the size of market.
Competitions exist high and low, honorable and dirty. They set the price space. If you are early, you can have authority to set price but you have to struggle as an early entrant. If you enter a crowded space, you must pick the right niche market strategy. Amazon started with books, Facebook started with college students, Apple started with hobby enthusiasts.
Stage 3: Operation and growth
What it involves: The startup becomes an incumbent, a job provider, and a game changer eventually replacing the old. The entrepreneur quit his job from an institution, and reestablish another institution and becomes the operational manager, and handing over the management job to talents that surrounds him.
After a company has sustainable revenue (breakeven and "pays the bill"), it may become profitable and sustainable (having money to pay for innovation and research).
The key mile markers and involved skills are:
Mile marker 1: The skill learning
Mile marker 2: The plunge/launch
Mile marker 2: Find buyer, found people who want to keep you or need your help
Mile marker 3: Start to earn trust and reputation. Third party say good things about you.
Mile marker 4: Your company can "breakeven" where income and costs are equal, but still with debts. A company like this can "make a living" or "feed the mouth", but may not be able to scale further.
Mile marker 5: Making a quality product
Mile market 6: Systematic lead generation - let customers find you
Mile marker 7: Making a profitable company
Mile marker 8: Company scaling and growth
Mile marker 9: Brand. This is the final stop. Your audience have deep relationship with you, trust you, knows you are always there and always make the same thing, strangers can find you if they search, and you have monopoly of your game.
The major risks of startup and why most newbies struggle, and why most startups fail even with a good business plan and star technologist. The rarely discussed failures of idealists and first failures.
Critical skills include
evaluate an idea for its potentials (link)
design a good business idea from scratch
focus and path finding
side hustle practice
business method and model design
Startup is not mysterious. It takes a first failure to activate. It is a still that needs to be practiced. A good idea is only 1/1000 of the success. Many people are not prepared and use thinking in vacuum instead. They struggle, even if they start.
Startup is the progression of four things:
the growth of you;
the growth of business;
the growth of a company entity;
the progression of products and product line.
A key mile marker for an individual is when the person find his onliness and relation.
the person find the universe within a grain of sand, and the only thing that he does better than everyone else.
the person find the audience to what he offers. The audience keeps him happy and financially rewarded.