Lessons from my Entrepreneurial Journey #13
The other day at an event a gentleman asked, “What does your startup do?” “We are not a startup anymore. We are a 4+ year old company, focused on healthcare software,” I quipped back, as we exchanged our visiting cards. That took him by surprise, as he was wondering why I am steering away from the word “Startup”, when it’s considered so cool to call yourself one.
The definition of a startup, as per Steve Blank – who is considered the pioneer of Customer Development methodology, a bible for startups – is “A startup is a temporary organization in search of a scalable, repeatable and profitable business model”. It is conducting experiments to get this right very fast.
So once you get it, you should not call yourself a startup anymore.
A human being runs through various phases of his/her life with different labels – a new born, a baby, toddler, boy, teenager, adult, senior citizen – You wouldn’t call yourself a baby when you are a 4 – 5 years old.
So I have sometimes wondered why this affinity amongst entrepreneurs to call themselves a startup for as long as possible. Some of them have products, business models and raised massive funding – but still tag themselves as startups.
Is it because:
- The word denotes that we are attempting to do something that no one has done before & it’s considered cool to run a startup or join a startup.
- The word conjures up entrepreneurship. Messages like “Startup.. It’s never too late” may make you feel that you are missing something in life if you haven’t “done” a startup.
In my view, the word startup sends a lot of uncomfortable messages subtly to various stakeholders.
- Hmm..so you are new. It means your products are untested…
- You are a young company and not seen the challenges yet. We do not know if you will be around long enough if we buy your products/services.
- I have heard that startup X folded up last month. Is my startup too similar? I am not sure.
- Will I have a long term career? What if our investors pull out?
Coming back to our story, we took a call not to call ourselves a startup when HealthMacro turned 3 in October 2015. When you are a 1 – 2 year old, it’s acceptable to call yourself a startup.
“We had a market fit product, a relatively large addressable market, paying customers and a business model. We only needed to scale”. So why call yourself a startup was the thought process we had.
We believed that if we called ourselves a startup even after 3 years of existence, we may end up doing silly things to fit into the mould of what a startup should do that could seriously jeopardize our growth.
I put together a comparative list of what a Startup Vs a Growth Stage company does:
|Early Stage Startup (0-3 years)||Growth Stage Company (3 years + )|
|1||Competes in startup events & attempts to win awards.||Participates in Industry trade events marketing its products.|
|2||Showcases its startup awards won & media coverage received.||Highlights its key customers, references and testimonials.|
|3||In search of the right paying customer & business model.||Has a clear business model, target segment & customer profile.|
|4||Depends on few early customers.||De-risks its dependence on few customers.|
|5||Woos customers with discount and other freemium models.||Clear value proposition. If this customer says no, move on to the next customer quickly.|
|6||Anyone interested can join. Will check fitment later.||Hires with a clear Job Description, with a strong interview process.|
|7||Informal Performance Reviews.||Formal Performance Reviews.|
|8||Competes with other startups.||Competes with companies bigger than itself and works to beat them.|
|9||Seeks informal feedback from customer on product and service.||Monitors every customer touch point to experience the “moment of truth” for the customer.|
|10||Focuses on Vanity Metrics & Social Media.||Focuses on proposals sent, invoices raised.|
|11||Seeks Funding.||Raises seed funding and runs with it frugally to have a long runway to take off without another round of funding.|
|12||Mindset: Let’s get the product out and generate early revenues.||Focus: On predictable revenues month on month. Attempts to get to break even and profitability faster.|
|13||Spend on marketing & ads.||Word of mouth referrals.|
|14||A very flexible culture.||Work culture balancing Company Results & Employee benefits.|
|15||Has assumptions on problem definition and customer mindset.||Has strong understanding of Industry value chain and customer pain points.|
We have gone through all the phases outlined in the “what early stage startup does” table.
Now at the 4+ year mark, we regularly check against this list to validate which bucket we are operating from & correct ourselves if our mindset is still that of an early stage startup.
We are working very hard & smart to scale up and get to profitability fast…as “We are not a Startup…”
This is the thirteenth part of a series by the author. Find the previous post here.
[About the Author: Shashi Bhushan is the Founder & CEO of HealthMacro Technologies. He plunged into entrepreneurship to explore his dream of building something that touches people’s lives. HealthMacro were TiE’s AnthahPrerana 2013 winners. He can be followed on twitter at @ShashiBhushanHR]