The super simple framework that will help your startup scale

Photo credit: Austin Chan

When founders start working on their startup, I often encourage them to be laser focused on finding product-market fit (PMF). Very little matters for a small, under-resourced company than building something that resonates strongly with some segment of the market.

Finding PMF is the necessary and often unassailable first challenge of building a great, enduring company. But it is just the beginning of what will hopefully be a longer journey. One way I’ve found helpful to think about this journey is through the progression from product to business to company.

My simplified view is that:

1. A great product is one that has a strong PMF.
2. A great business is one that can leverage this product to scale profitably and become a machine that can predictably and rapidly grow. Over time, a business should be able to both improve and extend the product to sustain this growth.
3. A great company is an organization that is able to launch new products, develop new businesses, and effectively nurture existing businesses. They are human systems that attract great human capital and can maximize that capital toward achieving short-term goals and long-term strategy.

I’ve found that it’s helpful for founders to keep this progression in mind as their businesses expand. It’s a simple but effective framework.

Here are a couple of additional thoughts.

It’s not a sequence

These three phases in the journey don’t happen in perfect sequence. In particular, the foundation of a great company is developed from the very beginning. Usually, this takes the form of culture, values, and quality of the early team.

Be stage-appropriate

The development of your product, business, and company should be stage-appropriate. While some companies have died of running too hard and fast with insufficient process and controls, far more over-invest in this stuff without having really achieved PMF.

Don’t over-measure your business or create too much process too early. But likewise, be prepared to continuously upgrade your operational model as your business progresses.

Hire the right people

When transitioning from a product to a business, I have never seen a company regret bringing on a strong, analytical utility player who infused data and measurement into multiple parts of the operation.

Startup management often resists bringing this sort of person on because the role is not specifically to build or sell. Thus, it feels like overhead. But hiring this person ends up being a force multiplier on every other function.

It’s a tricky spec — it could be someone who sits in marketing, finance, or product (and may even end up heading one of the products at some point). I’d argue that if you don’t think this person would pay for themselves immediately, you probably don’t have PMF.

Build for these transitions

You should be building your investor base and board with an eye toward these transitions. That’s why I’m a fan of bringing on investors that are specialized around the particular stage of your business.