Hi,

You must have already received lots of those messages. Facebook, WhatsApp, Instagram, TikTok and God knows what else. What’s the latest fad in social media anyway? #asking-for-a-friend

This mail luckily is NOT about that.

Like all living creatures, companies go through an evolutionary cycle of their own. (Un)Fortunately though, businesses do not get millions of years to perfect their stride. I feel January 01 is a good time to shed some light on how companies evolve.

PS: Nothing new or fancy is mentioned below. You can ignore it like all compiler warnings!

Any company typically has 3 stages:

Stage 1: Startup

This is the most riskiest and adventurous phase. A startup goes through many iterations and business models to see what sticks. This approach is commonly called “Spray and Pray”. In other words, it introduces a new product into the market and sees if there is a fit; get feedback and release again, get feedback and release again, get feedback and release again. One more time, get feedback and release again. Ok one more time, get feedback and release again. Ok ok one last time, get feedback and release again. Reid Hoffman has famously said, “If you are not embarrassed by your first release, you are too late”. I counter it telling, “Successful people can say whatever they want.” There is some truth to his logic, no doubt. You ask – “Why is the ‘some’ italicised?” Glad you noticed. The emphasis is on ‘some’ because many a time, you only get one chance. You miss it, you kiss it. Goodbye!

VCs look for 3 ‘V’s during this phase – Value, Volume and Velocity. If a startup has all these, then it can go on to the next stage.

Stage 2: Growth

This is an exciting phase in any company’s journey. After all the craziness of Stage 1, it is now time to stabilise and grow. This path is often called “Lift and Shift”. To put it simply, you have a product and you know the market fit; you just lift what is working and shift gears to cruise along in top speed so that your competitors are only visible in your rearview mirror.

VCs look for 3 ‘Y’s during this phase – stabilitY, consistencY and profitabilitY. They also look for an additional ‘Y’ which is loyaltY. If a company has all the ‘V’s and ‘Y’s, then it can go to its final destination.

Stage 3: IPO / Exit

This is the phase where “you have the cake and eat it too”. It is every founder’s dream come true. All the hard work and dedication over the past several years has finally borne fruit. It is a validation of your vision and a result of your perseverance. Very few make it here. An exit gives an opportunity to work under a bigger and (hopefully) better business. An IPO gives an opportunity to continue working independently like before. Both of these approaches has its pros and cons, but nevertheless it is broadly considered a success. I personally call this stage “Slice and Dice” where the bigger entity slices your company to fit it into theirs.

In all these stages of a company, what is it that I have deliberately missed mentioning. Any guesses? No? Really no? Still in hangover, is it? Too bad. Of course it is “You”. Only “You” can set the direction of a company. Only “You” can transition a company from one stage to another. Only “You” can make it happen!

And how can “You” achieve this?

be HAPPY, NEW YEAR or not!

PPS: I know PS should always come at the bottom. But who cares 🙂
PPPS: No prizes for guessing which stage we are in.
PPPPS: In case you are wondering what the VCs and others are looking at in Stage 3, it is not ‘V’s or ‘Y’s or any other letter. Everyone’s looking at “U”!

^{First written on 01 Jan 2021}