“A startup is a temporary organization designed to search for a repeatable and scalable business model.” - Steve Blank
Once a startup has found product-market fit and a repeatable and scalable business model, what’s next? How about growing the business and building the company?
The graph shows Starbucks' revenues from the time they raised venture funding to $10 Billion. I was impressed as I observed the company during its formative years, when I was a junior Associate of a VC that invested, through the IPO in 1992. At the time, I did not fully appreciate what they were doing and had no idea what would be accomplished long after IPO.
There is an awful lot written and discussed on the blogosphere about fundraising, building products, finding product-market fit and even the idea of building a "company" as the ultimate "product" in the way Steve Jobs thought about building Apple before his untimely death. Yet nothing I've read has provided much insight or practical knowledge on the topic we want to cover.
Silicon Valley is full of start-ups. It is also full of big companies. The legendary ones, companies such as Apple, Cisco, eBay, Google, HP, Intel and Oracle, all grew to enormous scale from very humble beginnings.
The vast majority of people working at hugely successful companies join long after employee number 1,000. They really don't understand what it took to get to the first 1,000 people. In fact, even people who experienced such growth may not understand because they were too busy to think about it. Yet, this is the topic we want to cover.
Somewhere between 100 and 1,000 employees, companies make the transition from startup, the "temporary organization," to a real company. This is where the serious money is made in the VC business.
Yes, once in a blue moon, there will be an Instagram. But the reality is it usually takes years, even decades of hard work to build a company with huge, sustainable value. A successful startup phase should be just the beginning, not the end.
Although we did once write about the Ramp Phase, we felt it was time to revisit the topic. It will be the theme for a series of posts for the rest of this year. We’ve only seen a few companies go through it but we have many more underway so it is a topic on the top of our minds.
We look forward to sharing our experiences and learning from others who have gone through this critical growth phase. If you have stories to share or can recommend people for us to contact who have gone through it, we would love to hear from you.