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Ins and Outs of Startup Stages Explained

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When Luke Skywalker left his farm for his journey, he barely knew what the future held for him. He trembled and shivered in the face of the nearing abyss. But the desire to stand up for his family defeated the fear, so he took the challenge bravely. In some way, a startup co-founder is Luke Skywalker. Driven by the idea of a great product, they are on the brink of an exciting, but challenging journey. 

Like in the fantastic sequel, you cannot complete a heroic journey without a competent partner, like Obi Wan Kenobi. An app development team can be such a helping hand to you at any startup phase. 

As a product manager, I have helped co-founders find their superpower and build products that users love for years. In this article, I will tell you about the main stages of this startup journey and how the partnership with a product team can bring you to the heroic triumph. 

Let's start! 

start new startup

Phase 1. Pre-Seed: Ideation

The pre-seed startup stage starts when you find the idea you believe in and try to make others see it. 

This idea can come out of your own experience. For example, the Nomad's co-founder decided to build a real estate platform after spending three tireless months looking for an apartment on the chaotic Dubai market. 

Now, with the idea already crystallized in your mind, your primary purpose is to make its preliminary validation. For that, you can do the following:

Step 1. Make a problem statement

Be honest with yourself, and try to clearly answer the questions – which particular problem does my idea solve? You can have an innovative, hype-driven idea, like an over-technological juice-squeezer or a hydration-measuring smart cup. But it will hardly gain any traction, if there is nothing else behind it but hype. Your main goal at this startup stage is to make sure your product solves a real user need. 

Read more about how to find real user needs in our article How to Define Real User Needs

Step 2. Conduct a market research

Market research is an essential part of the startup timeline. However, many professionals mistakenly narrow it down to a competitors’ analysis only. The truth is that besides your competitors’ evaluation, you need to deliver attention to another essential player – your potential user. Think about: 

  •  Who are they?
  •  How do they spend their regular days?
  •  And free time?
  •  And how can you make their lives better? 

These are the questions to answer. Interview them and ask them a tone of questions to understand how they see the problem and solve it now. 

Tip: It is common among co-founders to see their audience too broadly. Describing your customers as “unemployed mothers” or “marketing specialists” will take you nowhere. You have to be super specific about your targeted audience. For example, New Relic, the famous SaaS platform, saw its target clients not as “all software developers whatsoever”. Instead, they narrowed the audience to Ruby on Rails developers and only gained popularity in this niche. Only after that, they expanded to broader audiences of developers. 

Step 3. Find your “supporters”

Another way to make your idea true is to find people who will support you on this journey. So share your idea to the people, who can be potentially helpful. At the pre-seed stage you can try pitching your idea to potential investors. Even if there are no products as such, it is important to share your idea with a crowd of people, the more the better. Some of them can offer an unexpected take on the implementation, some will want to join, and some of them will be willing to invest. 

pre-seed stage

How Can a Product Team Help You Save Money at Pre-Seed?

By sharing your idea with people, you can find not only investors or supporters. You can also find a product team with expertise in your niche and product development in general. Involving product experts at the pre-seed stage, you can save your product from failure by preventing unnecessary time, effort and financial investments. 

Carbon Club, the UK-based environmental startup, approached us with a bare idea at hand. We decided to conduct a Design Sprint to define the problem right and test possible solutions. We started a competitors’ analysis, created a Persona Profile, Value-Proposition Canvas and a Business Model Canvas. 

pre-seed stage example

After 5 user tests we saw one pattern that repeated – users did not want the app to see their full transaction history out of privacy concerns. And that was a feature that we had expected to include in our future MVP. Thanks to Design Sprint and user interviews we managed to exclude the feature that could have cost the business thousands of dollars. That is how we saved $50 000 for our client

Phase 2. Seed Stage: Time for a prototype

The seed startup stage is when you are ready to pitch your idea to potential investors or users ready to pay for your product. Raising funds is a tricky startup phase that requires both creativity and strategic thinking. 

Unfortunately, traditional bank loans are not an option in the case of a startup. You will have to pay off the whole amount plus interest regardless of whether your idea will shoot or not. So this is quite a risky option. 

Of course, you can always turn to the classic FFF (fools, friends, and family) strategy. If you are lucky enough to have a supportive environment around, this is a perfect option. 

Still, you can try another option before spending the hard-earned funds of your beloved ones. 

Fundraising, for example. In this case, your idea should be well-bound and proven to have a product-market fit. Angel investors or venture funds usually want to see that an idea has traction among users. To prove that, you need to have three conditions met:

  • A validated idea.
  • A proof of concept. For example, you have conducted quantitative research, which showed that 200 people would use your product. 
  • Prototype. This is an early attempt to visualize how your product will work and confirm that you are not at least far from the product-market fit. It can be a paper sketch, landing page, a UX prototype to click through, a 3D model of a space before and after your product has been installed.
startup artefacts on different stages

Phase 3. Early-Stage Startup: MVP

Your primary purpose at the early-startup stage is to validate your idea and its possible implementation via a Minimum Viable Product (MVP). An MVP is a basic version of the product, created within minimum time limits and with minimum effort. It usually possesses limited functionality (from one to three features) that demonstrate the concept of the product. 

At the seed startup stage you create the product’s prototype to validate hypotheses and aid with the fundraising. But when it comes to the early stage, you test the implementation of your product.

Today, MVP is often not enough to release the product and secure further investments. Your product available publicly? It is not enough for the product to just work, so that people pay for it. You release a Minimum Marketable Product, and strive to convert the experience of users with your product into their willingness to use it and give feedback. 

It is always a challenge to pilot the product as swiftly as possible and keep essential, indispensable user or data flows. And this challenge is always tackled as startups optimize their time to market.

A product team always discovers your products with you. Thus, in addition to recommending features and options of their implementation, we will assist you to find out the integral functionality of your products yourself.

Check out more in our ultimate guide on building an MVP
startup stages

How can the Product Team help you with an MVP?

If a client approaches us with an MVP, we help in the following ways: 

Make a tech audit of the product version. For example, for our client Anytime, we found out that their MVP was not scalable. So we rebuilt the architecture to make it scalable for further app development. 

Build a go-to-market strategy. Sometimes clients have well-functioning products but lack the go-to-market strategy. It means that before applying for the service or buying a product, a customer has to come through many links and pages. This dissipates the customer's focus and simply tires them. We help the customer complete their goal as fast as possible from our side. 

Find cheaper solutions. Having ample experience, Product Managers can help you define the basic functionality for your MVP. A product team knows the cost of every feature and can offer more affordable alternatives. For example, you do not have to build specific features from scratch. Instead, you can use an off-the-shelf solution and integrate them into your app.

These can be chatting solutions, CRMs, SaaS solutions for features that require a high amount of engineering effort, Google Material SDK instead of fully-customized web UI and sometimes even Excel Sheets. 

Similarly, you do not always have to build an entire web app for your MVP. Sometimes it suffices to use a no-code solution or a website template. 

Adjust your metrics. MVP is the stage where you should already track your metrics. Having experience in product metrics, we can help you adjust such metrics as sales pipeline, google analytics, north star metrics – analytics that show that your business is growing and you are achieving your goals. 

startup stages support

Phase 4. Growth Startup Stage: Focus on Profits

Congrats, you've come so far already! Now it is time to grow. The product evolves and takes its niche on the market at this stage, with the turnovers rising. 

Yet, relaxing is the last thing you should do at this startup phase. As your product and team grow, there are many more things to handle and more metrics to set up. The action steps at this stage are: 

  • Provide sustainable scaling of your product; 
  • Finding new customers and ensuring profits;
  • Keep improving your product to keep up with the scaling. 

How can the Product Team help you grow?

At the growth startup stage, the product team will help you focus on the essential things. In particular, we can: 

  • Help you scale your product technically correct; 
  • Automatize some operational processes to step up the progress; 
  • Help make your customers stay with you as long as possible (set up a retention strategy).

Phase 5. Expansion: Search for New Opportunities

As your product gets more mature, the growth slows down. Sad, but true. 

However, the main principle of the Top world’s companies is never to stop evolving. Take LinkedIn, the 20-year old company, for example. Besides its global success, it keeps testing new growth hypotheses. Thus, the company acquired an educational service Linda.com. 

So be in the best league and start expanding your product, once the growth is over! Here is precisely what you can do at expansion startup stage: 

  • Keep investing in your product and growth team; 
  • Seek to enter new markets or target new audiences; 
  • Merging or acquisition with other products or services.

 

startup stages

By the expansion, you can increase your value for loyal customers and win a new part of the market. 

Phase 6. Exit: Product’s Prom Night

The exit startup stage. If you have done everything right at the previous steps, at some point, you may decide to sell your business to some big players. It may sound somewhat sad, but at the same time, this is the right moment to implement a new idea! 

So do not be afraid to say goodbye. 

startup stages development

Wrap-Up

Once you are ready to make your idea come to life – you are a hero. Yet, you should know there is a tricky six-step journey ahead. And on this startup journey you cannot be everything – business owner, product manager, operations, technical engineer. What you can do is delegate the product and technical work to an experienced partner – a product team. 

Contact our sales manager to gather a proper team for your journey!

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