The Start-Up J Curve: The Six Steps to Entrepreneurial Success… by Howard Love, an entrepreneur for 35 years, who has founded and co-founded over 15 companies and has invested in more than 50 early-stage startups.
The big idea: focus on where you are on the path
The book lays out the path from startup inception all the way to sale or IPO. The big idea is that knowing the 6 steps and recognizing where you are on the path, can help you stay focused and take the right action. For example, don’t worry about your revenue model when you still haven’t proven that your product has traction. And don’t get bogged down with strategies to scale when you haven’t nailed your business model yet.
The Valley of Death: the first 4 phases of the J curve
The first phase of the J curve is: Create. This is where you’re getting the main ingredients together: a good idea, a strong team with complementary skills that will support each other during tough times, and money. This is actually the best time to be raising money because you’re selling the dream. When you launch, reality sets in and investors’ pockets tighten up.
The second phase is: Release. Push out your minimum viable product and start listening to customers as soon as possible, because they will give you a reality check and point you in a better direction. The more time you spend adding features and perfecting your product, the more you fall in love with it, the more rigid your team becomes, and the more difficult it will be to pivot.
Which is the third phase – the author calls it Morph to indicate that you may have to radically change your product. This is where you iterate through customers’ feedback until you achieve product-market fit.
The fourth phase is: Model. This is where you figure out your economics and nail your business model, making sure that as you grow you will make more money. When a startup is flush with cash, a common mistake is to skip this stage and go directly into scaling mode, which can ruin the company. Focus on making sure that you have a business BEFORE you grow it!
These phases – which the author refers to as ‘the valley of death’ – are the toughest in the lifecycle of a startup, because you start with a dream that’s more than likely to get crushed, but you have to be prepared for this and persevere.
How does it all help in practice?
The author gives a great example of an entrepreneur who started thinking about global expansion too soon: franchising, new products and services, all the possibilities… it was exhausting.
He was in the mindset of phase 5 – scaling the business – when in fact he hadn’t even proved product-market fit, which is phase 3. By re-focusing on the right questions and tasks, the entrepreneur was able to execute without feeling overwhelmed and getting burned out. You want to first NAIL the product, THEN the business model, and THEN scale.