How Starting a Company is Like Climbing Everest
Our accelerator, The Triangle Startup Factory, is in week five of the current 12-week program. A combination of structured mentoring and serendipitous advice is the order of the day. Our current founders are all smart, thoughtful, high-energy, pedal-to-the-metal people. This is fun.
But I have one concern. A big one.
I was having trouble describing it naturally. So one of our local mentors offered an analogy that seems to fit:
In order to climb Mt Everest, you must plan, work, and make adjustments at each of four Base Camps.
How does this relate to start-ups?
Founders create product road maps detailing and prioritizing various features and functions. They outline, test, and roll out various customer acquisition tactics and model how the acquisition costs will come down as their viral coefficient goes up. They consider various funding scenarios and match their vision to funding milestones.
But as they do that, they tend to in terms of Base Camp 4. Especially if they have a high level of entrepreneurial DNA, as our people do. They immediately project three years down the road. That’s dangerous. You don’t get to skip Base Camps 1, 2, and 3.
You can’t take the express customer-acquisition train. You can’t super-think and super-work your customer acquisition in order to bypass these requisite stages and go right to a million customers.
Base Camp 1 might represent the acquisition of your first set of customers. Depending on your business, Base Camp 1 might mean 50 customers (enterprise-like application) or 1,000 (consumer-oriented). The acquisition tactics at this stage are naturally guerilla--we need customer feedback and data! One of our teams put a table in the middle of a business courtyard and produced 700-plus initial signups.
You reach Base Camp 2 by identifying new acquisition tactics (while possibly doubling down on tactics that worked previously) and making product and feature modifications to fit those tactics. The goal at this juncture is to begin laying out the handful of acquisition programs that will drive the business to the next customer goal.
Base Camp 3 and Base Camp 4 represent bigger and more expanded versions of Base Camp 2. The acquisition strategies may morph with your fundraising strategies as these new investments drive customer adoption. (In plain English, the purpose of your new funds will be to secure new customers.)
My point is that you have to have the patience to acquire customers in this systematic way. You simply do not know enough to grow from 10 to 10,000 customers in two months. This needs to be done incrementally, with knowledge and understanding gained at each Base Camp.
Those companies that find lightening in a bottle and achieve rocketship growth are freakish and not a good model. And in fact they probably grew more slowly than you realize: When you peel back the curtain, you typically find that they too had to go through months or years of incremental growth before they accelerated to the numbers that suddenly made them seem ubiquitous.
The more I have talked about this, the more I see stats like this:
- Meetup.com grew from fewer than 500k active users to 2.5m in six years
- ReverbNation, which has more than 2.5 million bands as customers, has been in business for seven years.
- Twitter took three years to get to 3 million users, and now sits at 225 million.
The significant variable in this equation is time. Work hard, but have the patience to let this play out.
CHRIS HEIVLY | Columnist | Managing Director
Chris Heivly was a co-founder of MapQuest (which sold to AOL for $1.2 billion), sole managing director of 77 Capital (a $25 million venture fund), and an executive at five software companies. Currently, he is one of two managing directors of The Startup Factory, a seed investment fund making 10 to 14 new investments per year. A national writer and speaker about startups and startup communities, Heivly is also the founder of the Big Top Job Fair.