Congratulations! You have achieved the elusive Product Market Fit. With a series-A under your belt, you are poised to be the next Unicorn. Now, you need a different game.
Transitioning from tinkering, testing, and learning to scaling is often a giant leap for the founding team. Not just the founders but the entire founding team needs a mindset change. The fail-fast approach, which serves startups well attaining PMF is only one arrow in the quiver of a growth-stage startup.
At this stage, I tell my clients to think hard about what they want to be in Twelve Months and start identifying the critical areas where they cannot fail.
I encourage them to think of the business in 30-day increments and build a painstakingly granular working backward plan on where they want to be and what it will take to get there.
These deep-dive sessions often result in articulation of goals and projects, ultimately leading them to identify the capabilities or the structure they need to succeed. And this is where a slight mindset change comes in — from a pure-play engineering mindset which is focused on building, founders need to take a broader approach, and bring in additional functions into purview that would be needed to scale the business.
I love to bake, so let me give you a baking analogy to this situation to help understand the process. In baking, not every ingredient is of the same value. What I mean by this is that olive oil can substitute butter. One can use various flours, chocolates, sugar bases, etc. I once baked “an amazing” chocolate cake, and the one ingredient I forgot to add was baking powder. You can imagine the horror on my kids’ faces when I opened the oven door. You cannot bake a cake without a leavening agent.
Founders need to evaluate everything — tech, ops, sales / marketing, and data maturity; ensuring they have the right team and leaders to deliver.
Identifying these critical components and putting together a structure where they make progress on them leads companies to attain what I call as a Minimum Scale Velocity.
So, what is a Minimum Scale Velocity (MSV)?
MSV is the minimum scale readiness required to catapult the startup into the growth stage. While your customers decide PMF, you own MSV, by driving focus and investments in the most critical areas of your business.
MSV premise is based on certain guiding principles:
- Work backward from the customer and continuously evolve your product strategy with data to back your decisions. With the core proposition established, you will start building additional features in the product. The product strategy must consider the “Voice of the Customer” coming from different functions. You need a seamless way to validate and test these inputs thoroughly before launching, or you risk having a massive production pipeline with a flat topline!
- Measure, measure, measure…there is no other way around it. And drive a data-inclusive culture where the critical parts of your organization have access to the most impactful data, thus using the same language. The ability to deploy data for competitive advantage will be a crucial differentiator for successful future businesses.
- While PMF has been achieved, your tech needs will evolve faster since your product scope will expand now, and you may start feeling the need to advance the maturity of core functions. And with the advent of AI, opportunities are tremendous for you to drive improvements.
- Adopt a Product-led model. A product-led model allows organizations to connect the dots and create a bridge between business/customer needs and technological feasibility while maintaining the desired speed to market. This model eliminates tech dependence on everything and helps businesses scale by looking for more straightforward solutions where feasible, thus maintaining the desired pace of commercialization. We call this Product-led engineering & design (P-led) and consider it a crucial enabler in attaining minimum scale velocity and product-led growth, especially in B2B businesses.
- Metricize your business initiatives and track them as inputs to growth. Diligently build connections between your metrics to track your initiatives and how they influence your top line. For example, to grow your sales (output), focus on metrics correlating to increased sales (input) — higher click-through rate, conversion, basket size, frequency, etc. Similarly, if you are a subscription business, focus on acquisition and retention input metrics. Assign input metrics goals to your team so they are focusing on the entire customer value and experience.
Conclusion
Getting a startup to the periphery of growth is a fantastic achievement. However, transitioning from an early-stage company into a growth mindset requires a shift in strategy and tactics. It involves implementing a flexible process that allows for planned execution- treading a delicate balance between chaotic energy and disciplined execution. Minimum Scale Velocity will ensure the right measure of leavening agent to raise your startup to the next level.
