The Startup life is a lot like Jumanji…
Hey, wait, where are you going? No, come back, just hear me out! I promise it makes sense.
Just like the magical 1995, 2017, and 2019 movies, startups begin with a few people getting together, taking on roles, and rolling the dice. Before they know it, they’ve been sucked into a decade-long adventure having to carve their way through a jungle and solve all sorts of puzzles and riddles, while avoiding the snakes and pitfalls.
While I’d love to take the credit for this brilliant analogy, I’m not the first person to make this jungle comparison.
In his 2017 book, Entering Startup Land, Jeff Bussgang, an entrepreneur and investor at the Harvard Business School, presents a guide to curious outsiders considering a career in the startup community or what he calls Startupland. He also uses a helpful startup roadmap to clear up the perception that all startups are the same.
Bussgang imagines three types of startups travelling through Startupland:
1) Those that are carving out a path in the jungle
2) Those that are walking down a dirt road
3) Those that are driving on a highway
The three stages of startups on the startup roadmap
All startups begin life in the jungle. There is no pre-existing path and founders can only see a few feet ahead as they hack their way through the thick brush to discover their product-market fit. In the jungle, you have to move smart and you have to move fast. Competition is everywhere and you only eat what you can hunt. Picture three people, a dog, a garage, and an idea.
The Dirt Road
As startups mature, they make their way out of the trees and find their way on a dirt road. They have survived the stress of the jungle and found a business model that works. While they bring in consistent revenue, there is much work to be done as they start to look inward at what got them here and what they need to improve. At this stage, we’re looking at a workforce of about 40-50 people, a small dog-friendly office, and actual health benefits.
As they continue to scale, their internal processes and business model almost fully mature, exponential growth seems within reach, and the dirt road leads to a highway. These startups are only making slight adjustments to their business model as the executive team focuses on long-term strategy – think 500+ people, multiple offices, and well-established career paths for employees.
Getting out of the jungle and treading a dirt road however is something that very few startups get to experience. So, how do you know when your firm has made it out of the jungle? And what does it mean to mature as a business?
How do you know when you’re out of the Jungle?
There is, of course, no scientific method to determining where your firm fits into this extended metaphor. Even within the startup community there continues to be a debate about the nature of growth, whether startups have defined growth stages, and if growth should even be the end goal.
At TTT Studios, we measure a business in terms of its “maturity” rather than its “growth.” We view growth as something that is driven by maturity, not the other way around. As such, we think that it is too simple for startups to say that because it made X dollars against Y cost it is now a Z.
Instead, I want to share the three basic questions that we think are the most effective criteria for startups to gauge their progress as they try to emerge from the jungles of Startupland.
1. Do you have a proven and consistent business model?
Sounds simple, right? We can speak from experience however that the two hardest questions for a startup still in the jungle are: what do you do, and will people pay for it?
By the sheer nature of their environment, these firms struggle to give the same answer from month-to-month. And to be clear, this is not a bad thing! These small companies are simply finding what works and, through market forces, are adapting so they can (hopefully) continue to earn revenue and provide value to society.
It is only when you can confidently answer these questions that the magic happens: the trees begin to open and your mind-set moves beyond month-to-month. You have enough stable revenue and a clear product-market fit to start envisioning what the path looks like two, three, five years into the future.
2. Are your internal processes maturing to support this business model?
I like to think of processes like the internal logic of a company – they are the norms that underlie and maintain the business model.
The jungle can be an exciting (and/or hectic) place to work as people are often forced to come up with these norms on-the-fly to adapt to changing situations and stay competitive. I imagine this conversation will look familiar to a lot of readers who have worked in a jungle startup:
Sales: “The client meeting went great! I promised that we could deliver it next week and for less!”
Engineering & Finance: “You did what!?”
While processes are born from necessity, firms that want to emerge from the jungle need to dedicate time and resources to define (and continuously refine) them to achieve value across the company. We prefer the conversation to sound like this:
Sales: “Before I met with the client, I sent them the in-take form to learn more about the situation, and after the meeting, I scored them against our scorecard and added their information to HubSpot. I plan to meet with the project manager this afternoon to review our available resources and with finance tomorrow to chat about budget and pricing options before booking a follow-up call.”
Engineering & Finance: “That’s better!”
In a previous article, we discussed how we are using the Capability Maturity Model framework for optimizing our project management processes. Startups might have most of their processes at Stage 1, “Initial” and large corporations might be fine-tuning their processes at Stage 5, “Optimization”. As any company grows it will gain the resources to hire the people and acquire the tools to help get it to Stage 5. You can only start improving the process however after you formally define it.
3. Can you consistently reinvest in the people and culture needed to support your processes and business model?
Most Startups’ culture consists of the cumulative social traits of its founder and the people hired in its earliest stages, forged by pressure and shaped by a shared experience inside the crucible of startup life.
A key difference between a dirt-road and a jungle startup however is the capacity and resources it has to nurture and grow the people creating and sharing its internal culture.
Simply put, life in the jungle requires startups (especially pre-revenue startups) to be creative and careful with cash flow. And while there is no doubt that almost all startups try their best to support their employees, a key indicator of a firm’s stage of growth (in our opinion) is its ability to consistently invest in its employees’ personal development and the values of its company culture.
When your firm is in a position to reinvest its profits into people and culture, we recommend you engage with your employees to ensure that you spend in a way that supports the culture you all want to see at the company. This could take the form of health benefits, yoga classes, boxing classes, happy hours, or supporting remote offices (more now than ever), etc.
Life in the startup jungle can be nasty, brutish and short. But it can also be a thrilling journey that gives way to the promise of a dirt road just past the next clearing and the highway that looms on the horizon.
Gauging your progress in Startupland is not easy but I hope the questions we pose above give you a chance to think about where you are and the steps you may still need to consider.