Early-stage startups - how fast can you grow? (Part 2)

If you’re serious about building an early-stage startup, please find some time on your hands to read this.

In Part 1 we touched on the basics of how early-stage startups can grow. In this part, we’re going to delve deeper. In this part, we discuss the factors that determine how fast your early-stage startup can grow.

The most important factors of growing fast are linked to:

• Product-market fit, or as I’d like to say, market-product fit. You find a problem in the market worth solving and build a product for that. Not build a product and then try to fit it into the market.

• Distribution channels: This means finding the most effective and efficient ways to reach and acquire your target customers. You need to understand where your customers are, what they are looking for, and how they make decisions. You need to test different channels, such as social media, email, SEO, ads, etc., and measure their performance and ROI. You can use tools like Sprout Social or Ahrefs to manage and optimize your marketing channels.

• Creating a repeatable, profitable, and scalable sales model. This means developing a sales process that can consistently generate and close leads, increase revenue, and reduce costs. You need to define your sales stages, metrics, and goals, and align them with your marketing and product strategies. You need to train and empower your sales team, and provide them with the right tools and incentives. You can use tools like Lattice or Gusto to manage and motivate your sales team (probably with commissions).

We will only deal with one of the factors in this section.

Product-Market fit:

Do you use Discord?

Product-market fit can lead to fast growth for startups because it means that the product has a high demand, a loyal customer base, and a competitive edge over other alternatives. One example of a startup that achieved PMF and grew rapidly is Discord, a chat app for gamers and communities.

Discord is a great example of a voice and chat service that solved expensive, complicated and intrusive VoIP options for gamers into free, easy to use, and non- interference within games.

Let’s take another example within an example!

Substack - YES SUBSTACK - was built on Discord. The popular newsletter platform has leveraged Discord to connect with writers and readers, with over 20,000 members. The server hosts discussions on writing tips, audience engagement, and newsletter monetization strategies, fostering a collaborative environment for newsletter creators.

Is your problem cheaper, easier or non-interfering in your customer’s lives?

If not, you don’t have a product market fit. Move onto another problem. There are plenty around. It’s OKAY not to go after one that doesn’t solve a problem at scale.

I try to write as simply as possible for fellow founders. If you like what I write, subscribe to The Capital Suite and move onto the next section.

Let’s do a founder fitness check.

You’re a budding entrepreneur just like me, whether in mind or body. These days all I do is to build my arguments for the tech I’m launching to market. For that, I have to double-down on my product-market fit.

List down one or more industries in your country that are suffering from chronic problems that early-stage startups can solve. Don’t focus on the globe, focus on your local problem. If it’s big enough, you can profit from solving it.

Answer the following questions:

1. Is the problem large enough? (Calculate market size using TAM).

2. Do I have the knowledge or technical skills to solve ONE of these problems at least? (Note: You must have both).

   1. If yes, then go to Google Docs now to write down how you intend to solve this at a lower cost or at lesser time. What are your barriers to lower cost or lesser time? How much time or money do you need to go overcome those barriers? The higher the resources you need to spend, the weaker your case gets as a startup, unless it’s a super hot sector.

   2. If no, it’s a good idea to stop right here. This isn’t the industry for you.

3. Review your writing. Do you think you can introduce something even better to launch your product? Are there small tweaks that can save your and your customer millions? Think deeply from every angle imaginable.

If you’re good with this, follow me and let me know in my DMs here.

Part 3 will be about distribution channels. Suffice to say, it may be the most important factor for fast growth. So don’t miss it, it’s coming out next week!