• Introduction - Start Here
  • Section 1: Planning Your Business

    In the first section, Planning Your Business, you will learn how to find your customers, how to create a value proposition (a product that customers want) and how to build a business model around it. You will also learn how to use your startup to test your business model quickly and cheaply, and how to make necessary changes.

  • Section 2: FUNDING Your Business

    In the second section, Funding Your Business, you’ll learn how to test your startup like an investor. You’ll also better understand how venture capital works.

  • Section 3: PRESENTING Your Business

    In the third section, Presenting Your Business, you’ll learn how to present your startup to investors and customers.

  • Resources

    Finally, the Resources section at the end contains a glossary and reading list to help you on your journey from an idea to a profitable business.

  • Primer Demo Day

1.7 From startup to business

1.7 From startup to business: Plan for the future now


If you’ve made it this far in your startup journey, you’re probably on the right path to success. But what happens when you get there? How do you go from startup to company, and what are the differences?






Once you have found a business model that works, you enter the scaling phase between a startup and a company. This is often a period of rapid expansion, both in terms of people (hiring new employees) and market (moving from early adopters to mainstream customers).


In the scaling phase of a startup, you’re switching from evaluating your progress based on how much you learn to evaluating your progress based on how much you earn. At this point, if your startup had been funded by investors, you need to start returning that investment in the form of profits.


Once you’ve found a successful business model, you’re no longer searching—you’re executing the business model. It’s only once you’ve entered execution mode that you should begin hiring project managers, sales, marketing, and business development teams.


Your goal during this time is to achieve sustainable growth, which is characterized by one simple rule: “New customers come from the actions of past customers.”


There are several aspects of growth you will need to consider. We’ll just say a few words here, but once you’re ready to scale, you should read the books and chapters recommended in the Read More box at the end.



Types of growth


To go from startup to company, your business must scale and grow. To do this, there are several growth models startups can adopt:


1. Sticky: growth relies on high customer retention. Hold on to existing customers while adding new ones.
2. Viral: growth requires existing customers to get their friends to join. Each new customer results in at least one or more additional customer.
3. Paid: growth relies on paid advertising and marketing. The money for advertising and marketing comes from current sales.


Startups should focus on developing only one growth model at a time. As they grow into companies, they can experiment with additional ones.

Building your team


When it’s time to hire new people, keep these tips in mind:


1. Never outsource hiring at the beginning. Your core team should be interviewed and hired only by the founder(s).
2. You will potentially spend 8+ hours per day with your team for the next few years. Make sure that in addition to their having the right skills, you get along on a personal level with the people you hire.
3. You don’t have to hire your friends, but you should be able to become friends with your hires.
4. Hire people who are excited about your company and understand your vision.
5. It’s better to hire someone who learns quickly than someone who already has the skills but is set in their ways. A startup needs people who can learn and adapt to rapidly changing conditions.
6. If you can, hire people who already have experience and connections in the industry you’re in.



Expanding into new markets


When you’re starting out, your target customer segment is early adopters or a similar niche of people who really need your solution. Eventually, however, you’ll run out of these people—hopefully, after you’ve already begun to expand to a larger market.


To be successful, your business model needs to be scalable and repeatable. That means you can replicate your success with early customers in new customer segments, each one bigger than the one before.


Your company’s growth must also be sustainable—driven by previous customers, not just sales or marketing efforts. There are four ways current customers lead to new customers:


1. Word of mouth (customers telling their friends)
2. As a side effect of using the solution (i.e. a website that requires users to sign up before interacting with existing users)
3. Funded advertising (advertising paid for from existing revenue, not investors’ money)
4. Repeat purchase or use (i.e. monthly subscription fees)

Sales and marketing


As a startup, you don’t need a sales or marketing department. When you’re searching for initial customers, you’re the salesperson (and marketer, and CEO, and sometimes CTO). You should be able to sell the idea of your startup to anyone (which we will help you do in Section 3). Most likely, you also don’t have the money to hire sales or marketing people while you’re still searching for a business model—and even if you do, that money would be better spent on building and testing MVPs.


However, once you have a large share of a small market, you can begin to expand into a larger market. This is the job of your new sales and marketing departments: finding customers in need of your solution and selling it to them.



From a lean startup to a lean business


Just because your company is no longer a startup does not mean that the principles of lean methodology no longer apply. In fact, many larger companies owe their success to adopting lean principles.


You want your startup to become an adaptive organization: one that is not stuck to a rigid business plan and adjusts its business model if conditions change. Above all, a company must invest in staying innovative—because you never know when a new startup will come along and disrupt your success.