In our last blogpost, we discussed the biggest debtbergs in the MVP stage. This blogpost is focused on the Growth stage. The startup is selling something and has moved from one to a number of paying customers. Hopefully by now, there is a team in place and an advisory board. It may even be seeking some type of outside funding.
At this stage, the startup is balancing making progress in the Human, Marketing, and Technical Oceans simultaneously. So, the biggest debtbergs now include:
Human- One of the first human resource challenges is the level of talent versus cost of the early hires. There are two extremes here: high-cost “whale-hunter” senior person vs. enthusiastic, bright, and cheap, fresh-out-of-college hires who exude energy, much of which might be misdirected. To avoid the Inappropriate Talent vs. Cost Tradeoff debtberg, the founding team must balance getting people with experience in key areas with not breaking the bank on overpriced talent. Hiring those first employees is incredibly rewarding, but it can also be a big source of hidden debt.
Marketing– We’ve stressed that startups have to establish a point of differentiation (POD). Becoming known for a specific POD takes consistent messaging over time. Being consistent seems to be more difficult for startups. But a startup won’t be known for what they want if they strike the Inconsistent Use debtberg. First, startups are often not quite sure whether they have the right POD. They try one for a while, and, if they aren’t getting traction, they pivot. That pivot creates a debt of inconsistency— some prospective customers think the product does one thing and others think it does something else.Also, most startups join different directories at different points in time. Their profile tends to migrate with the changes in messaging. To avoid this debtberg, be intentional about changes in messaging and make them consistent across platforms.
Technical– Now the product is coming along. Too many startups fall prey to the Ivory Tower Insights debtberg. Early on, founders were highly involved in user testing. But now they are letting others do the testing. Founders still need to hear directly from customers so they can prioritize the development process better. And prioritizing development is critical to avoid theMushy Process debtberg. That means knowing what features need to be developed next and having a strong backlog or list of features to develop. That also means keeping track of development progress by naming milestones and knowing whether you’ve hit them or not.
Strategy– Now that the startup is getting traction, it needs to avoid the Meager Measurement debtberg. Founders need to translate their strategies into trackable metrics. The startup needs to find metrics that match the actions it is taking. And it needs to make sure it tracks progress against those metrics. Know what proof of concept means to each of your stakeholders.
This is the most critical stage for getting real traction, securing outside funding, and growing sales. Using a tool like the Iceberg Index Map, where employees can post concerns about debtbergs that are arising, can be a useful and visible way to keep sailing.
The book itself goes into more detail about these debtbergs and how to avoid them. So, grab your copy at Amazon,Barnes & Nobleor your favorite bookstore.