A Mental Model for Prioritizing Your Startup's Energies
I’ve playing with a new mental model for early-stage startups: a pendulum. This pendulum oscillates between the limiting factors of the business at different stages. There are only two limiting factors in this mental model: product and go to market.
At the moment a startup is founded, the business is product limited. You can’t do much without a product. After the company establishes product market fit, the pendulum swings to go-to-market.
Now sales and marketing limits the company’s growth. Time to hire account executives and demand generation. As those teams begin to achieve lift, they exert stress on the product again. And the pendulum swings back.
Proofs of concept and pilots are rocky. Customers ask for new features or bug fixes. The product and engineering teams’ ability to quickly satisfy these demands limits progress.
Over some time, product and engineering bevel and chamfer the product’s sharp edges. Buoyed by this advance, sales and marketing accelerate their efforts and grow their teams. Regional vice presidents join the sales ranks. They will hire account executives in different regions.
After a bit, these new AEs will begin closing business that requires more product work. SOC2 compliance, single sign-on integration, auditing, deeper security, etc. Often these are larger accounts. And the ball is passed back to product and engineering.
Finally, the company has mastered both the product and the go to market for this first product. The cycle starts once again with a new product that might be built internally or acquired.
One of the questions I started asking myself when working with companies at different stages is: where is the pendulum of this business? Is the limiting factor product or go to market? I find it is a helpful framing for prioritizing the efforts of the business and in particular the management team.