4 Stages of a Business

  1. Achieve productivity : A team that can work together and make progress. And all the basic roles of a leader, coordinator, worker etc. are met within the small group.
  2. Product market fit : The product that the group is building is wanted by a market. And the market is willing to pay for the product in exchange for the value that it gives them. This stage corresponds to the ability of the team to create value in a niche or given product market combination.
  3. Scaling : As the customer base increases, they would need more recruiting and more throughput in the group to meet customer demands. These demands can change over time and the technology/industry can also evolve over the time.
  4. Institution building : After reaching a certain size both within the company and market share, most of the business processes needs to be standardized and repeated. For example, creating good legal and finance departments etc. This stage corresponds to the ability of the business to create future value. This is probably also why, VC firms bring in more matured CEO and managers in to the firm after the startup has grown beyond a size.

Of course, this is generalized and over-simplified but it gives a framework on how to think about early stage businesses.

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