When is a Startup not yet Ready to Become a Scaleup?
DOUG: Applicant scaleups are really startups, is that not right?
ROLAND: Yes, correct, they are startups in the classic sense, companies
before product-market-fit. They hope to transition to the first scaleup stage.
DOUG: What are the typical characteristics of these Applicant scaleups?
ROLAND: If I may be so blunt, most startups at this stage scream “early
stage” across most of our dimensions.
DOUG: What does that mean for the type of customer they sell to?
ROLAND: The few paying customers that applicant scaleups have are technology
enthusiasts/innovators. People who love the technology for its own sake and for
its potential. Who love to tinker with it themselves but who do not look to make
business impact with it yet.
DOUG: These are still companies before product-market-fit, right? Have they
reached a different milestone?
ROLAND: Yes, proper applicant scaleups have reached problem-solution-fit.
The founders are no longer shopping around a solution looking for a problem.
Applicant scaleups have gone through enough build-measure-learn cycles. They
have matched their technology to a real problem that customers want solved.
Startups need to have reached this stage before I accept them as scaleup
DOUG: Have they raised funding already?
ROLAND: Yes, I would expect applicant scaleups to have raised a seed round
from angel investors.
DOUG: How far along is their product at this early stage?
ROLAND: Applicant scaleups’ products are functional. Demonstrating that “it
works” is the core of the pitch.
DOUG: If the product is already working, what is the challenge they face?
ROLAND: Applicant scaleups are trying to master how to serve customers well.
That means figuring out not only how to sign up customers and how to get paid.
But also providing support, response to feature requests and solve bug reports.
DOUG: I assume their team is still small at this stage.
ROLAND: Correct, most applicant scaleups have the founders and a few
employees and interns . I see the total team size below ten.
DOUG: Are applicant scaleups even in business already? I mean, have they
started selling their product?
ROLAND: Just barely. Applicant scaleups have very little revenue or none at
all. Definitely below a million USD per year. They typically have few customers
and a significant share of the ones they have are in trial mode
Roland Siebelink regularly speaks and writes about leadership in fast-growing
tech startups. You can find more of his insights, including free chapters of his
book “Scaling Silicon Valley Style.”