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One of the hardest parts of a startup is determining if you’ll ever find success. Entrepreneurs dream of the day their startup will turn a profit or even hit its initial milestones. Startups are the most challenging types of businesses, as they’re the ones pushing the world’s boundaries.
What makes a startup different from a typical business is the ability for rapid growth. Famous startups are known for viral growth. What many don’t realize though, is that there were hundreds, if not thousands, of hours of work put in before they hit that incredible growth mark.
For a startup to become successful, one must have an amazing product, a rock-solid team and a stellar vision for the future. Companies like Tesla that were once considered startups were conceived with all three. If you read Elon Musk’s Master Plan for Tesla, you’ll find the origins of a successful startup.
If you think your startup is on the verge of success, test your business against these three metrics to see how you’re performing:
The S-curve illustrates the stages of innovation in which you’re at. It is broken up into four stages: startup, scale, compete and transition. If your startup is at the scale stage, you should start to see some close rivals. The transition stage is crucial to the s-curve because that is where innovation happens.
Take Blockbuster and Netflix, for an example. In 2000, Blockbuster had a chance to buy Netflix (now worth $28 billion) for a mere $50 million. Blockbuster opted out because Netflix was losing money at that point. Blockbuster was hesitant to gamble, not looking ahead, and instead looking for a short-term profit rather than a disruption of the industry. No one walks into a store to rent DVDs anymore, we either rent online or stream them. Missing the transition in modes of DVD rentals is what put Blockbuster out of business.
Month-over-month (or MoM) growth is one of the keys to determining how fast your startup is growing. This key metric is what venture capitalist investors often use to make their investment decision. If you aren’t growing your key performance indicators every month, then you’re in trouble.
Some vital month-over-month growth metrics could include users, revenue, profits or retention. The exact growth metric you should watch varies per startup, but overall, you need to be growing some aspect of your business in a positive way each and every month.
Viral arc based growth
This performance indicator reflects your startup’s trajectory for growth. A viral arc based growth tactic involves users referring other users and a strong word of mouth approach, meaning people will actively talk about their experience with your business, product or service.
Slack, a messaging app for teams, went viral because people couldn’t stop discussing their amazing experience using the platform. In under a year, the company became the fastest growing SaaS-based platform and continues to have incredible success.
While all entrepreneurs wish there was a guaranteed way to determine a startup’s success, the fact of the matter is there can’t be, as every startup has its own journey. Your startup’s vision will change over time and you’ll continually have to iterate your product. The one certainty with a startup is that the more work you put in, the better results you’ll get back.