A “start-up” is a business that takes on a unique challenge. The challenge is usually a customer demand that has not yet been met.
Customer demand is often hard to identify. Trial and error are often needed. Once the customer demand is identified and quantified, the start-up can focus on finding solutions and turning the solutions into revenue, and scaling up.
These are the two phases for building a start-up: discovery and execution.
The Discovery Phase
The discovery phase is not about acceleration. It is about identifying customer demand and finding solutions to meet the customer demand.
The focus is also on ways to identify customers or users in scalable and cost-efficient ways.
The solution(s) offered can change dramatically during this exploratory phase. The products or solutions meet the minimum viable product standard–if that.
This discovery phase is where the real value of the start-up comes from.
This phase is often paid for by self-funding. It may even involve angel funding or seed rounds. Investors are looking primarily at the idea and the team’s ability to clearly articulate the customer demand they have identified, how much the potential opportunity can generate, and the range of possible solutions that are achievable.
The Execution Phase
The execution phase is about taking the learnings from the discovery phase and translating them into clients or users and scaling the business.
This phase involves taking the minimum viable product and perfecting it. The focus is also on acquiring customers or users as fast as possible.
The founders focus their time and energy on raising capital. They may even bring in professional management to grow and manage the team.
This phase is often funded by series A/B rounds.
First Things First: Discovery is First!
It is common for entrepreneurs to try to rush the process by executing their business model while conducting the discovery phase. This “get started” mentality is understandable, but it can also increase the risk and uncertainty for the business.
These entrepreneurs build small versions of corporate structures. They have the beginnings of product development, public relations, manufacturing, and marketing departments. They do this without having first fully validated the customer market fit and business model.
The discovery phase is critical in building a start-up. The entrepreneur can eliminate the risk and uncertainty of the business by putting time and effort into the discovery phase. This can increase the chances of success for the start-up exponentially.