The Three Phases of Building a Startup Company

Hadi Aboukhater Startup PhasesA new article in Forbes magazine discusses the steps that new tech startups have to take to get off the ground. Jeff Wald and Jeffery Leventhal wrote this article. They go on to claim that growing a tech startup involves a mix of fortitude, attitude, work ethic, risk management, with a touch of irrationality. Each stage of evolving a startup is almost like the beginning of a new company. At each stage of developing a startup; the environment, work pace, and culture can be vastly different. Jeff and Jeffery describe the growth in three phases.

Phase 1 is the idea phase. It involves thinking about a new concept that involves a new, easier, and innovative way of doing things. They describe this phase as staying in your garage until 4am in the morning with friends. They are having a lot of fun with large amounts of stress. There are typically a few people in stage one. There is little structure or process, and a lot of caffeine and gut feelings. There is no need for financing or charts in Phase 1; the people who make it past this phase just find a way to get it done and move on to Phase 2.

Phase 2 is the building phase. This is the phase where the team builds their budget, process, and organization. The team might even have to rebuild itself. If people from Phase 1 are not interested in structure or organizing a real company, then they have to go. This is when the real organization needs to begin. This is the phase where the founders are taking the idea and turning it into a real company. Phase 2 is when the founders have to grow up and finally start their own company.

Phase 3 is the optimization phase. This is the phase when the company is optimizing their budgets, organization, and process. They are finding the best way to make their product work at the lowest cost. This is when the company is thinking in terms of “the long term.” The company is adding a finance team and an HR team as well as integrating sales and marketing. The founders are consistently thinking about scaling different aspects of the company. Debt needs to be paid back and the product needs to fit to scale.

This article is based off of this Forbes article.