When does a Startup grow up?

Written by Niko Skievaski on Jan 22, 2016 11:00:00 PM

In 2013 I left big business and started my first company. I abruptly discovered that all the stuff I learned in business school was not applicable. You can’t market a product that doesn’t yet exist. You can’t manage employees when you don’t have any. You can’t create analyses and forecasts when there’s absolutely nothing predictable. I learned that another set of skills was required for startups, skills more appropriate for the tasks of proposing and testing hypotheses than for efficiently managing an enterprise. I found that a startup is not a business at all; it’s an entity searching for a scalable business model. 

Over the next three years and a dozen or so startups later, that idea has anchored my day-to-day being. We are not a company: don’t plan, just execute, add value, and see what happens. Learning is better than revenue. Revenue is better than profit. Focus on hypotheses, tests, validations, and iterations. Ideas like these are the basis of how many startups search and they’re poles apart from the activities of profit-minded big companies. 

My big question this year is regarding when a startup starts to make that transition. I feel like I’m beginning to understand how to start. And I’ve seen what the other side looks like working at big companies for the seven years prior. But when does a startup know it’s ready to turn the corner? And does it happen all at once or is it a slow transition? Is it a shift in focus or a growth in operational capacity? 

In 2014 we started Redox. We could probably consider that the year we searched for a problem worth solving. We had a ton of ideas and no focus. We only knew we wanted to help spur innovation in healthcare. By the end of the year we had honed in on the problem and the beginnings of the technology that could solve it. We still had little idea of what to build first, which stakeholder would pay for it, and if that’d be enough to cover costs. Like many modern tech startups, we had hopes of sitting in the middle a two-sided market without the answer to “chicken or the egg?” I understood how much risk we still had ahead of us and conveyed that to potential investors. Somehow we raised a seed round. (I don’t know if I could ever be an angel investor.)

Last year, I’d categorize our activities as validating a model through a stomach-dropping pendulum of pivots. We put efforts towards selling to one side, then the other, then back again. We participated in three different accelerators in the hopes that they would help us figure that out. We built something we could try out pricing on. In the end we went live with our first handful of sites and convinced more investors that we were headed in the right direction. 

And that brings us up to now. Fresh off a Series A, we’ve searched, found, and repeated on delivering clear value propositions to at least one side of our network. Is it time to whip out those business school skills yet? Do we start developing processes around what we know has worked and hiring people to scale those activities? We’ve definitely started down this path with some functions in the business. The first things that felt stable and repeatable, we hired for. Dedication and ownership over some of these tasks has brought a level of quality and expertise I could only dream of. And this way our founders and early employees can get back to doing what brought us here: the not scalable, unpredictable, and unknown unknowns. We still don’t know how to attract certain types of customers. We still don’t know how to monetize the other side of our network. There are still use cases and value propositions that customers haven’t used yet.

My misconception was that I thought at some point we’d know when it’s time to scale. Like we’d hit a mark and start hiring to fill roles rather than hiring badass generalists. It looks as though it’ll be a more gradual transition. One day I hope to take a step back and observe this startup operating as efficiently as a business should: delighting customers while maximizing profits. But I sincerely hope we don’t lose the quick and innovative edge that being young and fragile brings, something that big businesses so often sacrifice.

Niko Skievaski

Written by Niko Skievaski

Co-founder of Redox. Taught healthcare economics at Epic. Rants about interoperability and technology adoption.

Topics: Business

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