When a startup is in an advanced stage, and it is time to scale, the
decisions that it makes are fundamental and can determine its future.
There are usually three types of challenges. The first is to conquer the
market, trying to attract as many customers as possible. The second is
about creating a new product, because if we don't keep innovating, our
products will soon become obsolete and we will most likely be wiped out
by the competition. The third challenge is what Marc Andreessen calls
"everything else” that is, building the company around the product and
distribution; developing competence in finance, law, human resources,
hiring, public relations and investor relations. In the initial phase of
a startup, all these factors are set aside, because the focus is only
on creating the product and building a sales system that works.
There
comes a point, however, where everything else needs to be addressed.
For example, when we have a certain number of employees (usually 50) it
is the right time to start thinking about hiring someone to deal with
personnel management. There also comes a time when it is important to
design an efficient distribution system, because the better we are at
creating channels that work, the easier it will be to sell other
products to our customer base. Mergers and acquisitions are often
underestimated, but they are strategic moves that must be taken into
consideration at this stage, as is the question of prices, which must be
given a lot of thought. There is always a tendency to think that we
should hit the market with low prices; on the contrary, setting high
prices can provide two advantages. The first is that we will understand
whether the product we have created really does serve people (in which
case a higher price will not be limiting); the second is that we will
have more liquidity to invest in research and development, marketing and
sales, so that we can conquer our reference market as we desire.
