Why nascent-stage startups need an on ramp to Lean Startup (1)
Why nascent-stage startups need an on ramp to Lean Startup (1)
When thinking about starting a tech business, the nascent stage is unique. If you take away just one thing, let it be this big idea.
If you’re interested in the question “I have an idea for a tech business. Now what?” then Nascent Startups is for you. My definition of a nascent-stage startup 🪺 is an aspiring founder with the kernel of a business idea, but no customers, no product and no funding. It’s a project of exploration constrained by minimal resources. By contrast, an early-stage startup 🐥 has initial customers, product and funding. To be clear, the nascent stage is not simply a smaller version of the early stage. The challenges of a startup with customers versus a startup without customers are tremendously different, so the strategies to navigate those challenges must also be different.
All the founders of nascent-stage startups I’ve mentored tried to utilize Lean Startup, which basically begins: “Our customers stopped using our product and our investors stopped giving us funding. Here’s how we overcame those challenges.” Lean methodologies, such as build-measure-learn and minimum viable product, require customers. By definition, nascent startups have no customers so lean doesn’t yet apply. Founders with just an idea need an on-ramp before they can benefit from Lean Startup. To address this need, Nascent Startups is a set of strategies focused on the first 100 days and first $100 that you invest in your startup.
Another challenge with conventional startup theory is that it covers all aspects of a startup, from idea to exit. Getting the lay of the land might seem useful, but the result is that founders of nascent startups struggle to focus and prioritize. It’s like using a map of the United States to navigate San Francisco. Confused founders set unattainable goals. For instance, I’ve mentored many founders who aim for product-market fit, but that requires customers so, again, it’s impossible at the nascent stage. A journey of a thousand miles begins with a single step. Nascent Startups is focused on just that first step. If your startup progresses to the early stage, you can feel confident that you’ll have lots of conventional theory to rely on. But while your startup is in the nascent stage, the rest of the journey is a distraction.
If startup creation is a 1,000-mile journey, then your best first step is to gauge the odds of success. I've seen too many teams pursue “dumb” ideas, resulting in wasted resources and frustrated founders. Indeed I’ve also made that mistake repeatedly. It sucks. To avoid this pain, Nascent Startups reframes the nascent stage as a project to gauge success rather than jumping into creating a business. Founders can use Nascent Startups to quickly and affordably gauge whether an idea is a 1-in-1,000,000 distraction 💩 or a 1-in-100 opportunity 💪. At the end of the nascent stage, the project may or may not become a business – this decision belongs to you, the founder.
Takeaways
Nascent Startups 🪺 is an on-ramp to conventional startup theory.
A nascent-stage startup consists of just an idea 💡 and your passion to create something from nothing. 🔥
Founders like you can frame the nascent stage as a project to quickly and cheaply gauge whether the idea is an opportunity worth pursuing. 🚦
You might still pursue a 1-in-1,000,000 idea but do so deliberately. ⚖️
About the author: Over the past 20 years I’ve founded 10 startups and mentored 100 founding teams through UC Berkeley and Alchemist Accelerator. My mentees and I have struggled to apply conventional startup strategies to nascent-stage startups. In response, I’ve developed Nascent Startups 🪺: How to spend your first 100 days and $100 when you have an idea for a tech business. I began writing a book (130 pages) that’s evolved into a podcast and newsletter.
Acknowledgements: Thanks to Adam Berk, David H. Martin and Thomas D. for providing feedback on previous drafts of this article.