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Foreman: Examining the ‘Startup J Curve’

In his book, The Startup J Curve, noted entrepreneur and angel investor Howard Love essentially states that there is no straight line from startup to sustainable success. Rather, it follows a J curve, where the company initially dips after it starts, explains Techwire contributing writer Rich Foreman.

In his book, The Startup J Curve, noted entrepreneur and angel investor Howard Love essentially states that there is no straight line from startup to sustainable success. Rather, it follows a J curve, where the company initially dips after it starts. The dip can occur for several reasons:

  • Product takes longer to develop
  • Customers don’t embrace the initial product
  • The business model doesn’t quite work
Love describes this dip as the Valley of Death. A young startup needs to be able to crawl out of it before running out of cash. Much of his book describes strategies for working through the Valley of Death.

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Here is a description of the six phases of the Startup J Curve:

  1. Create: This is where the initial excitement occurs for a startup and three elements come together: the idea, the team and the money. This is the best time to raise money because the startup is selling the dream.
  2. Release: This is where a startup releases its product to market and where the market provides feedback. It’s where the rubber hits the road and reality sets in. It’s at this phase where founders really need to listen to their customers.
  3. Morph: In this phase, the startup needs to make adjustments on the product or business model based on customer feedback. At this phase, there need to be several iterations until a product market fit is achieved.
  4. Model: In this phase, the startup needs to optimize its business model. The goal is to get to a point where there is a direct return on investment (ROI) if more money is invested in the startup.
  5. Scale: After the business model has been nailed, this is where investment into the startup is able to scale the business.
  6. Harvest: This is where the startup graduates to a fully established business and is where the founders have the opportunity to reap the benefits of their labor. It’s also where they need to decide on what direction they would like to take, such as an IPO, acquisition, etc.
A startup founder needs to be aware of where they are on the J curve. For example, if the startup focuses on scaling strategies before actually nailing the business model, the odds of success are diminished. This video is a great overview of the Startup J Curve.

If you like to meet Howard Love and get a copy of his book (while supplies last), he will be speaking at Startup Grind Sacramento on Dec. 13, 2016.

Rich Foreman is a contributing writer for Techwire. He is the CEO of Apptology, a Sacramento-based mobile application development and mobile marketing company. He also is the Sacramento director of Startup Grind.