The Startup’s Hierarchy of Needs
The most value I got from going through an incubator (AngelPad) was the basic startup education. If you’re doing a startup for the first time, I whole-heartedly recommend it. The environment was such that we were always around like-minded people who went through similar challenges and a lot of the learnings would just circulate constantly.
One of the most fundamental lessons that I learned there is what I would call the Startup’s Hierarchy of Needs (an analogue to Maslow’s Hierarchy of Needs), or TMVPT.
Just like Maslow’s hierarchy of needs, this pyramid shows which aspects of the startup are more fundamental than others. The thinking goes like this: first you start with building a team. Then, based on the background of the team, you pick a market and a go-to-market strategy. Then you come up with a vision — the end-state of the world in which your product will thrive. Then you build a product. Then you build user traction (may or may not include revenue).
In reality things don’t happen quite in this order: the process of innovation is more chaotic. But the directional dependency of it still applies. Meaning, if for example, you have a product, but there are issues with the market (eg too small, or difficult to penetrate), then you have to throw away the product and the vision and start over rethinking the market. Or if you have a vision, but there are issues with the team (eg not the right fit, cofounder disputes or not the right backgrounds), then you have to throw away the vision and the market and start over with reforming the founding team.
You can use this framework to figure out what your next focus should be as you progress towards an early funding round, like seed or series A.
In addition, the more fundamental levels often weigh more in front of investors. For example, if you have a really really strong team, a good enough market and a decent vision, you could get by getting funding with nothing else. Basically you raise money with just a team, a dream and a keynote presentation. (This is generally rare, however, and I don’t recommend it — will talk about this in a future blog post.)
Now, for the reverse, as an example, if you’re an average team, in a crowded market, then you will really really need some solid traction in order to stand out in front of investors.
This framework has helped me navigate the early stages in the past and is one of the most valuable tools to understanding what investors are looking for. It brings clarity and focus in situations where there’s anything but.
