There are 5 Parts of Every Business, each of which flows into the next:
- Value Creation - Discovering what people need or want, then creating it.
- Marketing - Attracting attention and building demand for what you’ve created.
- Sales - Turning prospective customers into paying customers.
- Value Delivery - Giving your customers what you’ve promised and ensuring that they’re satisfied.
- Finance - Bringing in enough money to keep going and make your effort worthwhile.
Take away any one of these five parts, and it’s not a business.
Roughly defined, a business is a repeatable process that:
- Creates and delivers something of value...
- That other people want or need...
- At a price they’re willing to pay...
- In a way that satisfies the customer’s needs and expectations...
- So that the business brings in sufficient profit to make it worthwhile for the owners to continue operation.
To become a company, a startup must do three things:
Most of the great startups come from a great insight, and a great insight usually occurs when someone is living in the future, and they notice something that’s missing. Then, it’s the job of the founder(s) to return o the present and bring early, true believers with them back into the future.
Next comes the value hacking phase—this involves figuring out what you can build that’s unique AND people are desperate for.
You want to have a value proposition that’s so strong that the customers in your target audience would be irrational not to buy if they knew the truth.
If the truth of your value proposition is super compelling, then growth becomes the exercise of syndicating the truth. If the truth of your value proposition isn’t present, you have to grow by throwing money at the problem.
“When you ask a founder questions like, ‘Why do you think now is the time for this to happen? Why hasn’t it happened before? Why isn’t it going to happen sometime in the future?’ regardless of the market they’re in, they’ll usually have a good answer to those.”
– Mike Maples
Startups are essentially jazz bands 🎷
A big company is like a marching band—people need sheet music to tell them what to do; startups are much different—they’re mostly made up of improv jazz musicians.
Just as the lead performer in an improv jazz group determines the group’s sound direction, a startup founder leads a close-knit team of people attempting to improvise their way to success.
10 companies out of 10,000 every year create 95% of the value in the startup business.
It’s incredibly rare to have a combination of an awesome insight, an incredible startup team—that’s like a jazz band with a composer running it—who can persuade the world to join their movement, and then create a super compelling value proposition.