Stabilization (5)

Purpose

“In the Stabilization stage (5), your startup spends time fixing the holes in its processes. It’s not ready for scaling up when the foundation is unfinished. You work on the second challenge of Product/Market Fit: going through the remaining unvalidated hypotheses concerning customer channels, business partnerships, and other parts of your business model. And you have to delegate work to a qualified management team that knows how to scale up a business while at the same time getting funding to pay for the acceleration stage, possibly in a so-called Series A round, led by venture capitalists.

The Validation and Stabilization levels are together often referred to as Customer Validation and the search for Product/Market Fit. They are the early and late childhood stages of your startup. At these two levels, experimentation and learning are all about exploring the world and understanding the options. It is the part of the lifecycle where you first build a product that many people want, and test whether the business model is repeatable, profitable, and scalable.

It makes sense to distinguish two separate stages for Product/Market Fit. In the Validation stage, you do things that don’t scale and you cut corners while validating the most essential hypotheses about your product. In the Stabilization stage, you fix the things that aren’t scalable and get your business model ready to become a scaleup. Many founders, entrepreneurs, and intrapreneurs find it difficult to make this distinction because most startup literature treats Customer Validation and Product/Market Fit as one stage. But young kids and older kids play by different rules. You don’t need a scalable organization until you have a proven business model. Trying to make things scalable before knowing that your product works is not a smart thing to do.

The Stabilization stage is the last one where the business is still treated as a startup. From the next stage, we consider it to be a scaleup. It leaves its childhood years behind and shifts up into the world of grownups.”