Fred Wilson of Union Square Ventures says startups are like climbing up a flight of stairs and it is a essentially a five step process.
- The first step you need to climb is building a product, getting it into the market, and finding product market fit. [Seed financing stage]
- The second step you need to climb is to hire a small team that can help you operate and grow the business you have now birthed by virtue of finding product market fit. [Series A stage]
- The third step you need to climb is to scale that team and ramp revenues and take the market. [Series B stage]
- The fourth step you need to climb is to get to profitability so that your cash flow after all expenses can sustain and grow the business. [Series C stage]
- The fifth step is generating liquidity for you, your team, and your investors. [IPO or the Secondary Stage]
That is also a good way for founders and chief executives to create an honest to go report card about the success or lack of success of their operations. I highly recommend you read the full post.