Startup Gates and Beyond

It took me 35 years to discover these Five Gates to Turning Your Idea Into a Successful Startup. If you enjoyed this series, share it with a friend. To catch up, go to paparelli.com.

“We need a common language. We need a methodology we believe in and follow,” said my friend Mike who leads a startup incubator.

I said, “I’m writing a series of blogs which may be useful. They are called the ‘Five Gates to Turning Your Idea Into a Successful Startup.’

“It took me a lifetime of working as an entrepreneur and most recently as an angel investor who works with entrepreneurs to get to this answer.

“I think it embodies the principles of Customer Discovery and Steve Blank’s Lean Startup ideas. It is simply my way of thinking about successful startup steps based on my experience.”

“What are they?” he asked.

The Five Gates to Turning Your Idea Into a Successful Startup include:

Gate #1: Define the problem in the market you intend to solve.
Gate #2: Define who owns the problem.
Gate #3: Discover if it is a problem they want to solve. Is it important enough to them?
Gate #4: If they want to solve it, how much will they pay to do so?
Gate #5: Knowing what they’ll pay, can you build a profitable business to solve this problem?

I was so proud of myself after telling him my methodology. I was sure this was the answer he was looking for.

But I was wrong.

He opened my eyes

Mike said, “That’s good for an entrepreneur who is at the idea stage, but what about a later stage company?”

“You’re right. I came up with this because this is where I hang out. I am and always have been a seed stage investor. I love working through these product-market fit problems with the entrepreneur. It’s who I am,” I said.

“We have companies in our incubator who can really use your ‘gates’ methodology. But most of the companies we help are past that. They aren’t profitable yet, but they sure as heck figured out the problem they solve and who they are selling to,” he explained.

He continued, “I believe we need a common language for each stage of company we deal with.”

This was the breakthrough.

Once an entrepreneur exits Gate #5, a viable business is created. But this new business now needs to grow.

This includes:

  • Building and coordinating the leadership team.
  • Getting to a clearly identified market.
  • Building brand and market identity.
  • Designing a repeatable lead generation and sales process.
  • Building a development team with a dependable delivery process.
  • Building a customer onboarding and support team and process.
  • Nurturing a continuous, value-add investor base and network.

In my experience, these are the next steps after an entrepreneur exits the startup phase. Giving birth to a new business is really difficult. Growing a business to that first $1mm in annual recurring revenue is an even bigger challenge.

But it doesn’t end there.

There is the next stage of scaling the business. I’m not even going to try to describe what might be the next steps there. I’ve been an employee of businesses which were at this stage and beyond. I’ve even been fortunate enough to invest in a couple who got there. But this is where I start running out of gas. My experience and my interest is in the startup stage. That’s my sweet spot. And I love it.

Startup is all about living on the edge.

It is a fight for the right to survive. I like this. This is me. But to each his own. It takes all kinds of entrepreneurs, business people, advisors, and investors to go from startup to multimillion-dollar valuation and then on to maybe even a unicorn.

And each stage has its challenges. Its gates if you will. Its own language. No one is good at every stage. But we can each be great at our chosen stage.

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