It All Starts With a Leap!
Achieving staged business milestones is absolutely vital to ultimate venture success, but most new ventures run into boulders and broken bridges along the way. We’ve identified seven key milestones that a venture must cross in order to achieve high-growth success.
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MILESTONE ONE
Big Need, First Target
We call this the Basis of Superiority Milestone.
Finding a large market for your promising new venture idea to grow within is a prerequisite for any business success. It’s so fundamental, we don’t even count it as a milestone achievement.
What really matters is validating two critical components for solution superiority.
Before you can pass Milestone One, your team first needs to quantitatively address two customer-facing questions:
Within that huge market vertical, where are there big, but currently unmet, customer needs?
Who will be your first target customers (your T1s) who have those unmet needs?
In order to reach high-growth success, your venture team must address a specific point of entry—laying a foundation for a competitively advantaged basis of superiority for your Big Idea.
MILESTONE TWO
Superior Solution
Milestone Two is the Forgotten Milestone.
This is often the milestone many venture teams neglect to address; it’s a costly mistake.
In the consumer products world, this step is second nature. It’s a key discriminator to help new venture teams decide which of their many new product ideas deserve to move forward through the decision gauntlet, well before production begins! This is typically not the case within more technology-driven versus customer-driven startups.
Relentless iterating, optimizing, and validating through customer research ensures that your new product or service concept distinctly meets or exceeds your target customer’s unmet needs. It's a key way to increase your odds of success while mitigating unnecessary risk. Proving that your new Minimal Viable Concept (MVC) is a unique and superior solution is too often a milestone that is skipped. Do so at your own peril.
MILESTONE THREE
Threshold Target Delight
Next is the aptly named the Moment of Truth Milestone.
Does your new product or service truly solve the unmet needs of the market customer? Too often, the goal of “product-market fit” is poorly measured, misinterpreted, and abused. What really matters is whether or not your target customer is truly delighted with your new product entry, and that they are also equally thrilled with the customer service that goes along with it!
The achievement of a high level of threshold target delight is absolutely measurable, and your new product or service must now pass two market-proven tests: 1) after use, 80% of your target customers report that they will definitely or probably purchase it when available; and 2) your T1 customers are very likely to recommend your business to a friend or colleague. Your team will achieve a minimum Net Promoter Score (NPS) of 20 or better as a result. Long-term, you will need a 40+ NPS to win in the marketplace!
Is this a tough milestone to pass? Yes. Experience the moment of truth before people begin to pay you for it.
MILESTONE FOUR
Right People Roundtables
The Dream Team Milestone is the next step.
There are few things more valuable to a new startup than the right people in the right place at the right time. To beat the odds of venture failure, there is a long list of things for people to “get right”...beginning with strategy and ending with outstanding execution.
Throughout history, the concept of the roundtable has proven to be a powerful vehicle to obtain deep strategic knowledge, engage diverse perspectives prior to decision-making, and collaboratively plan a course of action, custom-fit for the mission at hand. New venture teams can benefit hugely from this wizened paradigm. Your next milestone is to finalize two of your three most important teams, or what we call right people roundtables.
Before you pass Milestone Four, you should have already created your first roundtable—a world-class and unconflicted strategic advisory board, specifically curated to help the CEO navigate the venture’s specific industry, competition, target customer, market channel, and relevant business models. You can't always pick your investors, but you should always pick your Board of Advisers as early as you can.
Next, given that your venture team is moving into launch mode, it’s now critical to bring on your executive team and other key employees who are highly skilled and are likely to win in the marketplace. Although generalists have their place, it’s now time to engage sales, marketing, customer service, and operations specialists to ensure executional excellence early on in your venture's journey to high-growth success.
Last—and surprisingly least—is finalizing your Board of Directors. This critically important roundtable is comprised of the people who will help take you public or be acquired, and it’s the last of the roundtables to finalize. It’s also a practical reality that you’ll be unable to lock down your Board this early, given that your new investors will require board seats within subsequent rounds of financing.
MILESTONE FIVE
Scalable Customer Acquisition
Welcome to the Lifeblood Milestone, the first vital sign of a successful business.
Two fundamental concepts, taken together, characterize the critical initial market entry milestone that we call Scalable Customer Acquisition.
Thought-leading venture capital firm Wildcat Venture Partners developed a comprehensive measure of initial market entry success that encompasses not only marketing, sales, daily usage, and download trends, but also the viability and quality of the initial business model, product roadmap, and customer service, operations, and launch teams. They define this challenging market entry inflection point as Minimum Viable Repeatability, or MVR. Minimal Viable Repeatability is “the smallest level of repeatability a startup can execute to demonstrate the feasibility of its business model, market/product fit, and marketing/product fit”.1
We use another metric to punctuate how critical this milestone is to your longevity, especially for those within consumer driven markets. Gross margin represents the amount of sales revenue your company retains after incurring the direct costs associated with producing the goods and services you sell, and it underpins your initial pricing strategy, spending levels, and competitive value proposition. Achieving a Minimal Viable Margin helps you set the right pricing, achieve an optimal value proposition, and begin to deliver positive cash flow during the initial market entry phase.
At Milestone Five, achieving Minimal Viable Repeatability, combined with Minimal Viable Margin, provides the lifeblood of new venture sustainability.
Reaching this milestone earns your team the right to responsibly acquire new customers, while becoming eligible for additional venture growth financing.
1Bruce Cleveland and Wildcat Venture Partners, Traversing the Traction Gap (New York: Radius Book Group, 2019), pp. 171-206
MILESTONE SIX
Commercial Viability
The Minimal Viable Business Milestone.
This is the “it’s a real business” milestone. At what point does your startup go from being a high-risk but promising new venture to a real and very viable new business? We believe that there is a specific point when you become a minimal viable business, and it is characterized by achieving three Milestone Six components.
Wildcat Venture Partners offers another measurement pillar for the end of the go-to-market phase. Minimal Viable Traction (MVT) occurs when your company has achieved successive quarter-to-quarter growth for 12-18 months, has completed filling its management team and improved its processes and efficiency, and when its product or service has matured to the point of optimal customer satisfaction.2
Beyond MVT, we call out two additional sub-metrics here to specifically punctuate their critical importance. First, you must convincingly validate that you have achieved Prolonged Customer Retention. You should now be retaining customers within the Early Majority3. Gaining traction and earning loyalty within this period of the technology adoption life-cycle is vital, especially in consumer-driven industries.
It’s also critical that your new business achieves Large Customer Integration, which serves as compelling evidence of your efficacy, necessity, and readiness to scale. This milestone component requires deep and wide customer integration, supported by a large partner’s endorsements and their willingness to offer their valuable customers what they must now consider to be a superior solution to their own.
Altogether, passing these three measures at Milestone Six is a powerful testament to your commercial viability. Cross this milestone and you have earned the right to attempt to achieve high growth!
2Bruce Cleveland and Wildcat Venture Partners, Traversing the Traction Gap (New York: Radius Book Group, 2019), pp.207-237
3Geoffrey A. Moore, Crossing the Chasm (New York: First Collins Business Essential, 2006), pp. 18-46
MILESTONE SEVEN
Exponential Growth
This is the Least Traveled Milestone.
In today’s world of sophisticated data science and artificial intelligence, there are numerous ways to validate when a new business is achieving exponential growth. Pick your favorite measure. Every data trend can now be seen, predicted and verified. Harnessing the Late Majority customer stage of the technology adoption life cycle, Milestone Seven graduates are truly growth rock stars.4 They have exchanged an incremental 10% growth per year mindset for a more explosive 10x venture growth operation.
Singularity University, a global learning and innovation community, says businesses achieve exponential growth by utilizing: 1) technology, digitization, and social collaboration to reach entirely new customer markets, enhance customer service, and open up “foundationally new exchanges of value”; 2) automated and scalable processes to analyze and automate routine activities and disrupt traditional manufacturing or delivery methods; and 3) “uncommon partnerships”, where different types of companies from different industries work together to collectively benefit from integrated value.
The majority of ventures don’t reach Milestone Seven; the companies that do are Milestone Unicorns. They’re the best 10%+ of startups, the best companies to work for, and those who succeeded in crossing the “stone least traveled.”
4 Geoffrey A. Moore, Crossing the Chasm (New York: First Collins Business Essential, 2006), pp. 10-49
LANDING THE LEAP
Successful Completion of All Seven Milestones
The companies that get this far will benefit from their cumulative milestone achievements. Their success can be traced back to when they assembled the right advisers, right team, right culture, and the right board.
They are maniacally dedicated to solving their customer’s unmet needs and then exceeding their expectations. These venture teams operate like well-oiled machines—they’re automated, digitized, socialized, and optimized. They are cash flow positive, have competitively advantaged profit margins, and have earned plenty of capital for further growth expansion. They’ve also created highly strategic partnerships to open up new markets and to close gaps in their service offerings, and they are now firmly cemented as mission critical within any and all of their large customer integrations.
Is your venture ready for high-growth success?
We’ll guide you along these seven critical milestones to ensure you land the leap.
