StartUp vs. ScaleUp

This entire playbook reflects experiences collected while working at multiple companies, all of which have been ScaleUp businesses with sustained growth. Depending on the stage or scale of growth, some Product Management principles might differ, so we think it’s worth defining the type of companies we are addressing:

Understanding Stages of Businesses

Companies, both B2B and B2C, typically go through several stages each of which comes with its own characteristics. We don’t want to go into the details of each phase here but only highlight some key aspects.

  • StartUps in the seed stage or early funding stage are typically small teams pre-revenue. Their primary focus is on experimenting and iterating their offering to find product market fit. This also is characterized by less mature operations, processes that are typically more ad hoc, and organizational roles not yet well defined. Beyond the product, also the business model might still not be clear yet.
  • Compared to that, ScaleUp (or growth stage) companies already have larger teams, with some initial organizational structure and areas of responsibility. Most importantly, ScaleUps have shown a product-market fit from which they generate significant revenue streams. As the name suggests, their main goal is to scale their business and to reach a broader audience — for which most often additional funding is raised. In addition, ScaleUps will constantly improve their maturity in terms of operational processes such that the organization can efficiently handle the growth. Given the existing revenue, the main elements of the business model have been established and will be optimized. These organizations may or may not yet be profitable depending on investments in growth.
  • After ScaleUp, companies may move into the expansion stage focused on maintaining their growth trajectories while improving profitability. Often, that includes expanding into new geographies, extending product lines, strategic partnerships as well as mergers and acquisitions.
  • A mature company has somehow reached a plateau in terms of business, market reach, and profitability. It’s well-established and has a proven product and business model as well as steady revenue streams based on a stable customer base. The main focus is to maintain its market position, potentially supported by partnerships or acquisitions.
  • Finally, a company at the decline stage will experience declining revenues, market shares and/or profitability. Disruption is a key aspect here when markets change completely, new technology is being introduced and competitors emerge — most likely being StartUp or ScaleUp companies.

From Founder-led to Spider in a Web

Founder-led StartUp
Founder-led StartUp

Founders are responsible for defining a StartUp’s vision, mission, and long-term goals. For that, most input into strategy and roadmap will come from them. In fact, some of them will act as Chief Product Officers — regardless of whether they have that title or a different one. Additionally, the company is small enough to allow founders to directly engage with everybody.

At a later stage, a Product Management team will be in place acting more like a Spider in a Web: The PM team will shape all aspects of the product but in order to be successful, they need to collaborate across the entire company. And, vice versa, whenever a problem occurs in these other departments, the PM team will notice. For example, poor quality or bad user experience will result in Customer Success being flooded with complaints — who then in turn will come back to the product team in order to address these issues and prevent churn.
PM as Spider in a Web
PM as Spider in a Web

From Early Ideation to Customer Discovery

Early Stage Founder Running Ideation
Early Stage Founder Running Ideation
In alignment with StartUps still being very much founder-led by their very nature, most ideas for solutions will also come from founders. Actually, this is why they founded the company: because they believe they could build a (better) solution to serve the needs of customers. At this early stage, lots of ideas will be produced all of which need to be validated against the Four Key Risks but most notably to make sure that there is an actual value for the customer.
When the company is more established, and already has a relevant customer base, involving these customers in product discovery becomes key. Whatever frameworks are being applied and whichever tools are being used (see part 3 of this playbook) — Product Management has to implement an appropriate process to collect and validate ideas as well as to test solutions.
Customer Discovery Cycle

From Focus on Value to PMF and Beyond

Build Measure Learn in a StartUp
Build Measure Learn in a StartUp
When ideas are being generated at a high pace in an early-stage StartUp, the main objective is to as quickly provide a unique value to customers by providing solutions for underserved needs. Combing back to The Four Key Risks, the main focus here is on value — because if a solution is of no value to customers, then everything else doesn’t matter.

Once a working solution for a customer problem has been found, it is important to address product-market fit (PMF). This implies that not only do customers want the product but also that appropriate strategies for Marketing and Sales are in place and the product can be built, sold, distributed, and operated in a profitable manner. Hence, the responsibilities of Product Management go far beyond just building features:

Beyond PMF for ScaleUps
Beyond PMF for ScaleUps

From Seed Funding to Serious Investors

Typically, companies are going through various stages in terms of financial investors. And while there are no strict boundaries and lots of variations in that process, a ScaleUp company will usually have way more demanding investors. They will challenge strategy and execution; they will require more formal decision-making and specific reporting structures; they might even participate by way of Boards of Directors. Specifically for the Product Management leader, most notably a Chief Product Officer, will have to be able to speak up, convince, and win that group.

From Seed Funding to Serious Investors
From Seed Funding to Serious Investors

From an Idea on a Napkin to a Well-Shaped Strategy

Idea on a Napkin
Idea on a Napkin

At an early stage, it is important that founders are aligned around their core vision as well as key values that are important to them. Not much formalization is required, everything fits on the proverbial napkin.

Once the company has grown to be a ScaleUp, it’s essential to precisely define its mission, vision, and strategy. Even beyond that, communication of the strategy and how it impacts the roadmap becomes a key responsibility of the Product Management team so that these are fully transparent to every single employee. Every. Single. One. Of. Them.

More on that topic in part 2 of this playbook.

Vision Mission Strategy House
Vision Mission Strategy House
Previous Chapter
Chapter 3:
Focus on B2B
Chapter 5:
Purpose & Vision
Next Chapter

Table of Contents

Part I: Introduction
Chapter 1:
Preface
Chapter 2:
The Four Key Risks
Chapter 3:
Focus on B2B
Chapter 4:
StartUp vs. ScaleUp
Part II: From Vision to Roadmap
Chapter 5:
Purpose & Vision
Chapter 6:
From Vision to Product Mission
Chapter 7:
From Mission to Product Strategy
Chapter 8:
From Strategy to Product Roadmap
Chapter 9:
From Roadmap to Product Backlog
Part III: The PM Process
Chapter 10:
Process Overview
Chapter 11:
Idea Collection
Chapter 12:
Problem Discovery
Chapter 13:
Problem Definition
Chapter 14:
Solution Discovery
Chapter 15:
Solution Validation
Chapter 16:
Delivery
Chapter 17:
Distribution
Chapter 18:
Optimization
Part IV: Life as a Product Manager
Chapter 19:
Archetypes of Product Managers
Chapter 20:
Traits of a Great Product Manager
Chapter 21:
Competency Assessment
Chapter 22:
Transitioning into Product Management
Chapter 23:
Business Acumen for Product Managers
Chapter 24:
Communication as a Product Manager
Chapter 25:
Implementing Customer Discovery – A Case Study
Part V: Product Leadership
Chapter 26:
From Individual Contributor to Product Leader
Chapter 27:
Onboarding New Product Managers