Five Stages of Startup: Level 5 -- The End

Exit, Failure, Graduation, Next, Giving Back
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The five stages of startup I'm discussing are not THE five stages of startup. They're just landmarks, broken down and generalized into something that we can all hopefully use as a guide, not gospel.

This is the final stage of the generalized startup timeline, and with this, we've now covered the entire roadmap, from humble beginning to glorious end. Level 1: The Jump is the period of time when you have a great idea that will become a great product. Level 2: Start is when the company is formed, it figures out how to operate, and launches that great product. Level 3: The Journey is about running and growing your company and selling your product. Level 4: The Grind covers all the ups and downs along the way.

But all good things…

The End can happen a few different ways. There are happy endings, horrible endings, and endings where you just shrug your shoulders and move on.

You shouldn't really do a lot of planning for the end. Your goal is to build an incredible business, one that you want to work on every day for the rest of your life. But let's face it, you're an entrepreneur, and you might find that there are other ideas you'd like to pursue -- ideas that may be totally different from the one that got you where you are today.

If you've done your startup right, there will be several knocks of opportunity at your door, people who want to buy everything you've built, and you'll need to listen to most of those offers. If you've done it wrong, failure -- inevitable, heartbreaking failure -- will come calling instead, and that's a call you've got to answer too.

Oh, and I need to tell you that you can do everything right and failure might just show up anyway. He's kind of a jerk.

Regardless of how you close the curtain on your startup, the end is also a new beginning, and you'll need to know how to start over.


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Exit is another startup buzzword you'll hear a lot. Simply put, it means getting out of the startup phase.

Good exits are the ones where everybody makes money and starts a new chapter. Bad exits are the opposite, where everyone loses money and you don't get to choose what happens to your company. Then there are a lot of exits that fall somewhere in between, mostly good, mostly bad, or even a kind of “to be determined,” where the quality of the exit ultimately gets figured out over time after the deal is done.

When most people talk about Exit, it comes down to one of two options.

The more familiar option to those outside of startup is going public, in other words, shares of the company are made available for sale on a public stock exchange. This is the option where (allegedly) everyone gets rich. But going public happens very rarely, like lightning-strike rarely, and that part about everyone getting rich is also a little bit of a myth.

The second option is less talked about, but it's far more likely for the average entrepreneur. That option is acquisition -- selling all or part of your company to someone else, usually to a bigger company or maybe a big investment firm.

Exit doesn't necessarily mean that you leave your company. In fact, the ideal situation calls for you writing a brand new story for your company beyond the startup phase.

Now, on the flip side, the end can also mean the implosion of your startup -- sometimes your hand is pushing the big red self-destruct button, and other times it's pushed for you.

Failure is something we will cover a lot. A lot. It's a part of everything you do with startup and, like almost everything in life, you have to fail often and learn how to recover if you're to have any chance at success.

I know people already talk about failure a lot. A lot. But very rarely do you get any sort of useful information out of those one-way conversations. It's like that speech I got in freshman year of college, when they told me to look at the person to my right and then to my left, and that two of the three of us would drop out or fail out, and that the only way it wasn't going to be me is if I worked hard and kept my head down and blah blah blah.

I left my first college career less than halfway into it. It had nothing to do with how hard I worked or where my head was at. And then I spent a lot of my startup career being advised that I needed to fail early and often. But then every time I failed it seemed like all of those advisors were nowhere to be found.

I'd rather tell you how to deal with failure than just use failure to try to scare you into working hard. If you're not ready to work hard, don't do startup.

Graduation is the first of three post-Exit concepts that we'll talk about. It's learning how to run your company when your company is no longer a startup.

Graduation happens a couple different ways: It could be when you reach an exit point but you stick around to run the new operation or it could be when your company grows to the point where it's no longer acting like a startup.

This is an excellent position to be in, but since there are already a ton of resources for leaders in the corporate or big-business world, we'll mainly just talk about the transition out of startup and into that world.

Next is a concept for those who don't stick around after exit. Next is starting over, but doing so with all of the experience that comes with having completed a startup. And to be honest, it doesn't matter how successful that startup was, it just matters how much you learned.

Next could be a new company or it could be an entirely different kind of operation. You may become an investor in other startups or you might just start funding some of those ideas you've been saving up, letting other people do the heavy lifting while you navigate. You may try to teach other people how to do what you did, because it changed your life so dramatically.

You may even do some combination of those things, that's me, or you may do something else entirely. I mean, if you want to spend the rest of your life on a beach somewhere, or fixing up old cars, or you want to become a doctor, that's cool too.

Giving Back seems like a throwaway concept, but it's absolutely mandatory. I'm a believer that all businesses need to give back, and I'm a big believer in the necessity of this practice in the startup universe.

Giving back isn't for some do-good or feel-good kind of vibe. Startup just works better when there are experienced people helping inexperienced people get further along. And the kicker is that those who give back usually get just as much in return.

You should actually start giving back early, even from the beginning if you can, but once you get to the end you'll have a lot more to offer.

So now we have a map. In Teaching Startup, we'll tag every entrepreneur we meet, every startup they run, and every lesson we produce with one of these levels. Where you are on the map will dictate what you need to know, how much and what kind of information you'll need to know about it, and how you'll use that information to move forward.

But there's more to startup than just where you are. There's also WHO you are. That's what we'll talk about next, a new set of tags for Five Roles of Startup.

Read the entire Five Stages of Startup series:
Level 1: The Jump
Level 2: Start
Level 3: The Journey
Level 4: The Grind
Level 5: The End (You Are Here)

Read the entire Five Roles of Startup series:

Read the entire Five Funding Sources for Startup series:
Friends and Family

Read the entire Five Kinds of Startup series:

Read the entire Five Reasons for Startup series:
Common Good

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