There are only 2 stages to any company

I’m not sure why people — both investors and entrepreneurs — make things so complicated.

There are only two stages to any company:

  1. Will it work?
  2. How big could it be?

Once you have at least one person that you don’t know paying you at least $1 for your product, you’ve passed the first stage. Congratulations, you’re not a startup anymore — you’re a business.

The second stage is where investors and entrepreneurs should focus their conversations:

  • If there are ~1,000 potential customers, you’ve got a great business… but it’s probably not big enough for investors.
  • If there are ~10,000 potential customers, things are starting to get interesting for you and the angel community.
  • If there are >100,000 potential customers, you’re on to something that will probably excite venture capital firms.

Pro tip: if you find yourself — both investors and entrepreneurs — spending more than 50% of any given meeting talking about the product, something’s wrong. In VC, we make our money via the growth of the business — not the product itself.

Don’t let your mentors confuse you, business isn’t all that complicated: sell one thing to one person you don’t know, then repeat. Ideally, get faster at it along the way.