Revenue, Users Or Technology

For a startup to survive, it must discover early on what its’ goal is. In the end, every startup has three options: Build a Revenue Generating Machine, Build a User Generating Machine or Build a Technology or Data Asset.

1. Revenue

   This is likely the single most common and also the most obvious goal for startups that turn into long-term companies. The goal of these organizations is to generate sustainable revenue growth. What is sustainable revenue growth? This is revenue growth that creates either enough growth (to attract outside investment) or net income to warrant continued re-investment.

2. Users

   The second option a startup has is to build a user base. This is famously the path that Mark Zuckerberg was so passionate about pursuing during the early days of Facebook. These companies look to build large user bases that they - or another company - can eventually monetize (or leverage in another way). Many of the companies Mark Zucerkberg has subsequently acquired have pursued this path (Whatsapp and Instagram to name just two).

3. Technology / Data Product

   The third path a founder can bring their startup down is to build a technology or data asset. In the case of technology, a startup develops technologies that are particularly difficult for another organization to develop because of the resources and/or specialty required to create it. A startup subsequently builds a business by licensing, going straight to market or otherwise selling the technology they have developed. A data asset is very similar except rather than focusing on building a technology they build a data set that is valuable to another entity (rather that a be a future acquirer or customer.

Every startup I can think of falls into one of these three categories. For an entrepreneur to consistently and definitively lead their company they must have a clear picture of where they are going and what they need to accomplish. Understanding what end goal a startup is driving towards can be helpful to define what tradeoffs to make and when not to compromise.

So what will it be - Revenue, Users or Product?