Note: Yes I use em-dashes when I write, and no this is not AI.
There are three kinds of startups. I have worked at all three — feel free to guess which is which.
First, hype-driven startups. It may sound bad, but this is the kind VCs like the most. You have something many people want — or at least the vision for it. Traction is obvious, for competitors too. You must chase growth at all cost to stay relevant. Your goal is to raise ever-larger rounds.
Second, customer-driven startups. You have found people who have a real problem; usually problems, plural. The market is underserved, and you know how to help. You start selling them things they need; they like it, give you feedback and help spread the word. Your goal is to be profitable.
Third, value-driven startups. You bet that something will become very valuable in the mid-term future. To be honest, you don’t know exactly in what form or to whom. It requires real tech that nobody has yet. Your goal is to learn, hire a few specialists, create an exclusive IP asset. It requires either initial investment or a niche you can sell intermediate results to. Your goal is to lead the field while staying lean until that value materializes.
None of those models is inherently bad. The danger lies in misunderstanding or forgetting which one you are building.
At a hype-driven startup, growth slows down and you start to chase profitability. You try to monetize your user base. Or blame churn and put the focus on customer satisfaction as opposed to acquisition. Or start investing in build vs buy in hopes to reduce costs.
At a customer-driven startup, you become blinded by an idea and pour your resources there instead of what your customers really need. Or you mistake a temporary growth spurt for the start of an exponential and bet everything on it.
At a value-driven startup, you become impatient. You build premature products showcasing your tech, trying to force a tipping point. Or you listen to your early customers and lose focus, letting their niche demands dictate your roadmap.
Next time you get interested in a startup, try to figure out which bucket it should fall into, then ask yourself if the founders truly understand the implications. It is a telling exercise.