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Hi, I’m Brad Feld, a managing director at the Foundry Group who lives in Boulder, Colorado. I invest in software and Internet companies around the US, run marathons and read a lot.

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Company Stages – Revisted

Comments (3)

A few days ago I wrote about the transition from a small to medium to large business.  I had a few people write to me with additional questions, including requests to define the sizes, talk more about the issues during the transition, and make suggestions about how to address things.  One of the notes came from a long time friend – Barry Culman – who is currently the president of SPADAC (Spacial Data Analytics Corp.)  I’m not involved in SPADAC, but Barry shared a framework that he used recently at a management retreat to explain his view of the evolution of a company.  Following is a quick summary of the stages according to Barry.

Birth

  • Idea created
  • Product or service utilized to deliver idea
  • All energy on creation
  • Leader is the core driver of revenue
  • No process or structure
  • Project or products – not a business

Teenager

  • Add overhead and infrastructure
  • Grow revenue base
  • Leader comes “in-house”
  • Cash is King
  • High energy
  • All executives involved in all parts of the business
  • Everyone feels like “I know what’s going on”

Young Adult

  • Add process and structure
  • Profitability dips
  • Must determine “who we are” / what do I want to be when I grow up
  • Leader is an evangelist
  • Separation of duties
  • External funding
  • Loose budget
  • People issues being to appear

Adult

  • Answer to board / investors
  • Tight budget controls
  • Consistent processes
  • Leader deals with external forces
  • Business is in a steady state
  • Emphasis on managing people

Senior Citizen

  • Death or Rebirth

While I don’t necessarily agree with every aspect of this and would likely cast some of it differently – especially based on the type of company (e.g. bootstrapped or venture backed), I think Barry’s framework is great and I appreciate him letting me share it with you.

  • http://andrewchen.typepad.com Andrew

    Would love to hear your ideas around how this process changes if it’s bootstrapped versus venture-backed. Maybe worthy of a third post on the topic?

  • http://theprogressbar.com Dave Evans

    I second that the change in procces in regards to funding type. Non sequitur alert: did you see the article in thge NY Times today about dehydration and cramping?

  • http://www.pascalsview.com Pascal Levensohn

    Brad–

    For venture-backed companies, I have found it useful to divide them into four distinct development stages: (1) seed funding and product development; (2) early commercialization; (3) late stage expansion; and (4) exit through either an acquisition or an initial public offering (

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