4P Theory of a Start-up

The four major parameters of a start-up equation are founder(s), employees, customers & product(s). The other components of the ecosystems are partners, vendors, investors and VCs. Seed capital & funding amount also play critical role in the start-up dynamics. However it is all about people (founders), people (employees), people (customers) and the product when it comes to measuring the potentials of an organization.

Based on these parameters, a start-up can be classified into one of these three stages:

• 2P Stage: It is the early stage of an start-up. The product is still in the idea form & the only set of people associated with it is the founding team.
• 3P Stage: Some employees have joined on-board and are slogging towards making the first prototype of the product.
• 4P Stage: The prototype of the product or MVP (Minimal Viable Product) has been exposed to customers. There is some customer base using and evaluating the product.

After successfully surviving the 4P stage, a start-up gets success in terms of bigger customer base, higher revenues and/or adequate funding.

Lets compare these stages based on the following criteria.

Criteria	2P Stage	3P Stage	4P Stage
Entry Criteria	Commitment to start. It can be started without a clear product idea. Commitment is the only key here.	1. Clarity on idea 2. At least one employee	1. Pilot of the product 2. At least one anchor customer
Objective(s)	1. Fine tuning the idea 2. Evaluate potential of the idea 3. Finding Co-founder(s)	1. Pilot of the product 2. Getting first few guys on board 3. Finding anchor customer for the product	1. Capture feedback from the customer(s) 2. Refine product features 3. Bring order in product development
Operational Focus	Survive while networking	Sell while building	Build while selling
Product Development Strategy	PoC by any mean. Big bang model	Small scale/duration pilots. Rapid Prototyping.	Improvise based on customer feedback. Agile development.
Priority list for spending money	1. Networking 2. Setting-up a bare-minimum platform for developing PoC	1. Setting-up an office for some number of employees 2. Hiring extreme end-roles, i.e. either a hands-on CTO to lead/create the design or a fresher if you are taking care of design	1. Fine tuning the product to the customer's need 2. Hiring some mid-level roles
Priority list for NOT spending money	1. Buying/renting out office space/accessories 2. Hiring specific roles like developers, HR, designers	1. Hiring mid-level roles 2. Establishing hierarchy 3. Buying/renting out fancy office accessories (Yes, printer can be considered a fancy office accessory, if you can work without it)	1. Getting expensive talent on board
Exit Criteria	1. Clarity in idea 2. PoC being accepted	1. One or series of pilots 2. Strong core team identified & retained	1. One or series of products 2. Customer base