Setting up and running a successful startup is not magic, it takes a mix of different ingredients for everything to work.

Simply put, we can safely say that starting, building, running and growing a startup is like baking a fruitcake. In a fruitcake, we use a lot of different ingredients but in addition to those ingredients, everything should be done in stages which are thoroughly planned for and carefully monitored so that in the end they bring an end product that is desirable and works.

If you are an entrepreneur, one of the things I bet you’ve thought about is how small businesses transform into large conglomerates. When you begin to think about it on a deeper level, you’ll realize that all businesses, even the world’s largest ones from Apple to Coca-Cola, Uber, Amazon Microsoft and Google began as startups.

Here’s the thing, when you read the autobiography of Steve Jobs written by Walter Isaacson and learn about the founding of the Apple Corporation, I’m sure you will come across how Steve Jobs and Steve Wozniak began their first days buying computer parts and assembling them in a garage and writing the code to create the world’s first PC that was popularly named the Mackintosh.

Today, this part of Apple’s story might be irrelevant especially if you consider that Apple is now the world’s largest tech company valued at $850Bn. But on a deeper level, Apple was once a startup just like the companies I highlighted above and each company in the world as I said, begins as a startup.

How then do they become big multinational conglomerates, you may ask?

To answer the above rhetorical question, we will look into the five stages of the business lifecycle which every startup has to go through from the point it’s conceptualized up to when it becomes a big name in the business world.

But before I delve a lot deeper into the business lifecycle and the stages involved, it’s highly imperative and important that I share the story of one of the world’s fastest-growing startups, Uber Inc.

I sincerely believe that you’ll be surprised to find out that in 2008, there wasn’t a thing named Uber, the company was only founded in a garage back in 2009 but fast forward 8 years later in 2017, the company itself has a market valuation of approximately $50 Billion.

Uber is the perfect example of a company that has perfectly gone through the five stages of the business lifecycle from the conceptualization of the idea up until where the company is today. If you follow the story of the transportation giant and several other companies like Expedia and even Dropbox, you’ll see that the executives and founders in those companies took time to study the business environments and steer their ships, navigating the waters with great precision through the several stages of the business lifecycle until the companies reached the level where they are today.

The Startup Lifecycle

When you ask most people why startups fail, they would tend to point to the market conditions or blaming secondary things like unpractical ideas and whatnot. Yes, although these factors contribute towards the failure of startups, they aren’t the only reasons why startups do fail.

An interesting study was released last year, named the Startup genome report. One of the things that startled me when I went through the report was actually the fact that about 85% of startups fail either due to poor marketing strategies or self-destructive factors.

Let me explain the former decision on poor marketing strategies.

Have you ever wondered why startups like Dropbox or even big companies like Google often invest in creating explainer videos? While you think about that for a bit, let us get to the first stage of the business lifecycle and we will get back to it in a bit.

  1. Seed and Development

Every startup begins with this stage. Take, for example, Uber, before Travis Kallanick and Garret Camp got on to developing the first prototype of the Uber App, they had to put their idea on paper after figuring out a need people had. During this stage, they took their time into understanding the market, including doing consumer surveys to figure out how viable the Uber idea was.

When they were convinced enough that the idea was actually great and could work, they began working on it, making the first prototype of the app to put it to test on the ground and find out if it would work as they said.

  1. Starting up

The 2nd stage is when the business idea had been validated by the market through continuous testing.

It is at this stage when an actual startup has launched the ground including opening the startup’s office on the ground.

In the entire startup lifecycle, this is by far the stage that will involve the highest risk and any company, when going through this stage is susceptible to being impacted greatly by simple mistakes.

At this stage, the key thing is adaptability. It matters for you’re the business to adapt and most importantly to not try fighting the market but accept market conditions as they are and adapt according to the market because survival will be key in this stage.

  1. Growth, Establishment, and Expansion

After the business has been conceptualized and put on the ground, it will now be time for it to grow and reach new markets. In this stage, this is where the introductory paragraphs on failure apply. The first thing that’s important for your business to grow is revenue generation and new customer acquisition. This, in turn, means that the two business processes to focus on at this stage are business development and marketing (sales and marketing).

To explain in detail, I’ll use Dropbox as an example for this stage. But before I go on to talk of Dropbox, there is an interesting company that survived stages one and two but immensely failed at this stage. One of the companies was Nirvanix, a startup that did what Dropbox did but failed spectacularly at it.

Unlike Dropbox, Nirvanix failed because it did not make use of modern methods of marketing such as having a great explainer video of their product made. Apart from that, Dropbox succeeded in growing their company to being the world’s largest cloud storage company because they expertly branded their product in a way that no other company could compare which was just amazing.


Startup explainer videos are key for any company if they are to grow particularly to survive beyond the third phase of the startup lifecycle. But generally, if you’d been confused about how small companies grow big, these are three stages that explain how it happens.

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