The Start! Matrix (Beta): Transforming Ideas Into Startups

We all have our Start! moment. The moment when we ask the "what if" question. The moment when we decide to take an idea, transform it into an entrepreneurial journey and build a startup.

But not all startups are the same! it is a common mistake I observed often in the past few years. In fact, Steve Blank, the father of modern entrepreneurship identifies six types of startups:

1. Lifestyle Startups: Self-employed folks.
2. Small Business Startups: Feeding the Family.
3. Scalable Startups: Born to Be Big.
4. Buyable Startups: Born to be bought.
5. Large Company Startups: Innovate or die.
6. Social Startups: Mission - Difference.

He also highlights the importance of market types when developing an idea into a startup. Each type of market differs in terms of customer, competition and risk. Another area treated lightly by most entrepreneurs and mostly addressed when executing the business model rather than while designing the business model.

The market types are: Existing market, Re-segmented market (based on an existing market) and new market.

For some time now, I have been working on a new framework that will allow entrepreneurs (especially first time entrepreneurs) design better startups and help their ecosystem offer better support services.

I call it the Start! Matrix.

The matrix evaluates startup ideas according to two main variables: Value proposition (existing/New) Vs the tech needed to deliver it (using Existing Tech/ Developing New Tech).

Accordingly the entrepreneur is capable of knowing clearly what type of startup his/her idea can develop into and in what type of market. More details further in the article.

The matrix only covers the first five types of startups.

First allow me to calibrate some definitions with you:

• Existing Value proposition: When a startup is addressing a current customer problem in the market with a solution that is similar to what is already available in the market.
• New Value Proposition: When a startup is addressing a newly discovered (for a new customer) /already known problem in the market with a completely new solution that is different to all what is already available in the market.
• Existing Tech: When a startup uses an existing technology or repurposes it to offer its main value proposition, manufacture/produce its main value proposition, or automate the main activities needed to offer its main value propositions.
• New Tech: When a startup develops a completely new technology (using R&D) to offer its main value proposition, manufacture/produce its main value proposition, or automate the main activities needed to offer its main value proposition.
• Value Tech: Is used to refer to when we materialize a value proposition into a tangible product or service that is intuitively and reliably usable by a customer.
• Value Tech Validation: Referring to all the techniques associated with the exploration and discovery of the feasibility of the value proposition. (UI/UX Validation)
• Value: Is used to refer to both customer value and company value. Creating value for the customer and by the customer.
• Value Validation: Referring to all the techniques associated with the exploration and discovery of the potential of the desirability and viability of the value proposition. 
• Business Model Four Dimensions: Describing the desirability, feasibility, viability and adaptability of any business model. To better understand the four dimensions of a business model, go here.

Now let us understand the Start! Matrix in depth

The Matrix has 4 blocks. The following describes the mostly observed traits in each block.

Block 1: Startup ideas that are based on an existing value proposition and existing tech.

• Startup Type: Lifestyle startups / small business startups. I would like to add here "high potential SMEs" which are small/medium businesses that leverages technology to grow its business faster than the typical SME.
• Market Type: Entering an existing market.
• Customer: Known
• Business Model: Known
• Founder Main Focus: Pricing, Key resources (Strategic assets & Value chains) and customer relationship (personal & direct relationships)
• Funding to Start: Minimum to Average
• Risk: Average

Block 1 startups are the backbone of any economy. They are the SMEs that will create jobs, pay taxes and create middle class growth.

Block 2: Startup ideas that are based on existing value proposition but using a new tech.

• Startup Type: Buyable startups / scalable startups
• Market Type: Re-segmented Market
• Customer: Known ( Niche-Low cost )
• Business Model: Known (impacted with new technology)
• Founder Main Focus: Cost structure, Key Resources (manufacturing capabilities, intellectual properties or pattens), Customer Acquisition Costs and Customer Relationship.
• Funding to Start: Average to High (depending on R&D needs).
• Risk: Average to high

Block 3: Startup ideas that are based on a new value proposition but using existing tech.

• Startup Type: Scalable startups
• Market Type: Re-segmented Market - New Market
• Customer: Known ( Niche-Low cost) - Unknown
• Business Model: Known (impacted with the new value proposition) - Unknown
• Founder Main Focus: Revenue stream type, Pricing, Customer Acquisition Costs & Customer Relationship.
• Funding to Start: Average to High (depending on customer acquisition needs)
• Risk: Average to high

Block 4: Startup ideas that are based on a new value proposition and new tech.

• Startup Type: Large Company Startups
• Market Type: Unknown
• Customer: Unknown
• Business Model: Unknown
• Founder Main Focus: All four dimensions of designing a new business model ( Desirability, Feasibility, Viability and Adaptability)
• Funding to Start: High to Huge!
• Risk: High to MONUMENTAL!

Block 4 is a very special block and it is reserved to the league of legends. Think Elon Musk when you approach this special block! Mr. Musk has conquered block 4 with his startups.

Examples

The following is an example of some of the famous startups that you might know and where they belong on the Start! Matrix at the time they were launched.

Kindly note that startups don't stay where they are and move on the matrix as they progress and innovate to grow. That will be the topic of another article coming soon. Also, please note that the funding dimension is an expression of how much money a startup needs to start and not to scale.

Now that we understood the Start! Matrix, the question is how is this helping in making a better ecosystem for entrepreneurs?

1. Not all startups are the same. They have different needs when it comes to funding, mentoring, support, training etc... The matrix puts this fact into a clearer perspective. It will also give the entrepreneurs a better understanding of where they are and what they should do next. In other words, it will take the mystery out of the startup founding process.
2. Building a startup is not about the"business model". It is about the business model within the context of a market (and industry). Many entrepreneurs, mentors and trainers go directly to the business model while putting minimum emphasis on the fact that the business model is the blueprint of the strategy needed to tackle a market type and market structure).
3. Funding needs to start. Not all startups are the same. Accordingly they have different funding needs to start and completely different funding needs to scale. They are not all the same and funding should not be a one size fit all funding ticket.
4. Knowledge and skills needs. If you think about it, entrepreneurs in block 1 will need a basic MBA education to be able to compete and build their companies. Block 4 will need more focus on embracing Lean Startup and design thinking as a mindset at first and followed by cementing the concepts with the tools and techniques. Very different needs, very different resources needed.
5. Incubation program length. Startups in block 1 can get the basic three month incubation program where they can polish their strategy and find some funding to start. While startups in block 4 will most probably need up to two years support to design and validate their business models, formulate a successful strategy to enter the market and raise adequate funds to start their companies.
6. Growth and risk potentials. The matrix takes away any illusions out of growth and risk potentials. It clearly puts the startup and its potential into perspective for the entrepreneurs and allows them to clearly understand where they are and what kind of journey they are about to embark on.
7. Common language. The matrix offers a simple yet in depth common language that can unify concepts between entrepreneurs, mentors and investors when discussing a startup and its potential.

So you identified your block on the matrix, what is next?

For entrepreneurs with a startup idea in Block 1

1. Market Sizing (customer is known, market is known)
2. Research Known Business models
3. Market Attractiveness (based on adoption curve)
4. Focus on Viability ( Costing and Pricing)
5. Typical Market Research + Sales Funnel

At this point, you should have enough information to decide whether to persevere or pivot your startup idea.

1. Piloting (Business Model Stress Test)
2. MUST Work hard on innovation to grow.

For entrepreneurs with a startup idea in Block 2

1. Market Sizing (customer is known, market is Known)
2. Research Known Business models and identify how it is impacted by your new tech 
3. Focus on Feasibility and Viability (costs)

At this point, you should have enough information to decide whether to persevere or pivot your startup idea.

1. Value Tech Validation ( tech proof of concept + validate the tech in terms of UI/UX)
2. Leverage Partnerships

For entrepreneurs with a startup idea in Block 3

1. Customer Discovery (Customer is not yet satisfied (niche/low cost market- customer is Not known for new market)
2. Research Known business models and identify how it is impacted by customer segmentation/value proposition)
3. Focus on Desirability and Viability (Revenue Streams)

At this point, you should have enough information to decide whether to persevere or pivot your startup idea.

1. Value Validation ( Problem-solution fit)
2. Leverage existing tech and partnerships

For entrepreneurs with a startup idea in Block 4

1. Customer Discovery (customer is Not yet known)
2. Design and prototype business models (Desirability, Feasibility, Viability)
3. Check the model's Adaptability ( Adapt (Think Google) or Rebel (Think UBER) )

At this point, you should have enough information to decide whether to persevere or pivot your startup idea.

1. Value and Value Tech Validation

The Start! Matrix is a simple guide to develop any idea into a startup by considering it within the context of a market, accordingly develop a strategy to enter the market and design the right business model to implement it.

More articles on the subject coming soon. Thanks you for reading!

N.B: If you want the Start! Matrix, please leave a comment with your email and I will forward it to you.

Please note that The Matrix is licensed under a Creative Commons license: Attribution-NonCommercial-NoDerivs.