Do you know the life cycle of a product? Raymond Vernon has shown that all product insertion takes place in four stages. In his study “International Investement and International Trade in the Product Cycle”, he developed his theory of the product life cycle by adapting it to the international market.
- Launch (called birth by Vernon): Little or no competition / The product is sold at a high price;
- Growth: Appearance of competitors / increase in demand = Profitable product;
- Maturity: Intensive competition = price war / Stable sales;
- Decline: Needs Change = Launch of Innovations / Prices and Sales Down.
How to start a startup
Of course, this theory developed in 1966 does not really take into account the specifics of the web. This aspect was developed in 2005 by Paul Graham. This web entrepreneur who became a millionaire after the takeover of his company by Yahoo! in 1998 was also the founder of the famous Ycombinator incubator. He is recognized as a great startup expert whose life he sums up in his famous essay entitled “How to start a Startup”. It divides this journey, which can be likened in a way to the life cycle of a start-up, into 9 stages.
- The beginnings : It’s enthusiasm. Everyone is watching what is going on with interest, newspapers, blogs and specialized sites are publishing on you.
- The Fall in Interest : The effect produced by the novelty is no longer. There are fewer publications.
- The Hollow of the Wave : Growth is slow. It can even be negative. This is often the time for questioning and strategic changes.
- Launch of new products : This is the consequence of the previous step. The service is evolving. New things are emerging: new designs, new features, new billing systems, etc.
- The crash : The changes made are not bearing fruit. Customers no longer follow you. It’s failure.
- Hope : Crash errors have been fixed. You “excite” users again.
- The promised land “ : The product meets its market, users are satisfied, new customers flock.
- Investment : The success of your product allows you to bring in cash. So you have money to spend. You have to consider the right investments to start growth.
- Increase in results : You sell more, the volume of customers increases, you have become essential. Large companies are starting to “test the waters” for a takeover. You are no longer a startup!
The perfect product does not exist
For Graham, the growth phase should only be started when the product satisfies its users and has met its market. In addition, he considers that the perfect product does not exist. The search for improvements must be permanent. This is why he insists so much on the many failures that punctuate the life of a startup, which sometimes condemn it, but which make it succeed every time.