The problem is when we try to use these financial reports at other times, especially in a startup investor review meeting. All this does is distract the founders by focusing on the wrong numbers. For years I wondered why for every review meeting I had to update an income statement that reported zero revenue for 18 months until we started having sales.
Startups and business models
A startup is a search for a repeatable and scalable business model. As a founder, you are testing a number of hypotheses about the pieces of the business model: Who are the users and brazil phone number library customers? Where and how will we build the product? What is the distribution channel? What will be the pricing policy? How do we generate demand? Who are our business partners? How will we finance the company? Figure 1 illustrates the transition from a startup to a company.
Figure 1. Transition from startup to company
One indicator that you have found the right business model is when 12 countries to flourish during a language stay you believe that the cost of attracting customers is less than the revenue those customers will generate. For web startups, this is when the cost of customer acquisition is less than the expected value of that customer. For biotech startups, it is when australia aatabase airectory the cost of the research and development required to find and verify a drug is less than the value of the market demand for that drug. These types of metrics are very different from those captured on an income statement and balance sheet, especially in the short term.