Startup Genome: A web app to test if your startup is scaling prematurely

As many as 74% of failed startups are caused by premature scaling — this was the finding of the first Startup Genome report, which synthesized data from over 3,200 startups (read our summary). But a new web app just launched could potentially reduce the casualty rate.

Before I elaborate, let’s talk about what exactly is premature scaling first. There are five aspects to any startups: Customer, Product, Team, Business Model, and Financials. Premature scaling occurs when growth for one aspect of the startup stretches way ahead of the others, eventually causing the company to crash and burn if not course-corrected.

Groupon has been deemed by this Harvard Business Review writer as a company that is on its way to failure because of the inability to balance the five plates. He believes that because Groupon has no viable revenue model and is in fact bleeding money (in other words, poor Financials and Business Model), it is rapidly using up its venture capital money and will find itself in a deep hole once the cash runs out.

To help startups ensure balanced growth, Blackbox, the seed accelerator behind Startup Genome, has created a benchmark web app called Startup Genome Compass that lets you compare your startup against 3,200 other Internet companies. Users can create an account, and take a 30 minute test that classifies their startups by type and stage.

A personalized report will then be generated which will gauge a startup according to the five aspects highlighted above.  Users can retake the test once a month to test the health of their startups.

Take the test for a spin, and let us know how you find it!

Comments