Stages of Companies

In a 2019 interview, Frank Slootman, CEO of Snowflake, described the stages of companies:

“I always divide up the stages of companies: you have a time when you’re building your product, they [Snowflake] did that between 2012-2015. Then you go to the formative stage, where you try to take the product to market, and figure out if you even have a product and get across the chasm and deal with all the frictions and objections and they did that very successfully under Bob Muglia.

Then the company got to velocity and needed to move to scale. That’s the change that I represent as a CEO to help the company achieve scale. Scale is not just throwing unlimited resources at the problem and ‘poof’ everything is great. It takes extraordinary discipline and effort to scale. You cannot just build organizations on loose sand. I have lived this life a few times before and hopefully that’s going to be my value added to the Snowflake journey.

Slootman’s mental model is valuable in applying the right product and go-to-market (GTM) playbooks in each stage of the company. Here I use the same framework to flesh out these stages and what I’ve commonly seen in each stage.

Stage 1

Shaping the product experience

Stage 1 is generally heavily hypotheses driven. Hypotheses at this stage focus on what customers need and a path to addressing their needs.

For example, at Amazon, a typical working backwards PR/FAQ document proposes what doesn’t work for customers today and why it’s painful or needs improvement. The PR/FAQ describes how the proposed product will address this, and importantly, how customers can ‘get started’ with the product.

This framing has helped me and my teams build clear hypotheses around what matters to customers, kept us honest about working backwards from their needs, and specifically shined light on their first mile, getting started experience. Once the team has agreed on these key product dimensions, we are equipped to shape our priorities, saying ‘no’ to several things and ‘yes’ to a select few.

While the PR/FAQ is valuable to start building something, in this formative stage I have always learned vastly more after we introduced the product to customers. No premeditated roadmap has survived first contact when the rubber hit the road. In the tradition of ‘strong opinions loosely held’, my teams and our leadership have also relied heavily on customer feedback to double down when something worked and change course when it didn’t.

Stage 2

Scaling the business

Once the demand for the product is clear, Stage 2 increasingly becomes outcome driven. The primary working principle at this stage is defining the outcome rather than the process or the path to achieve it.

I’ve been lucky that my teams and leadership have also always separated outputs (e.g. financial results) from outcomes. Outcomes are SMART goals, specific, measurable, achievable, relevant, and time-bound. For example, we have aimed to accelerate adoption by shipping key features, reduce pricing for customers by reducing our costs, grow more efficient to deliver faster, and so on. Defining goals in this way, as input goals rather than output goals, has helped us stay focused on customers and plan for the long term. Specifically, defining such goals has required a deeper understanding of what customers care for and what will remain true years later.

Stage 3

Doubling down on strengths

Stage 3 often builds on the core product’s strengths to tackle bolder opportunities that were not possible earlier.

For example, at AWS my team doubled down on the unique technologies of the AWS Nitro System that powers modern EC2 instances in AWS. With the Nitro System, AWS can now operate its infrastructure anywhere, whether it’s in its own data centers or in customer locations. This enabled a new product, AWS Outposts, that brings AWS infrastructure to on-premises and edge locations for the first time since AWS pioneered the cloud computing industry.

Stages of Companies

What Next?

In the next few posts, I’ll focus on product and go to market playbooks for stage 1, where organic product discovery and the getting started experience are top of mind for me. For product engineers looking to take the leap into company building, stage 1 is the most ambiguous and self-styled, which also makes it the most fun for me personally!