The 4 Stages from Idea to Company


Fred Perrotta

When talking about Tortuga, I often break our history up into four stages: idea, product, business, and company. We needed a long time to move from one stage to the next, so they are easy to delineate in our case.

Regardless of your velocity, each step is necessary and worth understanding. First-time entrepreneurs should know about each and be able to recognize the evolution from idea to full-fledged company. Here's how I break down the stages.

1. Idea

The idea. You have an idea (in your head) but haven't made the thing (in real life) yet.

In case no one else has told you: ideas are worthless.

Get from idea to product as soon as possible. Most people will be polite and say they like your idea. A slightly smaller number will say they like your product. Almost no one will actually give you money in exchange for goods and services.

You should aim to get from idea to product to selling that product as quickly as possible to figure out the viability of your venure.

Tortuga 2009-2011
We went from idea to design quickly but spent the next 18 months trying to figure out manufacturing. Our first product, Tortuga V1, went on sale two years after we had the idea for it.

2. Product

The product. You've turned your idea into a physical product (or piece of software or whatever). It exists. You can show it to people and ask them for money.

This is an exciting phase. You're getting your first real feedback and (hopefully) sales. While you may have some personal financial pressure, everything feels like a bonus. You don't have any targets to hit yet. Your costs are (should be) low. You aren't getting paid, but you also aren't responsible anyone else's livelihood. You will miss these early days.

Tortuga 2011-2013
For two years, we sold 1 to 3 bags per month. Every sale notification from the Shopify app was a cause for celebration. People (strangers!) were buying the thing we made. We had a long list of things to fix and ways to improve, but the few people who were buying bags really liked them. Despite our meager sales and negliglbe growth, we saw a path to the next level.

3. Business

Now you're a business. Your team is still founders only. You're probably making a product for yourself first and others second. You're breakeven or profitable or at least on a clear path to get there.

Having lived in the Bay Area for over a decade, I understand that some companies get past this stage, even all the way to an IPO, without being profitable or having a way to get there. I'm ignoring these outliers for the purposes of this article. If that's what you're after, you're on the wrong site. I consider most tech companies products, not businesses, unless they have a real way to make money.

Tortuga 2013-2015
After a redesign and relaunch in late 2013, we finally started making real money. We had enough to cover our costs and to increase the size of our orders. We spent most of 2014 placing larger and larger orders while being sold out for months in between them. We finally got to a point where our accountant told us that we had to take salaries or risk an audit by the IRS. That was the best stern warning I've ever received. After finally paying ourselves, we eventually decided to hire more teammates and to keep growing.

4. Company

My line between business and company is admittedly arbitrary but still useful. I look for two changes to signal the shift from business to company.

The first is hiring and developing a team. Going beyond just the founders requires money (yours or a VC's) to pay people.

The second is making products for others. Many businesses start by scratching their own itch. That's what we did. You make something that you want, then hope that other people will buy it.

As you grow, you will begin to think more about "the customer" and what she wants. Sometimes that will overlap with what you want but not always. Understanding others' needs and making products to solve their problems is the next step for your company. If you only ever make products for yourself, you'll have a hard time going from hobbyist to company owner.

Tortuga 2016-present
We grew our team in 2014 and 2015. By 2016, we had re-launched the brand, including our product line and website, leveraging the whole team's expertise.

Now, what's next?