Three-Legged Business Stool

A framework for evaluating startups and businesses based on three critical components, as described by Nir Eyal.

The Three Legs of a Successful Business

• Growth
• Engagement
• Monetization

Key Framework Principles

• Every business starts with no legs (like a stool with no support)
• Must build legs one at a time
• First leg can be either growth or engagement
• Having 2 legs is sufficient to start
  • Gives good chance of figuring out the third leg
  • Acceptable position for early-stage companies

Common Pitfalls

• Many startups try to raise money with only one leg
• Having just one leg is insufficient for long-term success
• Need minimum two legs to have a viable business

Application

• Use framework to evaluate companies:
  • Companies with all 3 legs are strongest
  • Companies with 2 legs are promising
  • Companies with 1 leg need more development before investment

Real World Example

• Givingly (mentioned in transcript)
  • Growth: Strong distribution through Snapchat minis
  • Engagement: Users actively sending cards
  • Shows how having strong distribution (growth) can lead to success