Everything You Knew About Startups is Wrong, And How to Make it Right
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- Traditional startup models assume the customer problem and product features are known, but they are actually hypotheses that need to be tested - Startups should focus on customer development from the beginning through customer discovery, validation, and creation to learn about customers and iterate the product - The lean startup methodology emphasizes rapid iteration and minimal viable products to get customer feedback quickly rather than lengthy waterfall development processes
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Everything You Knew About Startups is Wrong, And How to Make it Right
- 1. Everything you knew about starting a company is wrong. And how to do it right.Steve BlankStanford School of Engineeringwww.steveblank.comTwitter: sgblank
- 2. More startups fail from a lack of customers than from a failure of product development
- 3. Traditional Product IntroductionConceptProduct Dev.Alpha/Beta TestLaunch/1st Ship
- 4. Traditional Product IntroductionHas Two Implicit AssumptionsCustomer Problem: knownConceptProduct Dev.Alpha/Beta TestLaunch/1st ShipProduct Features: known
- 5. Tradition – HireMarketingConceptProduct Dev.Alpha/Beta TestLaunch/1st Ship- Create Demand- Launch Event- “Branding”- Hire PR Agency- Early Buzz Create Marcom Materials- Create PositioningMarketing
- 6. Tradition – Hire SalesConceptProduct Dev.Alpha/Beta TestLaunch/1st Ship- Create Demand- Launch Event- “Branding”- Hire PR Agency- Early Buzz Create Marcom Materials- Create PositioningMarketing Build Sales Organization
- 7. Hire Sales VP
- 8. Hire 1st Sales StaffSales
- 9. Tradition – HireBusiness DevelopmentConceptProduct Dev.Alpha/Beta TestLaunch/1st Ship- Create Demand- Launch Event- “Branding”- Hire PR Agency- Early Buzz Create Marcom Materials- Create PositioningMarketing Build Sales Organization
- 10. Hire Sales VP
- 11. Hire 1st Sales StaffSalesBusiness Development Hire First Bus Dev
- 12. Do deals for FCSTradition – HireEngineering/Product Management ConceptProduct Dev.Alpha/Beta TestLaunch/1st Ship- Create Demand- Launch Event- “Branding”- Hire PR Agency- Early Buzz Create Marcom Materials- Create PositioningMarketing Build Sales Organization
- 13. Hire Sales VP
- 14. Hire 1st Sales StaffSalesBusiness Development Hire First Bus Dev
- 15. Do deals for FCSEngineering/Product Mgmt Write Requirements
- 16. Waterfall Development
- 17. Q/A
- 18. Tech PubsEngineering Executes a Waterfall ProcessConceptProduct Dev.Alpha/Beta TestLaunch/1st ShipRequire-mentsDesignImplementVerifyMaintain
- 19. Waterfall / Product ManagementExecution on Two “Knowns”RequirementsProduct Features: knownDesignImplementationVerificationCustomer Problem: knownMaintenanceSource: Eric Rieshttp://startuplessonslearned.blogspot.com
- 20. This is A Plan For FailureCustomer Problems and Product Features are hypothesesSales & Marketing costs are front loadedfocused on execution vs. learning & discoveryFirst Customer Ship becomes the goalExecution & hiring predicated on business plan hypothesisHeavy spending hit if product launch is wrongFinancial projections assume success=You don’t know if you’re wrong untilyou’re out of business/money
- 21. An Inexpensive FixFocus on Customers and Markets from Day OneHow?
- 22. Traditional Product IntroductionConcept/Bus. PlanProduct Dev.Alpha/Beta TestLaunch/1st ShipCustomer DevelopmentCompanyBuildingCustomerDiscoveryCustomerValidationCustomer CreationCustomer Development
- 23. Agile DevelopmentWaterfall Product DevelopmentRequire-mentsDesignImplementVerifyMaintainAgile Product Development
- 24. Lean StartupCustomer Problem + Product Features are UnknownProblem: UnknownSolution: UnknownSource: Eric Rieshttp://startuplessonslearned.blogspot.com
- 25. Customer DevelopmentCustomerDiscoveryCompany BuildingCustomerValidationCustomer CreationPivotThe foundersGet the heck Out of the Building^
- 26. Customer DevelopmentCustomerDiscoveryCompany BuildingCustomerValidationCustomer CreationPivotDiscovery
- 27. Test hypotheses I.e. problem and product concept
- 28. Validation
- 29. Build a repeatable and scalable sales process
- 30. Creation
- 31. Scale via relentless execution and fill the sales pipeline
- 32. Building
- 33. (Re)build company’s organization & managementCustomer DiscoveryCustomerDiscoveryCustomerValidationCompanyBuildingCustomerCreationStop selling, start listeningTest your hypothesesContinuous DiscoveryDone by founders
- 34. Customer ValidationCustomerDiscoveryCustomerValidationCustomer CreationCompanyBuildingPivotRepeatable and scalable business model?
- 36. Pivot back to Discovery if no customersThe Pivot The heart of Customer Development
- 38. Fast, agile and opportunisticSpeeding Up Cycle TimeSpeed of cycle minimizes cash needs
- 39. Minimum feature set speeds up cycle time
- 40. Near instantaneous customer feedback drives feature set22Customer CreationCustomerDiscoveryCustomerValidationCompanyBuildingCustomerCreationCreation comes after proof of sales
- 41. $’s for scale
- 42. Lean Startups are not cheap startupsCompany BuildingCompanyBuildingCustomer CreationCustomerValidationCustomerDiscovery(Re)build company’s organization & management
- 43. Re look at your missionNot All Startups Are Equal
- 44. Small BusinessStartupSmall Business StartupsServe known customer with known product
- 45. Feed the familySmall BusinessStartupExit Criteria Business Model found- Profitable business Existing team< $1M in revenueSmall Business Startupsknown customer known product
- 46. Feed the familyScalableStartupLarge Company>$100M/yearScalable StartupGoal is to solve for: unknown customer and unknown features
- 47. ScalableStartupLarge Company>$100M/yearExit CriteriaTotal Available Market > $500m
- 48. Can grow to $100m/year
- 49. Business model found
- 50. Focused on execution and processScalable Startup
- 51. ScalableStartupLarge Company>$100M/yearTotal Available Market > $500m
- 52. Can grow to $100m/year
- 53. Business model found
- 54. Focused on execution and process
- 55. Typically requires “risk capital”Scalable Startup In contrast a scalable startup is designed to grow big
- 56. Typically needs risk capital
- 57. What Silicon Valley means when they say “Startup”ScalableStartupLarge CompanySearch Business Model found
- 58. i.e. Product/Market fit- Repeatable sales model- Managers hiredWhat’s A Startup?A Startup is the organization used to search for a scalable business model
- 59. What VC’s Don’t Tell You:The Transition – Founders LeaveScalableStartupTransitionLarge CompanyBuildFounders depart
- 61. Process
- 62. Beginning of scaleStartup-to-Company LifecycleScalableStartupTransitionLarge CompanyBuildSearchGrow
- 63. Why Startups Aren’t Run By Accountants
- 64. Startups Search and PivotThe Search for the Business ModelScalableStartupTransitionLarge CompanyBusiness Model found customer needs/product features found i.e. Product/Market fit Found by founders, not employees
- 65. Repeatable sales model- Managers hired
- 66. Startups Search, Companies ExecuteThe Execution of the Business ModelThe Search for the Business ModelScalableStartupTransitionLarge Company- Cash-flow breakeven- Profitable- Rapid scale- New Senior Mgmt~ 150 peopleBusiness Model found
- 67. Product/Market fit- Repeatable sales model- Managers hired
- 68. Metrics Versus AccountingThe Execution of the Business ModelScalableStartupTransitionLargeCompanyTraditional AccountingBalance Sheet
- 69. Cash Flow Statement
- 70. Income StatementMetrics Versus AccountingThe Search for the Business ModelThe Execution of the Business ModelScalableStartupTransitionLargeCompanyStartup Metrics Customer Acquisition Cost
- 72. Customer Lifetime Value
- 73. Average Selling Price/Order Size
- 74. Monthly burn rate
- 75. etc. Traditional Accounting Balance Sheet
- 76. Cash Flow Statement
- 77. Income StatementCustomer Validation Versus SalesThe Execution of the Business ModelScalableStartupTransitionLargeCompanySalesSales Organization
- 78. Scalable
- 79. Price List/Data Sheets
- 80. Revenue PlanCustomer Validation Versus SalesThe Search for the Business ModelThe Execution of the Business ModelScalableStartupTransitionLargeCompanyCustomer Validation Early Adopters
- 82. Not yet repeatable
- 83. “One-off’s”
- 84. Done by foundersSales Sales Organization
- 85. Scalable
- 86. Price List/Data Sheets
- 87. Revenue PlanCustomer Development VersusProduct ManagementThe Execution of the Business ModelScalableStartupTransitionLarge CompanyProduct Management Delivers MRD’s
- 88. Feature Spec’s
- 90. Prod Mgmt drivenCustomer Development Versus Product ManagementThe Search for the Business ModelThe Execution of the Business ModelScalableStartupTransitionLarge CompanyProduct Management Delivers MRD’s
- 91. Feature Spec’s
- 92. Competitive AnalysisCustomer Development Hypothesis Testing
- 93. Minimum Feature Set
- 94. Pivots
- 95. Founder-drivenEngineering Versus Agile DevelopmentThe Execution of the Business ModelScalableStartupTransitionLarge CompanyEngineering Requirements Docs.
- 97. QA
- 98. Tech PubsEngineering Versus Agile DevelopmentThe Search for the Business ModelThe Execution of the Business ModelScalableStartupTransitionLarge CompanyEngineering Requirements Docs.
- 100. QA
- 101. Tech PubsAgile Development Continuous Deployment
- 102. Continuous Learning
- 103. Self Organizing Teams
- 104. Minimum Feature Set
- 105. PivotsStartups Model, Companies PlanThe Execution of the Business ModelScalableStartupTransitionLarge Company Plan describes “knowns”
- 106. Known features for line extensions
- 108. Known business modelStartups Model, Companies PlanThe Search for the Business ModelThe Execution of the Business ModelScalableStartupTransitionLarge CompanyUnknown customer needs
- 109. Unknown feature set
- 110. Unknown business model
- 111. Model found by iteration
- 113. Known features for line extensions
- 115. Known business modelStartups Don’t Last ForeverScalableStartupTransitionLarge Company- Cash-flow breakeven- Profitable- Rapid scale- New Senior Mgmt~ 150 people Business Model found
- 116. Product/Market fit- Repeatable sales model- Managers hiredYou failif you remain a startup!
- 117. I Wrote This
- 118. I Write a Blog www.steveblank.com