Why Accountants Don't Run Startups
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The document discusses the differences between startups and traditional small businesses, and outlines the key stages in a startup's evolution from early-stage company to large, established organization. It notes that while small businesses focus on finding a profitable business model, startups aim to build scalable companies through continuous experimentation and iteration. The document also contrasts traditional business school education with an entrepreneurship school approach better suited to startups' needs around customer development, agile development, and metrics-driven decision making.
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Why Accountants Don't Run Startups
- 1. Why Accountants Don’t Run Startups Steve Blank Stanford - School of Engineering U.C. Berkeley - Haas School Of Business www.steveblank.com Twitter: sgblank
- 2. News From Silicon Valley Source: Dave McClure 500hats.com Small VC Funds ($50-250M) Union Square Ventures First Round Capital Traditional VC Funds (>$250M) Benchmark Sequoia Angels & Incubators ($0-10M) Y-Combinator TechStars Seed Funds ($10-50M) SoftTech (Clavier) Maples Investments Felicis (Senkut) SV Angel (Conway)
- 3. News From Silicon Valley Small VC Funds ($50-250M) Traditional VC Funds (>$250M) Angels & Incubators ($0-10M) Seed Funds ($10-50M) Source: Dave McClure 500hats.com Innovation is happening here
- 4. News From Silicon Valley Internet startups - $500K is the new $5M Driven by the top of the pyramid Seed Funds providing entrepreneurial education Ycombinator, TechStars, SeedCamp, LaunchBox, etc Customer Development/Lean Startup adoption Methodology to test hypothesis and business model
- 6. Small Business Startups Small Business Startup
- 7. Small Business Startups Small Business Startup - Business Model found - Profitable business Existing team < $10M in revenue
- 8. Small Business Startups - Business Model found - Profitable business Existing team < $10M in revenue 5.7 million small businesses in the U.S. <500 employees 99.7% of all companies ~ 50% of total U.S. workers http://www.sba.gov/advo/stats/sbfaq.pdf Small Business Startup
- 9. Small Business Startup: Internet Edition Small Business Startup - Business Model found - Profitable business Existing team < $10M in revenue The Internet allows a new class of Small Businesses Not all businesses on the Internet are “ Scalable Startups”
- 10. Scalable Startup Scalable Startup Large Company >$100M/year
- 11. Scalable Startup Scalable Startup Large Company >$100M/year Total Available Market > $500m Company can grow to $100m/year Business model found Focused on execution and process
- 12. Scalable Startup Scalable Startup Large Company >$100M/year Total Available Market > $500m Company can grow to $100m/year Business model found Focused on execution and process Typically requires “risk capital” In contrast a scalable startup is designed to grow big It typically needs risk capital These are what Silicon Valley means when they say “Startup”
- 13. Very Different Startup Goals Small Business Startup - Business Model found - Profitable business Existing team < $10M Scalable Startup Large Company Total Available Market > $500m Company can grow to $100m/year Business model found Focused on execution and process Typically requires “risk capital”
- 14. Silicon Valley Venture Firms Invest in Scalable Startups Small Business Startup Scalable Startup Large Company
- 15. What VC’s Don’t Tell You: The Transition Scalable Startup Large Company Transition Search Build Grow
- 16. What VC’s Don’t Tell You: The Transition Scalable Startup Large Company Transition Founders depart Professional Mgmt Process Beginning of scale
- 17. What’s A Startup? Scalable Startup Large Company Transition Business Model found Product/Market fit - Repeatable sales model - Managers hired A Startup is the organization used to search for a scalable business model
- 18. The Search for a Business Model No Business Plan survives first contact with customers A Business Model diagrams how a company creates, delivers and captures value Or in English: How a company makes money
- 19. Emphasis On Hypotheses Testing
- 20. Startups Continually Pivot (Iterate)
- 21. Startups Search and Pivot Scalable Startup Large Company Transition Business Model found Product/Market fit - Repeatable sales model - Managers hired The Search for the Business Model
- 22. Startups Search, Companies Execute Scalable Startup Large Company Transition Business Model found Product/Market fit - Repeatable sales model - Managers hired - Cash-flow breakeven - Profitable - Rapid scale - New Senior Mgmt ~ 150 people The Search for the Business Model The Execution of the Business Model
- 23. Metrics Versus Accounting Scalable Startup Large Company Transition Traditional Accounting Balance Sheet Cash Flow Statement Income Statement The Execution of the Business Model
- 24. Metrics Versus Accounting Scalable Startup Large Company Transition Startup Metrics Customer Acquisition Cost Viral coefficient Customer Lifetime Value Average Selling Price/Order Size Monthly burn rate etc. Traditional Accounting Balance Sheet Cash Flow Statement Income Statement The Search for the Business Model The Execution of the Business Model
- 25. Customer Development Versus Product Management Scalable Startup Large Company Transition Product Management Delivers MRD’s Feature Spec’s Competitive Analysis The Execution of the Business Model
- 26. Customer Development Versus Product Management Scalable Startup Large Company Transition Customer Development Hypothesis Testing Minimum Feature Set Pivots The Search for the Business Model The Execution of the Business Model Product Management Delivers MRD’s Feature Spec’s Competitive Analysis
- 27. Engineering Versus Agile Development Scalable Startup Large Company Transition The Search for the Business Model The Execution of the Business Model Engineering Requirements Docs. Waterfall Development QA Tech Pubs
- 28. Engineering Versus Agile Development Scalable Startup Large Company Transition Agile Development Continuous Deployment Continuous Learning Self Organizing Teams Minimum Feature Set Pivots The Search for the Business Model The Execution of the Business Model Engineering Requirements Docs. Waterfall Development QA Tech Pubs
- 29. How Do Startups Search For A Business Model? The Search is called Customer Development The Implementation is called Agile Development
- 30. The Lean Startup The Search is called Customer Development The Implementation is called Agile Development
- 31. Startups Don’t Last Forever Scalable Startup Large Company Transition Business Model found Product/Market fit - Repeatable sales model - Managers hired - Cash-flow breakeven - Profitable - Rapid scale - New Senior Mgmt ~ 150 people You fail if you remain a startup!
- 32. Why Startups Aren’t Run By Accountants
- 33. Leadership Versus Management Scalable Startup Large Company Transition
- 34. Leadership Versus Management Scalable Startup Large Company Transition
- 35. Leadership Versus Management Scalable Startup Large Company Transition Search
- 36. Leadership Versus Management Scalable Startup Large Company Transition Build Search
- 37. Leadership Versus Management Scalable Startup Large Company Transition Build Grow Search
- 38. E-School instead of B-School
- 39. Durant Versus Sloan Scalable Startup Large Company Transition
- 40. Business School Versus Entrepreneurship School Scalable Startup Large Company Transition Execution Accounting Products Engineering Management Administrative Business School
- 41. Entrepreneurship School Scalable Startup Large Company Transition Entrepreneurship School Hypothesis testing Business Model testing Customer Development Agile Development Metrics Venture Finance Hands-on Execution Accounting Products Engineering Management Administrative Business School
- 42. Business School Versus Entrepreneurship School Scalable Startup Large Company Transition Business School Courses Managerial Finance/Accounting Managing Groups and Teams Financial Accounting Operations Modeling for Optimization Global Value Chain Strategies
- 43. Business School Versus Entrepreneurship School Scalable Startup Large Company Transition Courses Entrepreneurial Management Creativity and Innovation Technology Entrepreneurship Patent Law for Entrepreneurs Global Entrepreneurial Marketing Entrepreneurial Finance Business School Entrepreneurship School Courses Managerial Finance/Accounting Managing Groups and Teams Financial Accounting Operations Modeling for Optimization Global Value Chain Strategies