When well-known entrepreneur Steve Blank took the stage at
Blank is a legend among many startup founders for having launched the lean startup movement and for pioneering the customer development model, which is at the core of the lean startup process. He was either a part of or a cofounder of eight Silicon Valley startups in 21 years, his last being E.piphany, an enterprise software company which he started in his living room in 1996. His book, Four Steps to the Epiphany, has been called the book that launched the lean startup movement. Blank now teaches entrepreneurship at UC Berkeley, Stanford, Columbia, NYU and UCSF.
Blank’s talk at Qualcomm was about how startups, universities and federal agencies are using lean startup methods. Some of his most interesting thoughts, however, were centered on how startups are not just very small, early versions of large companies, but totally different animals. He also had some lean startup-method advice for founders. Here were some take-aways from that discussion (Blank’s comments have been condensed and edited):
Startups are not smaller versions of big companies.
This is a huge idea. It’s like saying the emperor has no clothes. For the first 30-40 years of venture capital in Silicon Valley, they said whatever the big companies do, startups need to do. You need to write a business plan, a five-year forecast. We want you to have an organizational chart that you execute on. We may not read them, but you need to have them.
But the difference between startups and large companies is that large companies execute known business models. Large companies keep the crank going by knowing their customers, having a sales force with quotas, knowing their competitors, knowing pricing…none of these are unknowns. As a large company your core business is an execution business—you have process manuals, HR manuals, your sales team has its own incentive program and everyone knows what their job is. And you get a business card, where the title is shorthand for a multi-page job spec.
Startups actually search for business models. Startup founders often delude themselves by saying they have this or that great technology or insight and that they know the customer’s problem. So let’s just build the solution. But most startups fail, not from lack of technology, but that they didn’t find the right product-market fit. You didn’t find enough customers to pay for your company to stay in business. That’s a failure to understand the business model.
Get out and talk to customers.
The lean startup model is focused around testing a group of hypothesis you’re making about your company. There are no facts about your product or service inside your building, so let’s get the hell outside. Customer development is about discovering and validating the hypothesis articulated by the company’s founders. You implicitly believe you are solving a problem and filling a need, so find ten other people who have this need or this problem and then find some more and figure out how they are solving or not solving it today.
Can the lean startup process make a company more successful? Probably not. But it can make sure you’ll understand if you had the right idea. All of science is focused around hypothesis testing; this is a model of hypothesis testing for entrepreneurship.
