The Customer Development Manifesto: The Startup Death Spiral (part.

Steve Blank

This post describes how following the traditional product development can lead to a “startup death spiral.&# In the next posts that follow, I’ll describe how this model’s failures led to the Customer Development Model – offering a new way to approach startup sales and marketing activities. Three to six months after first customer ship, if Sales starts missing its numbers, the board gets concerned. Part 4 of the Customer Development Manifesto to follow.

Is the Lean Startup Dead?

Steve Blank

Reading the NY Times article “ Jeffrey Katzenberg Raises $1 Billion for Short-Form Video Venture, ” I realized it was time for a new startup heuristic: the amount of customer discovery and product-market fit you need to find is inversely proportional to the amount and availability of risk capital. He just hired Meg Whitman. Startups wrote business plans, generated expansive 5-year forecasts and executed (hired, spent and built) to the plan.

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Crisis Management by Firing Executives – There’s A Better Way

Steve Blank

In an existing company with existing customers you 1) understand the customers problem and 2) since you do, you can specify the entire feature set on day one. Yet by first customer ship most of the business model hasn’t been validated or tested.

Why Founders Should Know How to Code

Steve Blank

I was driving home from the BIO conference in San Diego last month and had lots of time for a phone call with Dave, an ex student and now a founder who wanted to update me on his Customer Discovery progress. Customer Discovery. Filed under: Customer Development , Technology.

It Must Be A Marketing Problem

Steve Blank

The Customer Development process is the way startups quickly iterate and test each element of their business model , reducing customer and market risk. The first step of Customer Development is called Customer Discovery. In Discovery startups take all their hypotheses about the business model: product, market, customers, channel, etc. outside the building and test them in front of customers. Six is a Proxy for Burn Rate.

Death By Revenue Plan

Steve Blank

In my last post I described what happened when a company prematurely scales sales and marketing before adequately testing its hypotheses in Customer Discovery. Companies in New Markets who hire and execute like they’re in an Existing Market burn through their cash and go out of business.

Lean Startups aren't Cheap Startups

Steve Blank

For those of you who have been following the discussion, a Lean Startup is Eric Ries ’s description of the intersection of Customer Development , Agile Development and if available, open platforms and open source. Who’s the customer? What’s the customer acquisition cost?

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And then you flip the big red switch

The Startup Toolkit

Similarly, I think that working nights & weekends is an awesome way to start doing customer development and answering the big questions about your business. For example, it’s very hard to go back to your old burn rate once you’ve hired a VP sales and it’s hard to re-vamp your product focus after a big PR campaign. 3] I mean organisational scale rather than technical scale — hiring, funding, advertising, etc.

The Secret History of Silicon Valley Part V: Happy 100th Birthday.

Steve Blank

Berkeley Haas Business School was courageous enough to give me a forum teach the Customer Development Methodology. In ten years, from the early 1950′s to the early 1960′s, the valley went through a hiring frenzy as jobs in microwave companies went from 700 to 7,000.

Are Business Plans Still Necessary?

Both Sides of the Table

That died with waterfall software development. It should talk about how many customers you think you will acquire and how much you’ll charge for your product. I care about the thought that you’ve given to the customer problem.

The Curse of a New Building « Steve Blank

Steve Blank

We can’t bring customers to this rundown building. We hired an interior designer and a great facilities person to manage the process. Reply Jerry Ji , on May 15, 2009 at 4:56 pm Said: When my startup starts hiring, I’ll make “The Four Steps to the Epiphany&# a prerequisite reading for every interviewer. They develop traditions and privileges in other ways.

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More Thoughts on MBA’s and Startups

Leveraging Ideas

I wanted to add my own thoughts since I have an MBA and know the startup space from both the perspective of a potential employee and as a CEO making hiring decisions. The priorities of the company at this stage are in customer development and determining product market fit via some sort of live, demonstrable product. An employee’s success is measured against what aspect of the business they can advance, relative to the hunk of the burn rate they are eating.

Lessons Learned: Cash is not king

Startup Lessons Learned

The full formula works like this: runway = cash on hand / burn rate # iterations = runway / speed of each iteration Very few successful companies ended up in the same exact business that the founders thought theyd be in (see Founders at Work for dozens of examples). To increase the number of iterations you have left, you can either increase cash on hand (by raising money or increasing revenues), reduce burn rate, or increase the speed of each iteration.

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Lessons Learned: Achieving a failure

Startup Lessons Learned

Hire the absolute best and the brightest, true experts in their fields, who in turn can hire the smartest people possible to staff their departments. Here are a few: We know what customers want. By hiring experts, conducting lots of focus groups, and executing to a detailed plan, the company became deluded that it knew what customers wanted. But that was two full years before any customers were allowed to use it. Stealth is a customer-free zone.

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Managing Startups: Best Posts of 2011

Platforms and Networks

Mark Suster gives advice for startups with applications that face a substitution threat from in-house versions developed by big platforms. Customer Discovery and Validation Laura Klein describes five fast/cheap/easy approaches to user research and usability testing. Brant Cooper reviews biases that managers from different functions bring to the customer development process. Ben Yoskovitz describes how and why to use the " day in a customer's life " technique.

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Lessons Learned: Don't launch

Startup Lessons Learned

Marketing launch) Make a new product available to customers in the general public. In particular, a marketing launch can help you do three things (courtesy, as is most of my marketing advice, of The Four Steps to the Epiphany ): Drive customers into your sales pipeline. Worse, if you are not geared up to make the best use of those customers when the launch sends them your way, its a pretty big waste. Do your customers really read TechCrunch?