Steve Blank, Serial Entrepreneur, Stanford Lecture Summary

Steve Blank, Serial Entrepreneur, Stanford Lecture

The following material has been reproduced by permission from various pages on Stanford's Entrepreneurship Corner website. http://ecorner.stanford.edu/


Rethinking the Product Development Process

The canonical product development model - concept, develop, alpha, beta, first customer, ship - is how Silicon Valley grew strong. But why does this process to build a business only succeed part of the time? And how can early stage ventures reduce their overall risk? Serial entrepreneur Steve Blank points out that most founding partners strongly focus on product and ship. But too often, startups confuse engineering's accomplishments with marketing and sales success, and they pop the champagne corks too soon.

Assessing Customer and Market Risks

The odds of success in Silicon Valley are about 1,000:1. How can so many good ideas fail to find their place in the market? Too many start-ups burn too many resources on sales and marketing too soon, says serial entrepreneur Steve Blank. Less than ten percent of start-ups fail because of faulty technology or engineering, whereas most elude success because they don't pinpoint the right market or the right customer.

The Customer Development Process

Any assumption that an entrepreneur makes about their customers and markets is nothing but a guess, says serial entrepreneur Steve Blank. But how can one prove a working hypothesis? It goes beyond soliciting friends for feedback in the dorm room. Successful ventures locate real customers in the field, solicit their feedback, and deeply analyze the customers whose problems they hope to solve.

Engineers and Founders: The First Sales Team

The most radical thing a new company can do is sell their product, says serial entrepreneur Steve Blank. He believes that the company founders - not the sales team - should be the first to try to turn a profit, as they will learn firsthand about their product's shortcomings and usability. Great engineers directly understand what their customers need.

Don't Seek Publicity Too Soon

Public relations and media contact should be strategic, rather than serendipitous. Serial entrepreneur Steve Blank is deeply against media coverage for a fledgeling start-up, as too many factors are variable in the early stages of a growing business.

Company Building as Shakespearean Tragedy

Silicon Valley lore includes anecdotes of company founders being thrown out of their own companies. But starting a company and growing a company are two different skill sets, says serial entrepreneur Steve Blank. Investors are often frightened away by world class entrepreneurs who know how to build, but not deepen and enrich, a later stage enterprise. The tragedy, says Blank, is that the largest, best-known tech companies are still run by their founders - think Microsoft, Oracle, or Apple. The gap in this insight, says Blank, is of theatrical proportion.

Acting on Customer Discovery

Customer feedback simply cannot be outsourced. Serial entrepreneur Steve Blank shares an anecdote that demonstrates the importance of a founder speaking directly to his customers. He recalls how Valley entrepreneur Alan Michaels tried to sell just a single-board computer and ended up producing an entire desktop machine. Micheals listened to the customer's needs and altered his product accordingly. These changes made during product development turned single-digit sales into the thousands, and resulted in an eventual $400 million company sale. On a later venture Micheals failed to listen to what the customer wanted, says Blank, and the company failed to thrive.

No VP's in a Start-up

Start-ups are not junior versions of larger companies. It's a different animal, says serial entrepreneur Steve Blank. Rather than developing a sales team or a marketing team from the get-go, Blank believes that a launching company should bring them together under the umbrella of customer development.

Intimate Customer Understanding

An entrepreneur needn't be a heart surgeon, but they must have an understanding of the tools a heart surgeon might need. That said, learning a business vertical is the responsibility of a great financier, regardless of its complexity, says Steve Blank, serial entrepreneur. Without this depth of customer understanding - knowing their problems and why they buy - no new venture can succeed.