A short and concise summary of Steve Blanks book "The Four Steps to the Epiphany". This is the book that launched the Lean Startup movement.

1. The Four Steps to the Epiphany
Summary

2. A legendary hero is usually the founder of something—the founder of a new
age, the founder of a new religion, the founder of a new city, the founder of
a new way of life. In order to found something new, one has to leave the old
and go on a quest of the seed idea, a germinal idea that will have the
potential of bringing forth that new thing.
~ Joseph Campbell, Hero with a Thousand Faces

3. Book Chapters
Chapter 1 The Path to Disaster : The Product Development Model
Chapter 2 The Path to Epiphany : The Customer Development Model
Chapter 3 Customer Discovery
Chapter 4 Customer Validation
Chapter 5 Customer Creation
Chapter 6 Company Building

4. Steve Blank has extensively studied the inherent
patterns empirically validated in successful and
failed start-ups and offers key insights for new
start-ups to avoid the failure trap while improving
the probability of finding the “Product-Market” fit.
The Book “The Four Steps to the Epiphany” launched the “Lean Startup Movement”

5. What is Product Market Fit
A Sweet Spot at the Intersection of Viability, Segment Desirability and Product Feasibility

6. Technology Adoption Cycle
Technology Adoption occurs in Stages and all stages are not fulfilled
Geoff Moore – Crossing the Chasm

7. Hall of Infamy - Failed Ventures
You do not want to be framed on this Wall
Volkswagen Phaeton -Volkswagen
took all of Toyota’s lessons in
launching it’s high-end Lexus brand
and ignored them. Cost to date:
$500 million
Kodak’s Photo CD - Kodak offered film
camera customers the ability to put
their pictures on a compact disc and
view them on their TV’s. It was 10 years
ahead of its time and marketed to
customers who were not ready for it.
Viable early adopter market in
corporate marketing departments
ignored. Cost: $150 Million
Apple’s Newton - They were right about
the Personal Digital Assistant market
but five years too soon. Yet they spent
like they were in an existing market.
Cost: $100 Million • Jaguar X-Type.
Created a Ford-type, low-end product
and slapped the Jag name on it,
alienating their high-end customers.
Cost: $200 million
Webvan -Groceries on demand: the killer
app of the internet. The company spent
money like a drunken sailor. Even in the
Internet Bubble costs and infrastructure
grew faster than the customer base. Loss:
$800 million. Groceries on demand: the
killer app of the internet. The company
spent money like a drunken sailor. Even in
the Internet Bubble costs and
infrastructure grew faster than the
customer base. Loss: $800 million
R.J. Reynolds’ Premier and Eclipse
smokeless cigarettes. Understood what
the general public (non-smokers)
wanted, but did not understand that
their customers didn’t care. Cost: $450
million
Motorola’s Iridium satellite-based
phone system. Engineering triumph and
built to support a customer base of
millions. No one asked the customer if
they wanted it. Cost $5 billion. Yes,
billion. Satellites are awfully expensive

8. Hall of Fame - Successful Ventures
Those who got it right !
Proctor & Gamble’s Swiffer : A
swiveling, disposable mop-on-a-
stick. Sophisticated planning and
consumer research have resulted in
a $2.1 billion market in 2003 that
could double by 2008.
General Mills’ Yoplait GoGurt : Yogurt in a
tube. The goal was to keep their yogurt
consumer base of toddlers and little kids for
as long as possible. Research led to the tube
packaging, making yogurt easier to
consume on the go.
Toyota’s Prius : They’ve found a profitable niche for
their electric hybrid car. As a classic disruptive
innovation, sales will grow and Toyota will continue to
eat the existing US car companies for lunch. In its first
five years sales grew to $5 billion. By 2015 hybrids could
make up 35% of U.S. car market

9. Key Points
“Build it and they will come” is a recipe for disaster for most ventures except for
some firms *.
*Building on a research hypothesis, if a biotechnology startup can develop a
successful drug which cures a specific cancer and get can FDA clearance then
customers will beat a path to their door. Customer Development strategy may be a
waste of time in such cases. Only in these special and some exceptional cases, the
Lean Startup process may be an oxymoron. For all other ventures, it may act as a
life saver drug for the vulnerable newborn.
** Note on Steve Jobs Unaided Intuition or Research Hypothesis – Last Slide

10. Key Points – Contd (2)
• A startup is not a scaled down version of an established company or an
enterprise. A new born learning to walk is not a scaled down version of a
marathon runner.
• Startups require an iterative approach to successful search for a Product-
Market fit and a business model to earn the venture’s survival, sustainability
and growth.
• Startups fail when product does not fit into a receptive, enthusiastic and
profitable and accessible market segment.
• Premature Scaling during the iterative stage has led to complete annihilation
of multiple start-ups.

11. Key Points – Contd (3)
• Initial Assumptions (intuitive inferences) about a successful product-market fit are
usually wrong and needs to be validated during the initial stages of the venture.
• When assumptions fail, start-ups can quickly pivot to new and more robust
assumptions which need further validation till the sweet spot of “Product-
Market” fit is achieved.
• Failing Fast and Failing Early can be a life saver for start-ups.
• A First Move advantage is a mythical concept and often leads to failure. It does
not matter how fast you are going if you are going in the wrong direction.

12. Henry Ford’s unaided intuition was
successfully educated and tempered by
his service environment, else he would
have been breeding faster horses.

13. Key Points – Contd (4)
Successful start-ups first understand and build their customer
segment and then iteratively improve the product features and
functions. Failed start-ups carry out this process in reverse.
Segway launched a two wheeled personal transporter after spending more than
200 Million USD in developmental and launch costs. The founder wanted to create
a stable, midsize value product for imagined market segments who did not want to
walk, yet did not want to spend on a four wheeler. Segway built a product on faulty
assumptions that it will find an enthusiastic, accepting and profitable market
segment for its innovative product. The product has been unable to find its sweet
spot in the market and remains a commercial failure.

14. The Entrepreneur's Achilles Heel
Key Points – Contd (5)
* Early Adopters are a different market
segment than the mainstream customers
and startup will only grow into an
enterprise if taps into bigger market
segments.
*Crossing the “Chasm” between the
earlyvangists (early adopters) and the
mainstream customers is the most
challenging stage of scaling a venture.

15. Key Points – Contd (6)
Collecting direct feedback from the client is key to test and
validate any faulty assumptions/hypothesis about the product
viability and demand. Getting out of office and interacting with
customers bridges the gap between dreams and reality.
Chip Stevens raised $ 8 million for his technology startup InLook. His product allowed
CFO’s to generate predictive forecasts on profitability allowing management of finances
through leading indicators. Chip was convinced by his VP (Sales) Bob through weekly sales
pipelines reports that that few early adopters will become paying customers in the near
future. Steve Blank advised Chip to call his Top 5 clients directly and Chip was shocked to
learn that his sales pipeline was a pipe dream. The customers did not feel the urgency to
buy or adopt his technology. Eventually, Chip was able to salvage the situation but a
disaster was waiting to happen around the corner if he relied on this faulty assumptions.

18. Key Quotes from the Book
“Startups don’t fail because they lack a product; they fail because
they lack customers and a proven financial model”
“In a startup no facts exist inside the building, only opinions.”
“Technology is adopted in phases by distinct groups: technology
enthusiasts, visionaries, pragmatists, conservatives, and skeptics.”
“A good plan violently executed now is better than a perfect
plan next week.”
“Success in a startup is all about searching, finding, and
exploiting ephemeral opportunities.”

19. Some Interesting Venture Stories in the Book
* Mark and Dave of BetaSheet (Page 207)
* Webvan (Page 1)
* Steve Powell of FastOffice (Page 41)
* Chip Stevens of InLook (Page 105)
* Ernie, Chen and Dave of PHOTOSTOYOU (Page 157)
* Andy Bechtolsheim and Vinod Khosla of Sun Microsystems (Page 249)

20. Final Notes from Summary Author
Steve Jobs was a statistical anomaly in the entrepreneurship world
where he was able to use unaided intuition to create and launch
successful products. Most of us lesser mortals are not Steve Jobs and
should note that unaided, untrained and unverified entrepreneurship
intuitions or hunches have a high likelihood of failure. Unless our service
environment actively trains and educates our intuitions, we must train
and verify them using the “Four Steps to Epiphany” and any other
processes that may help educate our intuitive hunches for a product-
market fit.

21. Final Notes from Summary Author –
Contd (2)
Startups need to service their product market fit using a good business model. A business model
canvas does not have the multi-dimensionality of a real business model, it is a canvas, so one should
move from the canvas to the real business model as fast as they can search and find their sweet spot
i.e Product-Market Fit.