1. Why Accountants Don’t Run Startups Steve Blank www.steveblank.com Twitter: sgblank

2. I Write a Blog www.steveblank.com

3. This Presentation Combines www.businessmodelgeneration.com www.steveblank.com

4. Five Short Stories

5. Not All Startups Are Equal

9. 99.7% of all companies

10. ~ 50% of total U.S. workershttp://www.sba.gov/advo/stats/sbfaq.pdf

14. Can grow to $100m/year

15. Business model found

16. Focused on execution and processScalable Startup

18. Can grow to $100m/year

19. Business model found

20. Focused on execution and process

22. Typically needs risk capital

24. i.e. Product/Market fit- Repeatable sales model - Managers hired What’s A Startup? A Startup is a temporary organization used tosearch for a scalable business model

26. Professional Mgmt

27. Process

30. New tech / Unknown product features

33. Repeatable sales model- Managers hired

35. Product/Market fit- Repeatable sales model - Managers hired

37. Cash Flow Statement

39. Viral coefficient

40. Customer Lifetime Value

41. Average Selling Price/Order Size

42. Monthly burn rate

44. Cash Flow Statement

46. Scalable

47. Price List/Data Sheets

49. Pricing/Feature unstable

50. Not yet repeatable

51. “One-off’s”

53. Scalable

54. Price List/Data Sheets

56. Feature Spec’s

57. Competitive Analysis

59. Feature Spec’s

61. Minimum Feature Set

62. Pivots

64. Waterfall Development

65. QA

67. Waterfall Development

68. QA

70. Continuous Learning

71. Self Organizing Teams

72. Minimum Feature Set

74. Known features for line extensions

75. Known customers/markets

77. Unknown feature set

78. Unknown business model

79. Model found by iteration

80. Plan describes “knowns”

81. Known features for line extensions

82. Known customers/markets

84. Always looking at something different

86. Finds your next market

87. Pains in the butt

88. Always looking at something different

90. Product/Market fit- Repeatable sales model - Managers hired You failif you remain a startup!

91. Plan versus Model

93. Customers

94. Channel

95. Demand Creation

96. Revenue/Expenses/ProfitThe template to look like everyone else when you present to VC’s/Management

97. No Business Plan survives first contact with customers

98. So Search for a Business Model

99. What Is a Business Model? Diagram of flows between company and customers Scorecard of hypotheses testing Rapid change with each iteration and pivot Product Management-driven * Alex Osterwalder

100. 9 building blocks of a business model:

101. CUSTOMER SEGMENTS which customers and users are you serving? which jobs do they really want to get done? 39 images by JAM

102. VALUE PROPOSITIONS what are you offering them? what is that getting done for them? do they care? 40 images by JAM

103. CHANNELS how does each customer segment want to be reached? through which interaction points? 41 images by JAM

104. CUSTOMER RELATIONSHIPS what relationships are you establishing with each segment? personal? automated? acquisitive? retentive? 42 images by JAM

105. REVENUE STREAMS what are customers really willing to pay for? how? are you generating transactional or recurring revenues? 43 images by JAM

106. KEY RESOURCES which resources underpin your business model? which assets are essential? 44 images by JAM

107. KEY ACTIVITIES which activities do you need to perform well in your business model? what is crucial? 45 images by JAM

108. KEY PARTNERS which partners and suppliers leverage your model? who do you need to rely on? 46 images by JAM

109. COST STRUCTURE what is the resulting cost structure? which key elements drive your costs? 47 images by JAM

110. value proposition customer relationships key activities customer segments key partners cost structure revenue streams key resources channels 48 images by JAM

111. sketch out your business model

112. building block

113. building block building block building block building block

114. building block building block building block building block building block building block building block building block building block building block building block building block

115. But,Realize They’re Hypotheses

116. 9 Guesses Guess Guess Guess Guess Guess Guess Guess Guess Guess

119. Customer Development Solving For Customer Risk

120. The Two Reasons Startups Fail

121. Yet All We Had WasThis… Concept/Seed Round Product Dev. Alpha/Beta Test Launch/ 1st Ship New Product Introduction Model

122. Traditional Product Introduction Model:Two Implicit Assumptions Customer Problem: known Concept Product Dev. Alpha/Beta Test Launch/ 1st Ship Product Features: known

125. Hire Sales VP

126. Hire 1st Sales StaffSales

128. Hire Sales VP

131. Hire Sales VP

134. Waterfall

135. Q/A

137. Customer Development The founders Get the Hell Out of the Building ^

138. Product Development Concept/Bus. Plan Product Dev. Alpha/Beta Test Launch/1st Ship + CustomerDevelopment Company Building CustomerDiscovery CustomerValidation Customer Creation Customer Development Pivot

139. Customer Discovery CustomerDiscovery CustomerValidation Company Building CustomerCreation Stop selling, start listening Test your hypotheses Continuous Discovery Done by founders

141. Market Type

142. CompetitionTurning Hypotheses to Facts

144. Customer

145. User

147. Customer

148. User

150. Market Type

152. (Customer)

155. Customer

156. User

158. Market Type

160. (Customer)

163. Customer

164. User

166. Market Type

168. (Customer)

171. Iteration without crisis

173. Minimum feature set speeds up cycle time

175. New Product Conundrum Product introductions aren’t predictable Why? Is it the people that are different? Is it the product that are different? Are there different “types” of startups?

176. Three Types of Markets Existing Market Faster/Better = High end Resegmented Market Niche = marketing/branding driven Cheaper = low end New Market Cheaper/good enough = creates a new class of product/customer Innovative/never existed before

177. So What Does Engineering Do?

178. Waterfall / Product ManagementExecution on Two “Knowns” Requirements Product Features: known Design Implementation Verification Customer Problem: known Maintenance Source: Eric Rieshttp://startuplessonslearned.blogspot.com

179. Agile - Customer Problem is KnownExisting Company/Market “Product Owner” or in-house customer Unit of progress: a line of working code Problem: Known Solution: Unknown Source: Eric Rieshttp://startuplessonslearned.blogspot.com

180. Lean StartupCustomer Problem + Product Features are Unknown Problem: Unknown Solution: Unknown Source: Eric Rieshttp://startuplessonslearned.blogspot.com

182. $’s for scale

185. Inventor of the Modern Corporation Scalable Startup Transition Large Company

186. Inventor of the Modern Corporation Scalable Startup Transition Large Company Alfred P. Sloan

188. MIT Sloan School

189. Sloan Foundation

191. Founder of General Motors Scalable Startup Transition Large Company Billy Durant

193. Fired by board, starts Chevrolet

194. Regains control of GM

195. Fired by board, GM ~$3.6 billion** GM Net sales in 1921 $304.5M = $3.6 Billion today

196. Durant Versus Sloan Scalable Startup Transition Large Company

200. Summary Companies execute business models Startups searchfor business models Business Model / Customer Development / Agile Development is the solution stack for startups

201. Thanks www.steveblank.com

202. One More Thing… International Business Model Competition $50K prizes Jan 24th 2011 http://www.businessmodelcompetition.com/