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

11. Scalable Startup Large Company >$100M/year Scalable Startup Goal is to solve for: unknown customer and unknown features

13. Can grow to $100m/year

14. Business model found

15. Focused on execution and processScalable Startup

17. Can grow to $100m/year

18. Business model found

19. Focused on execution and process

21. Typically needs risk capital

23. 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

25. Professional Mgmt

26. Process

29. New tech / Unknown product features

32. Repeatable sales model- Managers hired

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

36. Cash Flow Statement

38. Viral coefficient

39. Customer Lifetime Value

40. Average Selling Price/Order Size

41. Monthly burn rate

43. Cash Flow Statement

45. Scalable

46. Price List/Data Sheets

48. Pricing/Feature unstable

49. Not yet repeatable

50. “One-off’s”

52. Scalable

53. Price List/Data Sheets

55. Feature Spec’s

56. Competitive Analysis

58. Feature Spec’s

60. Minimum Feature Set

61. Pivots

63. Waterfall Development

64. QA

66. Waterfall Development

67. QA

69. Continuous Learning

70. Self Organizing Teams

71. Minimum Feature Set

73. Known features for line extensions

74. Known customers/markets

76. Unknown feature set

77. Unknown business model

78. Model found by iteration

79. Plan describes “knowns”

80. Known features for line extensions

81. Known customers/markets

83. Always looking at something different

85. Finds your next market

86. Pains in the butt

87. Always looking at something different

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

90. Plan versus Model

92. Customers

93. Channel

94. Demand Creation

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

96. No Business Plan survives first contact with customers

97. So Search for a Business Model

98. 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

99. Business Model = Keeping Score in a Startup CUSTOMER RELATIONSHIP PARTNER NETWORK INFRASTRUCTURE CUSTOMER OFFER TARGET CUSTOMER CORE CAPABILITIES portrays the network of cooperative agreements with other companies explains the relationships a company establishes with its customers VALUE PROPOSITION describes the customers a company wants to offer value to outlines the capabilities required to run a company's business model gives an overall view of a company's bundle of products and services DISTRIBUTION CHANNEL VALUE CONFIGURATION describes the channels to communicate and get in touch with customers describes the arrangement of activities and resources sums up the monetary consequences to run a business model describes the revenue streams through which money is earned COST STRUCTURE REVENUE STREAMS FINANCE

100. But,Realize They’re Hypotheses

101. 9 Guesses Guess Guess Guess Guess Guess Guess Guess Guess Guess

104. Customer Development

105. Solving For Customer Risk:Customer Development

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

107. More startups fail from a lack of customers than from a failure of product development

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

111. Hire Sales VP

112. Hire 1st Sales StaffSales

114. Hire Sales VP

117. Hire Sales VP

120. Waterfall

121. Q/A

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

125. Market Type

126. CompetitionTurning Hypotheses to Facts

128. Customer

129. User

131. Customer

132. User

134. Market Type

136. (Customer)

139. Customer

140. User

142. Market Type

144. (Customer)

147. Customer

148. User

150. Market Type

152. (Customer)

155. Iteration without crisis

157. Minimum feature set speeds up cycle time

159. 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?

160. 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

161. So What Does Engineering Do?

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

163. 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

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

166. $’s for scale

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

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

172. MIT Sloan School

173. Sloan Foundation

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

177. Fired by board, starts Chevrolet

178. Regains control of GM

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

180. Durant Versus Sloan Scalable Startup Transition Large Company

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

185. Thanks www.steveblank.com

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