The New Normal for Startups

Posted: October 28, 2012 by Bill Cunningham in Innovation, Leadership, Planning, Startup

“No business plan survives first customer contact.” – Steve Blank

Steve Blank wowed the Greater Cincinnati Venture Association meeting this week by delivering a compacted presentation of his customer development process. Steve has launched 8 companies in Silicon Valley over the last 31 After a brief stint at retirement, he assembled his life’s lessons about startups into college course, which turned into a book, which has turned into a viral movement in the entrepreneurial world to increase a startup’s chances of success.

Steve BlankAnd to top it off, this is not a get rich quick scheme for the author, as he has published his work and shared his resources in a variety of locations such as the Stanford Entrepreneurial Corner, Udemy, SlideShare and others for free. He has assembled an incredible list of resources for startups on his website that covers everything from presentations to financing to finding customers. Yes, you have to buy the book, “The Startup Owner’s User Manual” – after all, products composed of atoms and require shipping do have production costs, a for $24 on Amazon, you can have the definitive bible and handbook to guide you on the path to building a successful company. Ask any MBA student who has taken a business plan course that required a $140 textbook if this is a great deal!

A Game Changer for Startups

The traditional path for startups goes something like this:  get an idea, develop a business plan, raise some money, work on completing the product, spend a lot to take it to market, and then watch customers flock to buy your wares. The rare instances of this happening in the past (like the infamous Pet Rock) are difficult to replicate.  What is missing from the traditional path is the customer and Steve’s approach involves agile customer development in parallel to software development (or product development) to find the right business model that will succeed.

In his view of the world, a “startup is a temporary organization designed to search for a repeatable and scalable business model.” The greatest ideas will never see the light of day unless you have customers. Finding customers who will buy and love your product as well as developing the right channels and message become far more important than the cool mySQL database searches or incredible user-created content. So instead of raising $1 million from angels or venture guys and work like madmen (and madwomen) to create a product in a secret lair, Steve suggests that you “validate your hypotheses with experiments.”  Separate the things your know (which he calls facts) from your faith-based ideas that you believe will work and test them with customers.

Talk to 100 Customers

Since “there are no facts in the office, get outside the building.” There is no substitute for eyeball to eyeball contact with real customers. There are also no shortcuts. Market research and focus groups are great for discovering what people thought in the past, but if you are to be successful, you have to skate to where the puck will be (ala Wayne Gretzky.) The founding team must do this – it can’t be outsourced to a consulting firm – the first hand learnings are most valuable to the founders.

So the Customer Development Process is sweeping the country. I know that Miami and Northern Kentucky Universities have started to integrated Steve’s thinking into their courses. Steve’s GCVA presentation is available on www.gcva.com as we as the links to resources mentioned above. Use these to find the right business model, and your startup will take off like a rocket!

Bill Cunningham is the CEO of OneMorePallet.com and shop foreman at the Greater Cincinnati Venture Association.

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