Steven Gary Blank: 4 Steps to the Epiphany, part 1

(written by Lawrence Krubner, however indented passages are often quotes)

My friend Colin Steele suggested that I should read 4 Steps to the Epiphany, by Steven Gary Blank. This is a very good book about how to manage a startup. I am still reading through it, but I will post an excerpt from page 6 that I like very much:

In startups the emphasis is on “get it done, and get it done it fast.” So it’s natural that heads of Sales and Marketing believe they are hired for what they know, not what they can learn. They assume their prior experience is relevant in this new venture. Therefore they need to put that knowledge to work and execute the sales and marketing programs that have worked for them before.

This is usually a faulty assumption. Before we can sell a product, we have to ask and answer some very basic questions: What are the problems that our product solves? Do customers perceive these problems as important or as “must have”? If we’re selling to businesses, who in a company has a problem that our product could solve? If we are selling to consumers how do we reach them? How big is this problem? Who do we make the first sales call on? Who else has to approve the purchase? How many customers do we need to be profitable? What’s the average order size?

Most entrepreneurs will tell you “I know all the answers already. Why do I have to go do it again?” It’s human nature that what you think you know is not always what you know. A little humility goes far. Your past experience may not be relevant for your new company. If you really do know the answers to the customer questions, the Customer Development process will go quickly and it will reaffirm your understanding.

A company needs to answer these questions before it can successfully ramp up sales and sell. For startups in a new market, these are not merely execution activities; they are learning and discovery activities that are critical to the company’s success or failure.

Why is this distinction important? Take another look at the Product Development diagram. Notice it has a nice linear flow from left to right. Product Development, whether it is intended for large companies or consumers, is a step-by-step, execution oriented process. Each step happens in a logical progression that can be PERT charted, (a project management technique for determining how much time a project needs before it is completed) with milestones and resources assigned to completing each step.

Yet anyone who has ever taken a new product out to a set of potential customers can tell you that a good day in front of customers is two steps forward and one step back. In fact, the best way to represent what happens outside the building is more like a series of recursive circles – recursive to represent the iterative nature of what actually happens in a learning and discovery environment. Information and data are gathered about customers and markets incrementally, one step at a time. Yet sometimes those steps take you in the wrong direction or down a blind alley. You find yourself calling on the wrong customers, not understanding why people will buy, not understanding what product features are important. The ability to learn from those missteps is what distinguishes a successful startup from those whose names are forgotten among the vanished.

Steven Gary Blank has a blog. I’ve been reading it for almost a year now. It is a great blog. It is often linked from Hacker News.

(Sidenote: there are a surprising number of spelling errors in this book. Or rather, grammar errors: “A little humility go far”. A little disappointing, in what is otherwise a great book.)