1. Successful Strategies for Products That Win Steve Blank Stanford - School of Engineering U.C. Berkeley - Haas School Of Business www.steveblank.com Twitter: sgblank

2. A Few Short Stories

3. There’s Something Happening Here, What It Is Ain’t Exactly Clear

4. Startup Constraints

5. High Cost to First Product Startup Constraints

6. High Cost to First Product Long Time to First Product Startup Constraints

7. High Cost to First Product Long Time to First Product Startup Constraints Slow Customer Adoption

8. High Cost to First Product Long Time to First Product Startup Constraints Slow Customer Adoption High Startup Failure Rate

9. High Cost to First Product Long Time to First Product Startup Constraints Limited Number of Venture Capitalists Slow Customer Adoption High Startup Failure Rate

10. High Cost to First Product Innovation Limited to a Few Regions Long Time to First Product Startup Constraints Limited Number of Venture Capitalists Slow Customer Adoption High Startup Failure Rate

11. High Cost to First Product Innovation Limited to a Few Regions Long Time to First Product Startup Constraints Limited Number of Venture Capitalists Slow Customer Adoption High Startup Failure Rate

12. There’s Something Happening Here, What It Is Ain’t Exactly Clear

13. Startup Constraints Entrepreneurial Explosion

14. Low Cost to 1st Product Entrepreneurial Explosion

15. Low Cost to First Product Short Time to First Product Entrepreneurial Explosion

16. Low Cost to First Product Short Time to First Product Entrepreneurial Explosion Fast Customer Adoption

17. Low Cost to First Product Short Time to First Product Entrepreneurial Explosion Fast Customer Adoption Lower Startup Failure Rate

18. Low Cost to First Product Short Time to First Product Entrepreneurial Explosion Large Pool of Risk Capital Fast Customer Adoption Rate Lower Startup Failure Rate

19. Low Cost to First Product Global Innovation Short Time to First Product Entrepreneurial Explosion Large Pool of Risk Capital Fast Customer Adoption Rate Lower Startup Failure Rate

20. Low Cost to First Product Global Innovation Short Time to First Product Entrepreneurial Explosion This talk Large Pool of Risk Capital Fast Customer Adoption Rate Lower Startup Failure Rate

21. Not All Startups Are Equal

25. 99.7% of all companies

26. ~ 50% of total U.S. workershttp://www.sba.gov/advo/stats/sbfaq.pdf

30. Acquire - Talent - Product - Customers - Business

31. Scalable Startup Large Company Scalable Startup Search Goal is to solve for: unknown customer and unknown features

33. Total Available Market > $500m -$1B

34. Can grow to $100m/yearScalable Startup

36. Company can grow to $100m/year

37. Business model found

38. Focused on execution and process

40. Typically needs risk capital

42. i.e. Product/Market fit- Repeatable sales model - Managers hired What’s A Startup? A Startup is a temporary organization used to search for a scalable and repeatable business model

43. What VC’s Don’t Tell You:The Transition Scalable Startup Transition Large Company Search Build Execute

45. CEO = Operating Exec

46. Professional Mgmt

47. Process

49. i.e. Product/Market fit- Repeatable sales model - Managers hired What’s A Startup? You fail if you stay a startup

50. Why Startups Are Not Small Versions of A Large Company

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

55. Cash Flow Statement

57. Viral coefficient

58. Customer Lifetime Value

59. Average Selling Price/Order Size

60. Monthly burn rate

62. Cash Flow Statement

64. Scalable

65. Price List/Data Sheets

67. Pricing/Feature unstable

68. Not yet repeatable

70. Scalable

71. Price List/Data Sheets

73. Waterfall Development

74. QA

76. Waterfall Development

77. QA

79. Continuous Learning

80. Self Organizing Teams

81. Minimum Feature Set

83. features

84. customers/markets

86. describes “unknowns”

87. customer needs

88. feature set

89. business model

90. found by iteration

91. Plan describes “knowns”

92. Known features for line extensions

93. Known customers/markets

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

96. Product Introduction Model Concept/Seed Round Product Dev. Alpha/Beta Test Launch/ 1st Ship

97. Product Introduction Model The Leading Cause of Startup Death Concept/Seed Round Product Dev. Alpha/Beta Test Launch/ 1st Ship

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

101. Hire Sales VP

102. Hire 1st Sales StaffSales

104. Hire Sales VP

107. Hire Sales VP

110. Waterfall

111. Q/A

113. How Startups Succeed

114. No Business Plan survives first contact with customers

115. So Search for a Business Model

116. The Business Model: Any company can be described in 9 building blocks

117. CUSTOMER SEGMENTS which customers and users are you serving? which jobs do they really want to get done?

118. VALUE PROPOSITIONS what are you offering them? what is that getting done for them? do they care?

119. CHANNELS how does each customer segment want to be reached? through which interaction points?

120. CUSTOMER RELATIONSHIPS what relationships are you establishing with each segment? personal? automated? acquisitive? retentive?

121. REVENUE STREAMS what are customers really willing to pay for? how? are you generating transactional or recurring revenues?

122. KEY RESOURCES which resources underpin your business model? which assets are essential?

123. KEY ACTIVITIES which activities do you need to perform well in your business model? what is crucial? 66

124. KEY PARTNERS which partners and suppliers leverage your model? who do you need to rely on?

125. COST STRUCTURE what is the resulting cost structure? which key elements drive your costs?

126. value proposition customer relationships key activities customer segments key partners cost structure revenue streams key resources channels 69 images by JAM

130. Customer Development The founders ^ Get Out of the Building

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

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

134. Market Type

135. CompetitionTurning Hypotheses to Facts

137. Customer

138. User

140. Customer

141. User

143. Market Type

145. (Customer)

148. Customer

149. User

151. Market Type

153. (Customer)

156. Customer

157. User

159. Market Type

161. (Customer)

164. Iteration without crisis

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

167. I Write a Blog www.steveblank.com

168. Thanks www.steveblank.com

169. Atoms or Bits? Speed of Experimentation

170. Atoms or Bits? Access to customers changes dramatically The product can be “bits” or physical The sales channel can be “web” or physical Speed of experimentation increases and cost decreases when both are bits

171. Distribution Channel – Bits or Atoms?

172. The Product - Bits vs. Atoms

173. Product & Channel are Bits

174. Web 2.0 - Product & Channel are Bits

175. Product is Bits but Channel is People

176. Traditional Enterprise Software

177. Physical Products Sold Over the Web

178. Killing Traditional Storefronts

179. The Factories May be in China

180. We Still Make Things that Need Salespeople

181. Speed of Experimentation

182. Silicon Valley - A Happy Accident Cold war research in microwaves/electronics at Stanford Cold war military funding drives Stanford spinouts in microwaves for the defense industry in the 1950’s Stanford Engineering Dean encourages startup culture A Bell Labs researcher starts his semiconductor company next to Stanford in in 1956 which led to… the wave of semiconductor startups in the 1960’s/70’s the emergence of venture capital as an industry the personal computer revolution in 1980’s the rise of the Internet in the 1990’s and finally the internet commerce applications of the 21st century.