1. Six Ways to Fail at a Startup Steve Blank www.steveblank.com Twitter: @sgblank

2. Six Ways to Fail at a StartupAnd How to Get it Right Steve Blank www.steveblank.com Twitter: @sgblank

3. This Talk is Based On Business Model Generation Four Steps to the Epiphany Lean Startup

4. I Have a Vision

5. I Know What Needs to Be Done

6. Lets Start A Company!

7. Six Ways to Fail

8. #1I Know Who The Customer Is

9. #2I Know Exactly the Product They Need

10. #3I Know the Problem They Have

11. #4We Can Fix It After We Ship It All

12. #5 All I Need to Do is Execute the Plan

13. #6 Let’s Use Large Company Tools

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

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

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

19. Hire Sales VP

20. Hire 1st Sales StaffSales

22. Hire Sales VP

25. Hire Sales VP

28. Waterfall

29. Q/A

31. A Startup is a temporary organization

32. A Startup is a temporary organization designed to search

33. A Startup is a temporary organization designed to search for a repeatable and scalable business model

34. Startups need their own tools, different from those used in existing companies

35. Startups need their own tools, different from those used in existing companies

36. Startups Are Not Smaller Versions of Large Companies Large Companies Execute Known Business Models

37. Startups Are Not Smaller Versions of Large Companies Startups Search for Unknown Business Models

38. So Search for a Business Model

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

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

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

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

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

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

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

46. KEY ACTIVITIES which activities do you need to perform well in your business model? what is crucial? 37

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

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

49. value proposition customer relationships key activities customer segments key partners cost structure revenue streams key resources channels 40 images by JAM

50. sketch out your business model

51. But,Realize They’re Hypotheses

52. But,Realize They’re HypothesesGuesses

53. 9 Guesses Guess Guess Guess Guess Guess Guess Guess Guess Guess

54. How Do Startups Search For A Business Model?

55. There are no facts inside your building

56. There are no facts inside your building So Get Outside

57. Customer Development = process to searchBusiness Model Canvas is the ScorecardAgile Engineering is How We Build Startups

59. Demo, demo, and demo!!

60. Proximity is paramount

61. Technology Design

62. Marketing

63. Demo and customer feedback

64. Research Labs

65. Equipment Manufacturers

66. Distribution Network

67. Service Providers

68. Cost Reduction

69. Remove labor force pains

70. Eliminate bio-waste hazards

71. Organic Farmers

72. Weeding Service Providers

73. Conventional Farmers

74. IP – Patents

75. Video Classifier Files

76. Robust Technology

77. Dealers

78. Direct Service

79. Indirect Service

80. … then Dealers

81. Asset Sale

82. Direct Service with equipment rental

83. … then Asset SaleValue-Driven

84. Customer Development is the process used to searchBusiness Model Canvas is the ScorecardAgile Development is How We Build Startups

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

86. Customer DevelopmentThe Search For the Business Model Company Building CustomerDiscovery CustomerValidation Customer Creation Pivot

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

89. Market Type

90. CompetitionTurning Hypotheses to Facts

92. Customer

93. User

95. Customer

96. User

98. Market Type

100. (Customer)

103. Customer

104. User

106. Market Type

108. (Customer)

111. Iteration without crisis

113. How Does This Really Work?Lean LaunchPad Class 8 Weeks From an Idea to a Business

114. Pivot ExampleRobotic Weeding Talked 75 Customers in 8 Weeks

115. Our initial plan

117. White Farms, Large Peanut farmer in Georgia

118. REFCO Farms, large grower in Salinas Valley

119. Rincon Farms, large grower in Salinas Valley

120. Small Organic Corn/Soy grower in Nebraska

121. Heirloom Organics, small owner/operator, Santa Cruz Mts

122. Two small organic farmers at farmers market

124. Parks: Stanford Grounds Supervisor, head of maintenance and lead operator (has crew of 6)

125. Toro dealer (large mower manufacturer)

126. User of back-yard mowing system

127. Maintenance Services for City of Los Altos

129. Autonomous vehiclesWEEDING Dealers sell, installs and supports customer Co. trains dealers, supports dealers - Innovation - Customer Education - Dealer training - Low density vegetable growers - High density vegetable growers - Thinning operations - Conventional vegetables We reduce operating cost - Labor reduction (100 to 1) - Reduced risk of contamination - Mitigate labor availability concerns - Ag Dealers - Ag Service providers - Research labs - Ag Dealers - Ag Service providers Engineers on Machine Vision Two problems: - Identification - Elimination Dealer discount COGS seek a 50-60% Gross Margin Heavy R&D investment Asset sale Our revenue stream derives from selling the equipment

130. 1 Week – 1 CarrotBot Confidential

132. Marketing

133. Demo and customer feedback

134. Farming conventions.

135. Demo, demo, and demo!!

136. Proximity is paramount

137. Organic Farmers

138. Weeding Service Providers

139. Conventional Farmers

140. Cost Reduction

141. Remove labor force pains

142. Eliminate bio-waste hazards

143. Research Labs

144. Equipment Manufacturers

145. Distribution Network

146. Service Providers

147. IP – Patents

148. Video Classifier Files

149. Robust Technology

150. Dealers

151. Direct Service

152. Indirect Service

153. … then Dealers

154. Asset Sale

155. Direct Service with equipment rental

156. … then Asset SaleValue-Driven

158. Marketing

159. Demo and customer feedback

160. Farming conventions.

161. Demo, demo, and demo!!

162. Proximity is paramount

163. Mid/Large Organic Farmers

164. Agricultural corporations

165. Weeding Service Providers

166. Mid/Large Conventional Farmers

167. Cost Reduction

168. Remove labor force pains

169. Eliminate bio-waste hazards

170. Research Labs

171. Equipment Manufacturers

172. Distribution Network

173. Service Providers

174. IP – Patents

175. Video Classifier Files

176. Robust Technology

177. Direct Service

178. Indirect Service

179. … then Dealers

180. Direct Service with equipment rental

181. ($1,500/d; 120d/yr )

182. Low density: $1,500/d

183. High density: $6,000/dValue-Driven

184. World Ag Expo interviews:the need is real and wide spread 10+ interviews at show Everyone confirmed the need Robocrop, UK based, crude competitor sells for $171 K Revenue Stream Mid to small growers prefer a service Large growers prefer to buy, but OK with service until technology is proven Charging for labor cost saved is OK, as we provide other benefits (food safety, labor availability)

186. Marketing

187. Demo and customer feedback

188. Farming conventions.

189. Demo, demo, and demo!!

190. Proximity is paramount

191. Mid/Large Organic Farmers

192. Agricultural corporations

193. Weeding Service Providers

194. Mid/Large Conventional Farmers

195. Research Labs

196. Equipment Manufacturer

197. Distribution Network

198. Service Providers

199. 2 or 3 Key Farms

200. Cost Reduction

201. Remove labor force pains

202. Eliminate bio-waste hazards

203. IP – Patents

204. Video Classifier Files

205. Robust Technology

206. Direct Service

207. Indirect Service

208. … then Dealers

209. Direct Service with equipment rental

210. Low density: $1,500/d

212. Bill of Materials

213. Training & Service

215. Thanks www.steveblank.com

216. I Write a Blog www.steveblank.com

217. Personal Libraries

218. Insight: No more bookshelves eBooks+150% YoY ‘10 Printed Books -20% YoY ‘10

219. Version 1.0: Personal Libraries

220. Original Idea: Personal Digital Libraries Import, organize and share thousands of digital papers

221. something-something-something.com Original idea Invincible Business Model: Version 1.0 SHORT TERMResearchers Lawyers Scientists LONG TERMAvid book readers Professionals FB/TW posts from users you know Company blog, FB, TW, support forums Import, organize and share thousands of papers Targeted marketing Product development Constant iteration & testing Libraries, Universities, Research Centers Bloggers and media targeting customer segment Academic Database providers Affiliate program SEO/SEM/SM IE/FF/Chrome App Stores Developers Marketers Affiliate program fees Licensing Subscription fees Ad revenue AWS Infrastructure SEM Eng & Marketing OpEx

222. Here’s What We Did Version 1.0: Personal Libraries

223. Got out of the building

227. Extensive Surveys

229. Extensive Surveys

230. 33,000+ Adwords

232. Extensive Surveys

233. 33,000+ Adwords

234. Compete Review

236. Extensive Surveys

237. 33,000+ Adwords

238. Compete Review

239. Market Sizing

241. Extensive Surveys

242. 33,000+ Adwords

243. Compete Review

244. Market Sizing

245. 50 bloggers

247. Extensive Surveys

248. 33,000+ Adwords

249. Compete Review

250. Market Sizing

251. 50 bloggers

252. 6 Social Networks

254. Extensive Surveys

255. 33,000+ Adwords

256. Compete Review

257. Market Sizing

258. 50 bloggers

259. 6 Social Networks

260. Usability Tests

264. Pipelines Optimize

266. Pipelines Optimize

268. Run away from this customer as fast as possible.

269. Run away from this customer as fast as possible. They don’t want to spend money and will incur infinite support and infinite cost.

271. Pipelines Optimize

274. Pipelines Optimize

276. Negative Margins

277. ECM = BoringNo adjacent pivots worked for the team

278. Version 2.0: Trusted Advice

279. something-something-something.com Original idea Invincible Business Model: Version 2.0 Upwardly mobile young professionals making $2-10K of discretionary online purchases a year (excluding travel) FB/TW posts from users you know Company blog, FB, TW accounts Discover online goods recommended by friends at the lowest possible price from trusted vendors Developing trusted advice and advisors Web marketing Affiliate partnerships Constant iteration & testing Bloggers and Media targeting customer segment Retail marketing partners IE/FF/Chrome teams Affiliate Program Providers Affiliate program SEO/SEM/SM IE/FF/Chrome App Stores Developers Marketers Content Library Install base Readership base Affiliate program fees Licensing Subscription fees Ad revenue AWS Infrastructure SEM Eng & Marketing OpEx

280. New Hypotheses

281. Here’s What We Did Version 2.0: Trusted Advice

284. Extensive Surveys

285. Landing Page TestsLanding pages tested on affluent, career aged professionals, approximately 70/30 male/female, N=800+

287. Extensive Surveys

288. Landing Page Tests

290. Extensive Surveys

291. Landing Page Tests

292. Market Research

294. Extensive Surveys

295. Landing Page Tests

296. Market Research

297. Compete Research

299. Extensive Surveys

300. Landing Page Tests

301. Market Research

302. Compete Research

303. Revenue Analysis

304. Two PrototypesInsidely.com wantio.com

306. Extensive Surveys

307. Landing Page Tests

308. Market Research

309. Compete Research

310. Revenue Analysis

311. Two Prototypes

314. Values celebrity trends & friends’ opinions

315. Wants high ticket items at lowest price

317. Hates tedious work

318. Identifies as influencer among friends

321. Version 2.0: Trusted Advice Top ~6M US Influentials (~$9B/year)

322. something-something-something.com Original idea Invincible Business Model: Version 2.0 Upwardly mobile young professionals making $2-10K of discretionary online purchases a year (excluding travel) FB/TW posts from users you know Company blog, FB, TW accounts Discover online goods recommended by friends at the lowest possible price from trusted vendors Developing trusted advice and advisors Web marketing Affiliate partnerships Constant iteration & testing Bloggers and Media targeting customer segment Retail marketing partners IE/FF/Chrome teams Affiliate Program Providers Affiliate program SEO/SEM/SM IE/FF/Chrome App Stores Developers Marketers Content Library Install base Readership base Affiliate program fees Licensing Subscription fees Ad revenue AWS Infrastructure SEM Eng & Marketing OpEx

323. Here’s What We Found Version 2: Trusted Advice

326. High Conversion43% clickthrough on Top Admissions Books for Stanford MBAs article Compare to 0.5% clickthrough on ads ~100x difference

328. High Conversion

329. Needs Addressed See videos at http://factnote.com/c/e245

331. High Conversion

332. Needs Addressed Super easy to install and use. I really did enjoy it! Great idea! I will keep the extension installed because I do think this is practical! I could see myself using this regularly

334. High Conversion

337. High Conversion

340. High Conversion

347. Life is short, focus on big markets

349. I Write a Blog www.steveblank.com

350. Carpe Diem www.steveblank.com