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Failcon10 387 million ways to fail

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  • 1. 387 Million Ways For a Startup to Fail…and How to Avoid Them
    Steve Blank
    www.steveblank.com
    Twitter: sgblank
  • 2. I Write a Blog
    www.steveblank.com
  • 3. Startups Fail Because They Confuse Search with Execute
  • 4. Scalable
    Startup
    Large Company
    >$100M/year
    What’s A Startup
    Search
    Execute
    Goal is to search for:
    unknown customer and unknown features
  • 5. Scalable
    Startup
    Large Company
    Search
    • Business Model found
    • 6. 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
  • 7. Startups Fail Because They Execute When They Should Search
  • 8. Startups Search and Pivot
    The Search for the Business Model
    Scalable
    Startup
    Transition
    Large Company
    Business Model found
    • customer needs/product features found
    i.e. Product/Market fit
    • Found by founders, not employees
    • 9. Repeatable sales model
    - Managers hired
  • 10. Startups Search, Companies Execute
    The Execution of the Business Model
    The Search for the Business Model
    Scalable
    Startup
    Transition
    Large Company
    - Cash-flow breakeven
    - Profitable
    - Rapid scale
    - New Senior Mgmt
    ~ 150 people
    • Business Model found
    • 11. Product/Market fit
    - Repeatable sales model
    - Managers hired
  • 12. Metrics Versus Accounting
    The Execution of the Business Model
    Scalable
    Startup
    Transition
    Large
    Company
    Traditional Accounting
    • Balance Sheet
    • 13. Cash Flow Statement
    • 14. Income Statement
  • Metrics Versus Accounting
    The Search for the Business Model
    The Execution of the Business Model
    Scalable
    Startup
    Transition
    Large
    Company
    Startup Metrics
    • Customer Acquisition Cost
    • 15. Viral coefficient
    • 16. Customer Lifetime Value
    • 17. Average Selling Price/Order Size
    • 18. Monthly burn rate
    • 19. etc.
    Traditional Accounting
    • Balance Sheet
    • 20. Cash Flow Statement
    • 21. Income Statement
  • Customer Validation Versus Sales
    The Execution of the Business Model
    Scalable
    Startup
    Transition
    Large
    Company
    Sales
    • Sales Organization
    • 22. Scalable
    • 23. Price List/Data Sheets
    • 24. Revenue Plan
  • Customer Validation Versus Sales
    The Search for the Business Model
    The Execution of the Business Model
    Scalable
    Startup
    Transition
    Large
    Company
    Customer Validation
    • Early Adopters
    • 25. Pricing/Feature unstable
    • 26. Not yet repeatable
    • 27. “One-off’s”
    • 28. Done by founders
    Sales
    • Sales Organization
    • 29. Scalable
    • 30. Price List/Data Sheets
    • 31. Revenue Plan
  • Customer Development VersusProduct Management
    The Execution of the Business Model
    Scalable
    Startup
    Transition
    Large Company
    Product Management
    • Delivers MRD’s
    • 32. Feature Spec’s
    • 33. Competitive Analysis
    • 34. Prod Mgmt driven
  • Customer Development Versus Product Management
    The Search for the Business Model
    The Execution of the Business Model
    Scalable
    Startup
    Transition
    Large Company
    Product Management
    • Delivers MRD’s
    • 35. Feature Spec’s
    • 36. Competitive Analysis
    Customer Development
  • Engineering Versus Agile Development
    The Execution of the Business Model
    Scalable
    Startup
    Transition
    Large Company
    Engineering
  • Engineering Versus Agile Development
    The Search for the Business Model
    The Execution of the Business Model
    Scalable
    Startup
    Transition
    Large Company
    Engineering
    Agile Development
  • 387 Million Ways to FailAnd the 5 Key Reasons Why
  • 49. Business Model Universe
    387 Million Choices (9x9x9x9x9x9x9x9x9) choices
  • 50. More startups fail from a lack of customers than from a failure of product development
  • 51. Failure 1No Business Plan survives first contact with customers
  • 52. You Need a Scientific Method to Search this Space
  • 53. So,Structure the Searchwith a Business Model
  • 54.
  • 55.
  • 56.
  • 57.
  • 58.
  • 59.
  • 60.
  • 61.
  • 62.
  • 63.
  • 64. Any Business Model in 9 Boxes
  • 65. Failure 2Assume Your Business Model is Correct
  • 66. So,Realize They’re Hypotheses
  • 67. 9 Guesses
    Guess
    Guess
    Guess
    Guess
    Guess
    Guess
    Guess
    Guess
    Guess
  • 68. Failure 3There Are No Facts Inside Your Building
  • 69. So,Formalize TestingHypotheses Outside
  • 70. Testing the Business Model =Customer Development
  • 71. Test Hypotheses:
    Turning Hypotheses to Facts
  • 74. Test Hypotheses:
  • Test Hypotheses:
    • Channel
  • Test Hypotheses:
    • Demand Creation
    Test Hypotheses:
    Test Hypotheses:
    Test Hypotheses:
    Test Hypotheses:
    • Channel
    Test Hypotheses:
    • Pricing Model / Pricing
    Test Hypotheses:
    • Size of Opportunity/Market
    • 85. Validate Business Model
  • Test Hypotheses:
    • Demand Creation
    Test Hypotheses:
    Agile Development
    Test Hypotheses:
    Test Hypotheses:
    Customer Development Team
    Test Hypotheses:
    • Channel
    Test Hypotheses:
    • Pricing Model / Pricing
    Test Hypotheses:
    • Size of Opportunity/Market
    • 93. Validate Business Model
  • Test Hypotheses:
    • Demand Creation
    Test Hypotheses:
    Agile Development
    Test Hypotheses:
    Test Hypotheses:
    Customer Development Team
    Test Hypotheses:
    • Channel
    Test Hypotheses:
    • Pricing Model / Pricing
    Test Hypotheses:
    • Size of Opportunity/Market
    • 101. Validate Business Model
  • Testing the Business Model is Customer Development
    Search
    Execution
    CustomerDiscovery
    CustomerValidation
    Company
    Building
    CustomerCreation
    Pivot
  • 102. Customer Development is the Search
    Search
    CustomerDiscovery
    CustomerValidation
    Pivot
  • 103. Failure 4A Mistaken Hypothesis Creates A Crisis
  • 104. So,Pivots are Business ModelChanges Without Crisis
  • 105. The Pivot Turns Failure Into Insight
    • The heart of Customer Development
    • 106. Business Model changes without crisis
    • 107. Fast, agile and opportunistic
  • A Pivot Changes the Business Model
    The Business Model/Customer Development Canvas
    Test Hypotheses:
    • Demand Creation
    Agile Development
    Test Hypotheses:
    Test Hypotheses:
    Test Hypotheses:
    Customer Development Team
    Test Hypotheses:
    • Channel
    Test Hypotheses:
    • Pricing Model / Pricing
    Test Hypotheses:
    • Size of Opportunity/Market
    • 115. Validate Business Model
  • Failure 5We Have Plenty of Time
  • 116. So,Startups Are Built for Rapid Search
  • 117. Pivot Cycle Time Matters
    • Speed of cycle minimizes cash needs
    • 118. Minimum feature set speeds up cycle time
    • 119. Near instantaneous customer feedback drives feature set
  • 387 Million Ways to Fail
    • No business plan survives first contact with customers
    • 120. Assume your business model is correct
    • 121. There are no facts inside your building
    • 122. A mistaken hypothesis creates a crisis
    • 123. We have plenty of time
  • Both Books on Amazon
  • 124. Thanks
    www.steveblank.com