Failcon10 387 million ways to fail
 

Failcon10 387 million ways to fail

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Failcon10 387 million ways to fail Failcon10 387 million ways to fail Presentation Transcript

  • 387 Million Ways For a Startup to Fail…and How to Avoid Them
    Steve Blank
    www.steveblank.com
    Twitter: sgblank
  • I Write a Blog
    www.steveblank.com
  • Startups Fail Because They Confuse Search with Execute
  • Scalable
    Startup
    Large Company
    >$100M/year
    What’s A Startup
    Search
    Execute
    Goal is to search for:
    unknown customer and unknown features
  • Scalable
    Startup
    Large Company
    Search
    • Business Model found
    • 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
  • Startups Fail Because They Execute When They Should Search
  • 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
    • Repeatable sales model
    - Managers hired
  • 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
    • Product/Market fit
    - Repeatable sales model
    - Managers hired
  • Metrics Versus Accounting
    The Execution of the Business Model
    Scalable
    Startup
    Transition
    Large
    Company
    Traditional Accounting
    • Balance Sheet
    • Cash Flow Statement
    • 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
    • Viral coefficient
    • Customer Lifetime Value
    • Average Selling Price/Order Size
    • Monthly burn rate
    • etc.
    Traditional Accounting
    • Balance Sheet
    • Cash Flow Statement
    • Income Statement
  • Customer Validation Versus Sales
    The Execution of the Business Model
    Scalable
    Startup
    Transition
    Large
    Company
    Sales
    • Sales Organization
    • Scalable
    • Price List/Data Sheets
    • 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
    • Pricing/Feature unstable
    • Not yet repeatable
    • “One-off’s”
    • Done by founders
    Sales
    • Sales Organization
    • Scalable
    • Price List/Data Sheets
    • Revenue Plan
  • Customer Development VersusProduct Management
    The Execution of the Business Model
    Scalable
    Startup
    Transition
    Large Company
    Product Management
    • Delivers MRD’s
    • Feature Spec’s
    • Competitive Analysis
    • 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
    • Feature Spec’s
    • Competitive Analysis
    Customer Development
    • Hypothesis Testing
    • Minimum Feature Set
    • Pivots
    • Founder-driven
  • Engineering Versus Agile Development
    The Execution of the Business Model
    Scalable
    Startup
    Transition
    Large Company
    Engineering
    • Requirements Docs.
    • Waterfall Development
    • QA
    • Tech Pubs
  • Engineering Versus Agile Development
    The Search for the Business Model
    The Execution of the Business Model
    Scalable
    Startup
    Transition
    Large Company
    Engineering
    • Requirements Docs.
    • Waterfall Development
    • QA
    • Tech Pubs
    Agile Development
    • Continuous Deployment
    • Continuous
    • Minimum Feature Set
    • Pivots
  • 387 Million Ways to FailAnd the 5 Key Reasons Why
  • Business Model Universe
    387 Million Choices (9x9x9x9x9x9x9x9x9) choices
  • More startups fail from a lack of customers than from a failure of product development
  • Failure 1No Business Plan survives first contact with customers
  • You Need a Scientific Method to Search this Space
  • So,Structure the Searchwith a Business Model
  • Any Business Model in 9 Boxes
  • Failure 2Assume Your Business Model is Correct
  • So,Realize They’re Hypotheses
  • 9 Guesses
    Guess
    Guess
    Guess
    Guess
    Guess
    Guess
    Guess
    Guess
    Guess
  • Failure 3There Are No Facts Inside Your Building
  • So,Formalize TestingHypotheses Outside
  • Testing the Business Model =Customer Development
  • Test Hypotheses:
    • Product
    • Market Type
    • Competition
    Turning Hypotheses to Facts
  • Test Hypotheses:
    • Problem
    • Customer
    • User
    • Payer
  • Test Hypotheses:
    • Channel
  • Test Hypotheses:
    • Demand Creation
    Test Hypotheses:
    • Problem
    • Customer
    • User
    • Payer
    Test Hypotheses:
    • Product
    • Market Type
    • Competitive
    Test Hypotheses:
    • Channel
    • (Customer)
    • (Problem)
    Test Hypotheses:
    • Channel
    Test Hypotheses:
    • Pricing Model / Pricing
    Test Hypotheses:
    • Size of Opportunity/Market
    • Validate Business Model
  • Test Hypotheses:
    • Demand Creation
    Test Hypotheses:
    • Problem
    • Customer
    • User
    • Payer
    Agile Development
    Test Hypotheses:
    • Product
    • Market Type
    • Competitive
    Test Hypotheses:
    • Channel
    • (Customer)
    • (Problem)
    Customer Development Team
    Test Hypotheses:
    • Channel
    Test Hypotheses:
    • Pricing Model / Pricing
    Test Hypotheses:
    • Size of Opportunity/Market
    • Validate Business Model
  • Test Hypotheses:
    • Demand Creation
    Test Hypotheses:
    • Problem
    • Customer
    • User
    • Payer
    Agile Development
    Test Hypotheses:
    • Product
    • Market Type
    • Competitive
    Test Hypotheses:
    • Channel
    • (Customer)
    • (Problem)
    Customer Development Team
    Test Hypotheses:
    • Channel
    Test Hypotheses:
    • Pricing Model / Pricing
    Test Hypotheses:
    • Size of Opportunity/Market
    • Validate Business Model
  • Testing the Business Model is Customer Development
    Search
    Execution
    CustomerDiscovery
    CustomerValidation
    Company
    Building
    CustomerCreation
    Pivot
  • Customer Development is the Search
    Search
    CustomerDiscovery
    CustomerValidation
    Pivot
  • Failure 4A Mistaken Hypothesis Creates A Crisis
  • So,Pivots are Business ModelChanges Without Crisis
  • The Pivot Turns Failure Into Insight
    • The heart of Customer Development
    • Business Model changes without crisis
    • Fast, agile and opportunistic
  • A Pivot Changes the Business Model
    The Business Model/Customer Development Canvas
    Test Hypotheses:
    • Demand Creation
    Agile Development
    Test Hypotheses:
    • Channel
    • (Customer)
    • (Problem)
    Test Hypotheses:
    • Product
    • Market Type
    • Competitive
    Test Hypotheses:
    • Problem
    • Customer
    • User
    • Payer
    Customer Development Team
    Test Hypotheses:
    • Channel
    Test Hypotheses:
    • Pricing Model / Pricing
    Test Hypotheses:
    • Size of Opportunity/Market
    • Validate Business Model
  • Failure 5We Have Plenty of Time
  • So,Startups Are Built for Rapid Search
  • Pivot Cycle Time Matters
    • Speed of cycle minimizes cash needs
    • Minimum feature set speeds up cycle time
    • Near instantaneous customer feedback drives feature set
  • 387 Million Ways to Fail
    • No business plan survives first contact with customers
    • Assume your business model is correct
    • There are no facts inside your building
    • A mistaken hypothesis creates a crisis
    • We have plenty of time
  • Both Books on Amazon
  • Thanks
    www.steveblank.com