Failcon10 387 million ways to fail

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Failcon10 387 million ways to fail

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

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