1. The Democratization of Entrepreneurship Steve Blank Stanford - School of Engineering www.steveblank.com Twitter: @sgblank

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

3. I Write a Blog www.steveblank.com

4. A Few Short Stories

5. Startup Constraints

6. High Cost to First Product Startup Constraints

7. Buy expensive workstationsBuy expensive development tools

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

9. Use Waterfall DevelopmentFirst Customer Ship in months/years

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

11. Customers – Gov’t/Businesses# of customers - hundreds/thousands

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

13. Startups are small versions of large companiesFocus is on execution of business plan

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

15. 3000 Sand Hill Road

16. 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

17. 3000 Sand Hill RoadMenlo Park, California

18. 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

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

20. Startup Constraints Entrepreneurial Explosion

21. Low Cost to 1st Product Entrepreneurial Explosion

22. Develop on inexpensive PC’s/Mac’sUse Open Source Software

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

24. Use Agile DevelopmentFirst Customer Ship in weeks/months

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

26. Customers –Consumers# of customers -millions

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

28. Startups arenot small versions of large companiesFocus is on Search for a business model

29. 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

30. Sand Hill Road

31. 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

32. Menlo Park, San Francisco New York, Shanghai, Israel, Chile, Singapore

33. 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

34. Not All Startups Are Equal

38. 99.7% of all companies

39. ~ 50% of total U.S. workershttp://www.sba.gov/advo/stats/sbfaq.pdf

43. Acquire - Talent - Product - Customers - Business

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

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

47. Can grow to $100m/yearScalable Startup

49. Company can grow to $100m/year

50. Business model found

51. Focused on execution and process

53. Typically needs risk capital

55. 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

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

58. CEO = Operating Exec

59. Professional Mgmt

60. Process

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

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

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

68. Cash Flow Statement

70. Viral coefficient

71. Customer Lifetime Value

72. Average Selling Price/Order Size

73. Monthly burn rate

75. Cash Flow Statement

77. Scalable

78. Price List/Data Sheets

80. Pricing/Feature unstable

81. Not yet repeatable

83. Scalable

84. Price List/Data Sheets

86. Waterfall Development

87. QA

89. Waterfall Development

90. QA

92. Continuous Learning

93. Self Organizing Teams

94. Minimum Feature Set

96. features

97. customers/markets

99. describes “unknowns”

100. customer needs

101. feature set

102. business model

103. found by iteration

104. Plan describes “knowns”

105. Known features for line extensions

106. Known customers/markets

109. Why Startups Fail

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

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

114. Hire Sales VP

115. Hire 1st Sales StaffSales

117. Hire Sales VP

120. Hire Sales VP

123. Waterfall

124. Q/A

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

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

128. Customer Discovery CustomerDiscovery CustomerValidation Company Building CustomerCreation Test yourbusiness model hypotheses Continuous Discovery Done by founders

130. No Business Plan survives first contact with customers

131. So Search for a Business Model

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

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

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

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

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

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

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

139. KEY ACTIVITIES which activities do you need to perform well in your business model? what is crucial? 82

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

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

142. value proposition customer relationships key activities customer segments key partners cost structure revenue streams key resources channels 85 images by JAM

144. Market Type

145. CompetitionTurning Hypotheses to Facts

147. Customer

148. User

150. Customer

151. User

153. Market Type

155. (Customer)

158. Customer

159. User

161. Market Type

163. (Customer)

166. Customer

167. User

169. Market Type

171. (Customer)

174. MVP + Customer are the first two you need to nail

176. Iteration without crisis

178. Why Startups Aren’t Run By Accountants

179. Inventor of the Modern Corporation Scalable Startup Transition Large Company

180. Inventor of the Modern Corporation Scalable Startup Transition Large Company Alfred P. Sloan

182. MIT Sloan School

183. Sloan Foundation

185. Founder of General Motors Scalable Startup Transition Large Company Billy Durant

187. Fired by board, starts Chevrolet

188. Regains control of GM

189. Fired by board, GM ~$3.6 billion** GM Net sales in 1921 $304.5M = $3.6 Billion today

190. Durant Versus Sloan Scalable Startup Transition Large Company

194. Thanks www.steveblank.com