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New Rules for the New Internet Bubble,[object Object],Steve Blank,[object Object],Stanford - School of Engineering,[object Object],www.steveblank.com,[object Object],Twitter: @sgblank,[object Object]
I Write a Blog  ,[object Object],www.steveblank.com,[object Object]
This Talk is Based On,[object Object],Business Model Generation,[object Object],Four Steps to the Epiphany,[object Object],Lean Startup,[object Object]
First -What’s A Startup?,[object Object],Five Types of Startups,[object Object]
Small Business,[object Object],Startup,[object Object],Small Business Startups,[object Object],[object Object]
Feed the family,[object Object]
Feed the family,[object Object]
99.7% of all companies
~ 50% of total U.S. workershttp://www.sba.gov/advo/stats/sbfaq.pdf,[object Object]
Large Non-Profit,[object Object],Social Startup,[object Object],Social Entrepreneurship Startups,[object Object],[object Object]
Social Enterprise: Profitable
Social Innovation: New Stratagies,[object Object]
Known product feature needs,[object Object]
New tech, customers, channels,[object Object]
Acquire      - IP- Talent,[object Object],      - Product,[object Object],      - Customers,[object Object],      - Business,[object Object]
Scalable,[object Object],Startup,[object Object],Large Company,[object Object],Scalable Startup,[object Object],Search,[object Object],Goal is to solve for:,[object Object],  unknown customer and unknown features ,[object Object]
Execute,[object Object],Search,[object Object],Scalable,[object Object],Startup,[object Object],Large Company,[object Object],Exit Criteria,[object Object],[object Object]
 Total Available Market > $500m -$1B
 Can grow to $100m/yearScalable Startup,[object Object]
Scalable,[object Object],Startup,[object Object],Large Company,[object Object],[object Object]
 Company can grow to $100m/year
 Business model found
 Focused on execution and process
 Typically requires “risk capital”Scalable Startup,[object Object],Execute,[object Object],Search,[object Object],[object Object]
 Typically needs risk capital
 What Silicon Valley means when they say “Startup”,[object Object]
 Total Available Market > $500m -$1B
 Can grow to $100m/yearScalable Startup,[object Object],Execute,[object Object],Search,[object Object],[object Object]
 13% of all public companies
 4% of total sales of all U.S. public companies ~$1 trillionSource: Josh Lerner, Harvard: VC and Innovation in Energey,[object Object]
Buyable Startup,[object Object],Search,[object Object],Sell,[object Object],Scalable,[object Object],Startup,[object Object],$5 to 50M Acquisition,[object Object],Goal is to solve for:,[object Object],  Internet and Mobile Apps,[object Object]
Buyable Startup,[object Object],Search,[object Object],Sell,[object Object],Scalable,[object Object],Startup,[object Object],$5 to 50M Acquisition,[object Object],Goal is to solve for:,[object Object],  Internet and Mobile Apps,[object Object],Sell to larger company,[object Object]
Scalable,[object Object],Startup,[object Object],Large Company,[object Object],[object Object]
 i.e. Product/Market fit- Repeatable sales model,[object Object],- Managers hired,[object Object],What’s A Startup?,[object Object],Search ,[object Object],Execute,[object Object],A Startup is a temporary organization used to search for a repeatable and scalable business model ,[object Object]
Next,What’s A Founder?,[object Object]
What You and I Saw,[object Object]
What Michelangelo Saw,[object Object]
What You and I Saw,[object Object]
What Van Gogh Saw,[object Object]
Founders See Things Others Don’t,[object Object]
Founders See Things Others Don’t,[object Object],Founders are Artists.,[object Object],Actually They are Composers.,[object Object],They Create Something From Nothing,[object Object]
Founders See Things Others Don’t,[object Object],They Build a Company By Convincing Others To See What They Do,[object Object]
Founders See Things Others Don’t,[object Object],The Early Employees Who Join Them ,[object Object],Are the Performers,[object Object]
A Few Short Stories,[object Object]
How Did We Get Here?,[object Object]
Paths to Building a Startup,[object Object],1970 – 1995 	build a business (revenue),[object Object],1995 – 2000	flip the business (concept IPO),[object Object],2001 – 2011	build a business (M&A),[object Object],2011 – 2014	flip a built business (M&A / IPO),[object Object]
1970 – 1995Building a BusinessStartups Are Small Versions of A Large Company,[object Object]
1970 - 1995 Building a Startup the Hard Way,[object Object],$Millions’sto start(Proprietary hdwr/sftwr),[object Object],Long product dev cycle           (Waterfall),[object Object],Thousands customers            (Businesses),[object Object],How you made Money= IPO(5 qtrsrevenue/profit),[object Object],No repeatable methodology(Smaller big company),[object Object]
1970 – 1995  Playbook,[object Object]
Product Introduction Model,[object Object],Concept/Seed Round,[object Object],Product Dev.,[object Object],Alpha/Beta Test,[object Object],Launch/,[object Object],1st Ship,[object Object]
Product Introduction Model,[object Object],The Leading Cause of Startup Death,[object Object],Concept/Seed Round,[object Object],Product Dev.,[object Object],Alpha/Beta Test,[object Object],Launch/,[object Object],1st Ship,[object Object]
Product Introduction Model:Two Implicit Assumptions,[object Object],Customer Problem: known,[object Object],Concept/Seed Round,[object Object],Product Dev.,[object Object],Alpha/Beta Test,[object Object],Launch/,[object Object],1st Ship,[object Object],	Product Features: known,[object Object]
Tradition – Hire Marketing,[object Object],Concept/Seed Round,[object Object],Product Dev.,[object Object],Alpha/Beta Test,[object Object],Launch/,[object Object],1st Ship,[object Object],- Create Demand,[object Object],- Launch Event,[object Object],- “Branding”,[object Object],- Hire PR Agency,[object Object],- Early Buzz,[object Object],[object Object],  Materials,[object Object],- Create Positioning,[object Object],Marketing,[object Object]
Tradition – Hire Sales,[object Object],Concept/Seed Round,[object Object],Product Dev.,[object Object],Alpha/Beta Test,[object Object],Launch/,[object Object],1st Ship,[object Object],- Create Demand,[object Object],- Launch Event,[object Object],- “Branding”,[object Object],- Hire PR Agency,[object Object],- Early Buzz,[object Object],[object Object],  Materials,[object Object],- Create Positioning,[object Object],Marketing,[object Object],[object Object]
 Hire Sales VP
 Hire 1st  Sales StaffSales,[object Object]
Tradition – Hire Bus Development,[object Object],Concept,[object Object],Product Dev.,[object Object],Alpha/Beta Test,[object Object],Launch/,[object Object],1st Ship,[object Object],- Create Demand,[object Object],- Launch Event,[object Object],- “Branding”,[object Object],- Hire PR Agency,[object Object],- Early Buzz,[object Object],[object Object],  Materials,[object Object],- Create Positioning,[object Object],Marketing,[object Object],[object Object]
 Hire Sales VP
 Pick distribution   ChannelSales,[object Object],Business ,[object Object],Development,[object Object],[object Object]
 Do deals for FCS,[object Object]
 Hire Sales VP
 Pick distribution   ChannelSales,[object Object],Business ,[object Object],Development,[object Object],[object Object]
 Do deals for FCSEngineering,[object Object],[object Object]
 Waterfall
 Q/A
Tech Pubs,[object Object]
1995 – 2000Flipping A BusinessThe Dot.comBubble ,[object Object]
1995 - 2000The Dot-com Bubble,[object Object],10’s $millions to start	(get big fast, create a brand),[object Object],Long product dev cycle      (ship beta, 1st mover adv),[object Object],Millions customers             (1st consumer internet wave),[object Object],How you made money= IPO(Little/no revenue, no profits),[object Object],Repeatable methodology   (brand, hype, flip or IPO),[object Object]
1995 – 2000 Playbook,[object Object],Netscape,[object Object]
2001 – 2010Why Startups Are Not Small Versions of A Large Company,[object Object]
2001 - 2010The Lean Startup,[object Object],≤ $½ million to start(open source, commodity hdwr),[object Object],Short product dev cycle     (Agile Development),[object Object],100’s millions Customers   (Social networks, consumer),[object Object],Liquidity -M&A(revenue & network of users),[object Object],Repeatable methodology   (Agile + Cust Dev),[object Object]
Startups Search and Pivot,[object Object],The Search for the Business Model,[object Object],Scalable,[object Object],Startup,[object Object],Transition,[object Object],Large Company,[object Object], Business Model found by founders,[object Object],[object Object],   i.e. Product/Market fit,[object Object],[object Object],- Managers hired,[object Object]
Startups Search, Companies Execute,[object Object],The Execution of the Business Model,[object Object],The Search for the Business Model,[object Object],Scalable,[object Object],Startup,[object Object],Transition,[object Object],Large Company,[object Object],- Cash-flow breakeven,[object Object],- Profitable,[object Object],- Rapid scale,[object Object],- New Senior Mgmt,[object Object],~ 150 people,[object Object],[object Object]
 Product/Market fit- Repeatable sales model,[object Object],- Managers hired,[object Object]
Metrics Versus Accounting,[object Object],The Execution of the Business Model,[object Object],Scalable,[object Object],Startup,[object Object],Transition,[object Object],Large,[object Object],Company,[object Object],Traditional Accounting,[object Object],[object Object]
 Cash Flow Statement
 Income Statement,[object Object]
 Viral coefficient
 Customer Lifetime Value
 Average Selling Price/Order Size
 Monthly burn rate
 etc.  Traditional Accounting,[object Object],[object Object]
 Cash Flow Statement
 Income Statement,[object Object]
 Scalable
 Price List/Data Sheets
 Revenue Plan,[object Object]
 Pricing/Feature unstable
 Not yet repeatable
“One-off’s”Sales,[object Object],[object Object]
 Scalable
 Price List/Data Sheets
 Revenue Plan,[object Object]
 Waterfall Development
 QA
 Tech Pubs,[object Object]
 Waterfall Development
 QA
 Tech PubsAgile Development,[object Object],[object Object]
 Continuous Learning
 Self Organizing Teams
 Minimum Feature Set
 Pivots,[object Object]
 features
 customers/markets
 business model,[object Object]
 describes “unknowns”
customer needs
 feature set
 business model
 found by iteration
Plan describes “knowns”
 Known features for line extensions
 Known customers/markets
 Known business model,[object Object]
2001 - 2011 Playbook,[object Object],Four Steps to the Epiphany,[object Object],Many Agile Texts,[object Object]
But We Were Still Using This,[object Object]
No Business Plan survives first contact with customers,[object Object]
So Search for a Business Model,[object Object]
The Business Model:,[object Object],Any company can be described in 9 building blocks,[object Object]
CUSTOMER SEGMENTS,[object Object],which customers and users are you serving? ,[object Object],which jobs do they really want to get done?,[object Object]
VALUE PROPOSITIONS,[object Object],what are you offering them? what is that ,[object Object],getting done for them? do they care?,[object Object]
CHANNELS,[object Object],how does each customer segment want to be reached? through which interaction points?,[object Object]
CUSTOMER RELATIONSHIPS,[object Object],what relationships are you establishing with each segment? personal? automated? acquisitive? retentive?,[object Object]
REVENUE STREAMS,[object Object],what are customers really willing to pay for? how? ,[object Object],are you generating transactional or recurring revenues?,[object Object]
KEY RESOURCES,[object Object],which resources underpin your business model? which assets are essential?,[object Object]
KEY ACTIVITIES,[object Object],which activities do you need to perform well in your business model? what is crucial?,[object Object],69,[object Object]
KEY PARTNERS,[object Object],which partners and suppliers leverage your model? ,[object Object],who do you need to rely on?,[object Object]
COST STRUCTURE,[object Object],what is the resulting cost structure? ,[object Object],which key elements drive your costs?,[object Object]
value proposition,[object Object],customer relationships,[object Object],key activities,[object Object],customer segments,[object Object],key partners,[object Object],cost structure,[object Object],revenue streams,[object Object],key ,[object Object],resources,[object Object],channels,[object Object],72,[object Object],images by JAM,[object Object]
sketch out your business model,[object Object]
But,Realize They’re Hypotheses,[object Object]
9 Guesses,[object Object],Guess,[object Object],Guess,[object Object],Guess,[object Object],Guess,[object Object],Guess,[object Object],Guess,[object Object],Guess,[object Object],Guess,[object Object],Guess,[object Object]
How Do Startups Search For A Business Model?,[object Object],[object Object]
The Implementation is Agile Development
The Sum is the Lean Startup,[object Object]
Customer Development,[object Object],The founders,[object Object],^,[object Object],Get Out of the Building,[object Object]
Customer DevelopmentThe Search For the Business Model,[object Object],Company,[object Object],Building,[object Object],CustomerDiscovery,[object Object],CustomerValidation,[object Object],Customer Creation,[object Object],Pivot,[object Object]
Customer Discovery,[object Object],CustomerDiscovery,[object Object],CustomerValidation,[object Object],Company,[object Object],Building,[object Object],CustomerCreation,[object Object],Stop selling, start listening,[object Object],Test your hypotheses,[object Object],Continuous Discovery,[object Object],Done by founders,[object Object]
Test Hypotheses:,[object Object],[object Object]
 Market Type
 CompetitionTurning Hypotheses to Facts,[object Object]
Test Hypotheses:,[object Object],[object Object]
 Customer
 User
 Payer,[object Object],[object Object]
 Customer
 User
 PayerTest Hypotheses:,[object Object],[object Object]
 Market Type
 CompetitiveTest Hypotheses:,[object Object],[object Object]
 (Customer)

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