This document discusses different types of startups and businesses. It begins by distinguishing between small businesses, which serve known customers with known products to generate revenue under $1 million, and scalable startups, which aim to solve unknown customer problems and build large companies generating over $100 million annually. It then describes the three types of markets that startups can enter: existing markets with known customers and products, new or emerging markets with unknown customer needs, and disruptive markets that require new technologies or business models. Depending on the market type, startups must approach customer development, sales, marketing, and business development differently. The document emphasizes that startups are temporary organizations that search for a scalable and repeatable business

1. Customer DevelopmentSteve Blankwww.steveblank.comTwitter: sgblank

2. Five Short Stories

3. Not All Startups Are Equal

4. Small BusinessStartupSmall Business StartupsServe known customer with known product

5. Feed the familySmall BusinessStartupExit Criteria Business Model found- Profitable business Existing team< $1M in revenueSmall Business Startupsknown customer known product

6. Feed the familySmall BusinessStartup- Business Model found- Profitable business Existing team< $10M in revenueSmall Business Startups5.7 million small businesses in the U.S. <500 employees

7. 99.7% of all companies

8. ~ 50% of total U.S. workershttp://www.sba.gov/advo/stats/sbfaq.pdf

9. ScalableStartupLarge Company>$100M/yearScalable StartupGoal is to solve for: unknown customer and unknown features

10. ScalableStartupLarge Company>$100M/yearExit CriteriaTotal Available Market > $500m

11. Can grow to $100m/year

12. Business model found

13. Focused on execution and processScalable Startup

14. ScalableStartupLarge Company>$100M/yearTotal Available Market > $500m

15. Can grow to $100m/year

16. Business model found

17. Focused on execution and process

18. Typically requires “risk capital”Scalable Startup In contrast a scalable startup is designed to grow big

19. Typically needs risk capital

20. What Silicon Valley means when they say “Startup”ScalableStartupLarge CompanyBusiness Model found

21. i.e. Product/Market fit- Repeatable sales model- Managers hiredWhat’s A Startup?Search ExecuteA Startup is a temporary organizationused tosearch for a scalable business model

22. What VC’s Don’t Tell You:The Transition – Founders LeaveScalableStartupTransitionLarge CompanyBuildExecuteSearchFounders depart

23. Professional Mgmt

24. Process

25. Beginning of scaleLarge Company Sustaining InnovationSustaining InnovationTransitionScalableStartupLarge CompanyExisting Market / Known customer

26. Known product feature needsLarge Company Disruptive InnovationNew DivisionTransitionLarge CompanyDisruptive Innovation New Market / Unknown customer needs

27. New tech / Unknown product features

28. Looks like a scalable startupWhy Startups Are Not Small Versions of Large Companies

29. Startups Search and PivotThe Search for the Business ModelScalableStartupTransitionLarge CompanyBusiness Model found customer needs/product features found i.e. Product/Market fit Found by founders, not employees

30. Repeatable sales model- Managers hired

31. Startups Search, Companies ExecuteThe Execution of the Business ModelThe Search for the Business ModelScalableStartupTransitionLarge Company- Cash-flow breakeven- Profitable- Rapid scale- New Senior Mgmt~ 150 peopleBusiness Model found

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

33. Metrics Versus AccountingThe Execution of the Business ModelScalableStartupTransitionLargeCompanyTraditional AccountingBalance Sheet

34. Cash Flow Statement

35. Income StatementMetrics Versus AccountingThe Search for the Business ModelThe Execution of the Business ModelScalableStartupTransitionLargeCompanyStartup Metrics Customer Acquisition Cost

36. Viral coefficient

37. Customer Lifetime Value

38. Average Selling Price/Order Size

39. Monthly burn rate

40. etc. Traditional Accounting Balance Sheet

41. Cash Flow Statement

42. Income StatementCustomer Validation Versus SalesThe Execution of the Business ModelScalableStartupTransitionLargeCompanySalesSales Organization

43. Scalable

44. Price List/Data Sheets

45. Revenue PlanCustomer Validation Versus SalesThe Search for the Business ModelThe Execution of the Business ModelScalableStartupTransitionLargeCompanyCustomer Validation Early Adopters

46. Pricing/Feature unstable

47. Not yet repeatable

48. “One-off’s”

49. Done by foundersSales Sales Organization

50. Scalable

51. Price List/Data Sheets

52. Revenue PlanCustomer Development VersusProduct ManagementThe Execution of the Business ModelScalableStartupTransitionLarge CompanyProduct Management Delivers MRD’s

53. Feature Spec’s

54. Competitive Analysis

55. Prod Mgmt drivenCustomer Development Versus Product ManagementThe Search for the Business ModelThe Execution of the Business ModelScalableStartupTransitionLarge CompanyProduct Management Delivers MRD’s

56. Feature Spec’s

57. Competitive AnalysisCustomer Development Hypothesis Testing

58. Minimum Feature Set

59. Pivots

60. Founder-drivenEngineering Versus Agile DevelopmentThe Execution of the Business ModelScalableStartupTransitionLarge CompanyEngineering Requirements Docs.

61. Waterfall Development

62. QA

63. Tech PubsEngineering Versus Agile DevelopmentThe Search for the Business ModelThe Execution of the Business ModelScalableStartupTransitionLarge CompanyEngineering Requirements Docs.

64. Waterfall Development

65. QA

66. Tech PubsAgile Development Continuous Deployment

67. Continuous Learning

68. Self Organizing Teams

69. Minimum Feature Set

70. PivotsStartups Model, Companies PlanThe Execution of the Business ModelScalableStartupTransitionLarge Company Plan describes “knowns”

71. Known features for line extensions

72. Known customers/markets

73. Known business modelStartups Model, Companies PlanThe Search for the Business ModelThe Execution of the Business ModelScalableStartupTransitionLarge CompanyUnknown customer needs

74. Unknown feature set

75. Unknown business model

76. Model found by iteration

77. Plan describes “knowns”

78. Known features for line extensions

79. Known customers/markets

80. Known business modelStartups Protect Mavericks, Companies Fire MavericksThe Execution of the Business ModelScalableStartupTransitionLarge CompanyPains in the butt

81. Always looking at something different

82. Doesn’t get with the programStartups Protect Mavericks, Companies Fire MavericksThe Search for the Business ModelThe Execution of the Business ModelScalableStartupTransitionLarge Company CEO of your company

83. Finds your next market

84. Pains in the butt

85. Always looking at something different

86. Doesn’t get with the programStartups Don’t Last ForeverScalableStartupTransitionLarge Company- Cash-flow breakeven- Profitable- Rapid scale- New Senior Mgmt~ 150 people Business Model found

87. Product/Market fit- Repeatable sales model- Managers hiredYou failif you remain a startup!