- Startups are focused on searching for a scalable and repeatable business model through continuous customer validation and pivoting if needed. In contrast, large companies execute established business models through planning and accounting. - Traditional processes like marketing, sales, engineering are inappropriate for startups still searching for a model. Startups require agile development and customer development focused on hypothesis testing. - Once a startup finds product/market fit and a repeatable sales process, it transitions to a large company focused on growth, processes, and management over leadership. Accounting takes priority over metrics like in large companies versus the search focus of startups.

1. Why Accountants Don’t Run Startups Steve Blank Stanford - School of Engineering U.C. Berkeley - Haas School Of Business www.steveblank.com Twitter: sgblank

2. Early-Stage Ventures

3. I Drew This CustomerDiscovery Company Building CustomerValidation Customer Creation Pivot

4. I Called It:Customer Development CustomerDiscovery Company Building CustomerValidation Customer Creation Pivot

5. I Wrote This

6. A Few People Read It

7. I Write a Blog www.steveblank.com

8. Five Short Stories

9. Not All Startups Are Equal

10. Small Business Startup Small Business Startups

13. 99.7% of all companies

14. ~ 50% of total U.S. workershttp://www.sba.gov/advo/stats/sbfaq.pdf

20. Company can grow to $100m/year

21. Business model found

22. Focused on execution and processScalable Startup

24. Company can grow to $100m/year

25. Business model found

26. Focused on execution and process

28. Typically needs risk capital

30. Company can grow to $100m/year

31. Business model found

32. Focused on execution and process

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

36. Professional Mgmt

37. Process

39. i.e. Product/Market fit- Repeatable sales model - Managers hired What’s A Startup? A Startup is the organization used to search for a scalable business model

40. Plan versus Model

41. No Business Plan survives first contact with customers

42. So Search for a Business Model

44. A Business Model diagrams how a company creates, delivers and captures value – it’s dynamic

46. Startups Continually Pivot (Iterate)

48. i.e. Product/Market fit- Repeatable sales model - Managers hired

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

52. Cash Flow Statement

54. Viral coefficient

55. Customer Lifetime Value

56. Average Selling Price/Order Size

57. Monthly burn rate

59. Cash Flow Statement

61. Scalable

62. Price List/Data Sheets

64. Pricing/Feature unstable

65. Not yet repeatable

67. Scalable

68. Price List/Data Sheets

70. Feature Spec’s

72. Feature Spec’s

74. Minimum Feature Set

76. Waterfall Development

77. QA

79. Waterfall Development

80. QA

82. Continuous Learning

83. Self Organizing Teams

84. Minimum Feature Set

86. Known features for line extensions

87. Known customers/markets

89. Unknown feature set

90. Unknown business model

91. Model found by iteration

92. Plan describes “knowns”

93. Known features for line extensions

94. Known customers/markets

96. Product/Market fit- Repeatable sales model - Managers hired You failif you remain a startup!

100. Customer Development Get the Hell Out of the Building

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

102. Then why do we have: process to manage product development?

103. Then why do we have: process to manage product development? no process to manage customer development?

104. Product Development Model Concept/Seed Round Product Dev. Alpha/Beta Test Launch/ 1st Ship

107. Hire Sales VP

108. Hire 1st Sales StaffSales

110. Hire Sales VP

113. Hire Sales VP

116. Waterfall

117. Q/A

119. Customer Discovery CustomerDiscovery CustomerValidation Company Building CustomerCreation Stop selling, start listening Test your hypotheses Continuous Discovery

121. Passionate earlyvangelists?

123. Iteration without crisis

125. Traditional Product DevelopmentUnit of progress: Advance to Next Stage Waterfall Requirements Design Problem: known Solution: known Implementation Verification Maintenance Source: Eric Rieshttp://startuplessonslearned.blogspot.com

126. When the Customer Problem is Known “Product Owner” or in-house customer Problem: Known Solution: Unknown Source: Eric Rieshttp://startuplessonslearned.blogspot.com

127. Agile - Customer Problem is KnownUnit of progress: a line of working code “Product Owner” or in-house customer Problem: Known Solution: Unknown Source: Eric Rieshttp://startuplessonslearned.blogspot.com

128. When the Customer Problem is Unknown Problem: Unknown Solution: Unknown Source: Eric Rieshttp://startuplessonslearned.blogspot.com

129. Lean Startup- Customer Problem is UnknownUnit of progress: learning about customers Problem: Unknown Solution: Unknown Source: Eric Rieshttp://startuplessonslearned.blogspot.com

130. Leadership Versus Management

131. Scalable Startup Transition Large Company Leadership Versus Management

132. Scalable Startup Transition Large Company Leadership Versus Management

133. Scalable Startup Transition Large Company Leadership Versus Management Search

134. Scalable Startup Transition Large Company Leadership Versus Management Build Search

135. Scalable Startup Transition Large Company Leadership Versus Management Build Grow Search

136. Why Startups Aren’t Run By Accountants

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

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

140. MIT Sloan School

141. Sloan Foundation

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

145. Fired by board, starts Chevrolet

146. Regains control of GM

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

148. Durant Versus Sloan Scalable Startup Transition Large Company

152. Thanks www.steveblank.com