This document contrasts how startups and large companies operate. Startups are constantly searching for and testing business models through customer development and agile development methods. In contrast, large companies execute established business models through traditional planning, accounting, and management processes. The founder of General Motors Billy Durant took risks and had success early on but was ultimately fired twice. In contrast, Alfred P. Sloan brought stability to GM through processes like cost accounting and helped transform it into a large, profitable corporation. While startups focus on discovering problems and solutions through iterative customer feedback, large companies focus on executing known business plans and expanding existing markets.

1. Why Accountants Don’t Run StartupsSteve Blankwww.steveblank.comTwitter: sgblank

2. I Write a Blog www.steveblank.com

3. This Presentation Combineswww.businessmodelgeneration.comwww.steveblank.com

4. Five Short Stories

5. Not All Startups Are Equal

6. Small BusinessStartupSmall Business StartupsServe known customer with known product

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

8. 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

9. 99.7% of all companies

10. ~ 50% of total U.S. workershttp://www.sba.gov/advo/stats/sbfaq.pdf

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

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

13. Can grow to $100m/year

14. Business model found

15. Focused on execution and processScalable Startup

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

17. Can grow to $100m/year

18. Business model found

19. Focused on execution and process

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

21. Typically needs risk capital

22. What Silicon Valley means when they say “Startup”ScalableStartupLarge CompanySearch Business Model found

23. i.e. Product/Market fit- Repeatable sales model- Managers hiredWhat’s A Startup?A Startup is a temporary organization used tosearch for a scalable business model

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

25. Professional Mgmt

26. Process

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

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

29. New tech / Unknown product features

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

31. 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

32. Repeatable sales model- Managers hired

33. 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

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

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

36. Cash Flow Statement

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

38. Viral coefficient

39. Customer Lifetime Value

40. Average Selling Price/Order Size

41. Monthly burn rate

42. etc. Traditional Accounting Balance Sheet

43. Cash Flow Statement

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

45. Scalable

46. Price List/Data Sheets

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

48. Pricing/Feature unstable

49. Not yet repeatable

50. “One-off’s”

51. Done by foundersSales Sales Organization

52. Scalable

53. Price List/Data Sheets

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

55. Feature Spec’s

56. Competitive Analysis

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

58. Feature Spec’s

59. Competitive AnalysisCustomer Development Hypothesis Testing

60. Minimum Feature Set

61. Pivots

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

63. Waterfall Development

64. QA

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

66. Waterfall Development

67. QA

68. Tech PubsAgile Development Continuous Deployment

69. Continuous Learning

70. Self Organizing Teams

71. Minimum Feature Set

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

73. Known features for line extensions

74. Known customers/markets

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

76. Unknown feature set

77. Unknown business model

78. Model found by iteration

79. Plan describes “knowns”

80. Known features for line extensions

81. Known customers/markets

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

83. Always looking at something different

84. 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