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The Four Steps to the Epiphany
MP3 CD Format
The Four Steps to the Epiphany launched the Lean Startup approach to new ventures. It was the first book to offer that startups are not smaller versions of large companies and that new ventures are different than existing ones. Startups search for business models while existing companies execute them.The book offers the practical and proven four-step Customer Development process for search and offers insight into what makes some startups successful and leaves others selling off their furniture.
Rather than blindly execute a plan, The Four Steps helps uncover flaws in product and business plans and correct them before they become costly. Rapid iteration, customer feedback, and testing your assumptions are all explained in this book.
Packed with concrete examples of what to do, how to do it and when to do it, the book will leave you with new skills to organize sales, marketing, and your business for success.
If your organization is starting a new venture, and you're thinking how to successfully organize sales, marketing, and business development, you need The Four Steps to the Epiphany. A must-listen for anyone starting something new.
1 pages, Audio CD
First published January 1, 2003
1440 people are currently reading
24571 people want to read
About the author
Steve Blank
25 books381 followersPut to a vote, I might have been chosen “least likely to succeed” in my New York City high school class. My path has taken me from repairing fighter planes in Thailand during the Vietnam War, to spook stuff in undisclosed location(s), and I was lucky enough to arrive at the beginning of the boom times of Silicon Valley in 1978.
After 21 years in 8 high technology companies, I retired in 1999. I started my last company, E.piphany, in my living room in 1996. My other startups include two semiconductor companies, Zilog and MIPS Computers, a workstation company Convergent Technologies, a consulting stint for a graphics hardware/software spinout Pixar, a supercomputer firm, Ardent, a computer peripheral supplier, SuperMac, a military intelligence systems supplier, ESL and a video game company, Rocket Science Games.
Total score: two large craters (Rocket Science and Ardent), one dot.com bubble home run (E.piphany) and several base hits.
After I retired, I took some time to reflect on my experience and wrote a book (actually my class text) about building early stage companies called Four Steps to the Epiphany.
I moved from being an entrepreneur to teaching entrepreneurship to both undergraduate and graduate students at U.C. Berkeley, Stanford University and the Columbia University/Berkeley Joint Executive MBA program. The “Customer Development” model that I developed in my book is one of the core themes in these classes. In 2009, I was awarded the Stanford University Undergraduate Teaching Award in the department of Management Science and Engineering. The same year, the San Jose Mercury News listed me as one of the 10 Influencers in Silicon Valley.
I also followed my curiosity about why entrepreneurship blossomed in Silicon Valley and was stillborn elsewhere. It has led to several talks on The Secret History of Silicon Valley.
In 2007 Governor Arnold Schwarzenegger appointed me to serve on the California Coastal Commission, the public body which regulates land use and public access on the California coast.
I am on the board of Audubon California (and its past chair) and spent several years on the Audubon National Board. I’m also a board member of Peninsula Open Space Land Trust (POST). In 2009 I became a trustee of U.C. Santa Cruz and joined the board of the California League of Conservation Voters (CLCV).
After 21 years in 8 high technology companies, I retired in 1999. I started my last company, E.piphany, in my living room in 1996. My other startups include two semiconductor companies, Zilog and MIPS Computers, a workstation company Convergent Technologies, a consulting stint for a graphics hardware/software spinout Pixar, a supercomputer firm, Ardent, a computer peripheral supplier, SuperMac, a military intelligence systems supplier, ESL and a video game company, Rocket Science Games.
Total score: two large craters (Rocket Science and Ardent), one dot.com bubble home run (E.piphany) and several base hits.
After I retired, I took some time to reflect on my experience and wrote a book (actually my class text) about building early stage companies called Four Steps to the Epiphany.
I moved from being an entrepreneur to teaching entrepreneurship to both undergraduate and graduate students at U.C. Berkeley, Stanford University and the Columbia University/Berkeley Joint Executive MBA program. The “Customer Development” model that I developed in my book is one of the core themes in these classes. In 2009, I was awarded the Stanford University Undergraduate Teaching Award in the department of Management Science and Engineering. The same year, the San Jose Mercury News listed me as one of the 10 Influencers in Silicon Valley.
I also followed my curiosity about why entrepreneurship blossomed in Silicon Valley and was stillborn elsewhere. It has led to several talks on The Secret History of Silicon Valley.
In 2007 Governor Arnold Schwarzenegger appointed me to serve on the California Coastal Commission, the public body which regulates land use and public access on the California coast.
I am on the board of Audubon California (and its past chair) and spent several years on the Audubon National Board. I’m also a board member of Peninsula Open Space Land Trust (POST). In 2009 I became a trustee of U.C. Santa Cruz and joined the board of the California League of Conservation Voters (CLCV).
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Displaying 1 - 30 of 252 reviews
September 21, 2011
Although I had mentioned him in previous posts such as The Art of Selling and his Views on Entrepreneurship, I had never read Steve Blank’s until now. I just finished reading The Four Steps to the Epiphany and I must just say it is a great book.
I will explain into some details his theory but the main reason I love this book is how he explains why founders are critical in all the decisions of the early phases of a start-up. Not the usual “hire business people”, but “learn and become an expert until you reach your limits”. I should immediately add that it is not an easy book to read and certainly mostly useful to people in the process of launching a start-up or developing new products. His web site steveblank.com is also very informative, you will find tons of slides of his teachings on the web and I particularly recommend the list of books he suggests reading.
Steve Blank is famous worldwide (mea culpa for not mentioning him more before) for his theory on the Customer Developement. Whereas we all know that the high-tech world is not about technology (no it’s not; ideas and technologies are far from sufficient to explain this world), we have a tendency to focus on products (much more important than technologies) and markets (business vs. technology). But Steve Blank explains how products can be an illusion (if never sold to customers) and how markets can be extremely dangerous if not well understood; whereas what counts are the users of products, the people which make markets, i.e. the customers. He explains how important it is to interact with potential customers in an iterative manner (bottom-up) even before designing and developing the product, then while developing them and be careful about a top-bottom-only analysis of the markets.
This is one of his famous slides where he explains that Product Development in isolation is deathly and should be done in parallel with Customer Developement only. Start-ups do not need teams in Marketing, Sales or Business Development, but only two teams, in Product Development and Customer Development, each headed by one of the Founder(s)/CEO. Below is another detailed description of this process (also available online). Then when they become large, they can switch to the traditional models.
You should absolutely read this if you are in a start-up mode. This may help you avoid many (possibly deathly) mistakes. More on http://www.startup-book.com/2011/08/3...
I will explain into some details his theory but the main reason I love this book is how he explains why founders are critical in all the decisions of the early phases of a start-up. Not the usual “hire business people”, but “learn and become an expert until you reach your limits”. I should immediately add that it is not an easy book to read and certainly mostly useful to people in the process of launching a start-up or developing new products. His web site steveblank.com is also very informative, you will find tons of slides of his teachings on the web and I particularly recommend the list of books he suggests reading.
Steve Blank is famous worldwide (mea culpa for not mentioning him more before) for his theory on the Customer Developement. Whereas we all know that the high-tech world is not about technology (no it’s not; ideas and technologies are far from sufficient to explain this world), we have a tendency to focus on products (much more important than technologies) and markets (business vs. technology). But Steve Blank explains how products can be an illusion (if never sold to customers) and how markets can be extremely dangerous if not well understood; whereas what counts are the users of products, the people which make markets, i.e. the customers. He explains how important it is to interact with potential customers in an iterative manner (bottom-up) even before designing and developing the product, then while developing them and be careful about a top-bottom-only analysis of the markets.
This is one of his famous slides where he explains that Product Development in isolation is deathly and should be done in parallel with Customer Developement only. Start-ups do not need teams in Marketing, Sales or Business Development, but only two teams, in Product Development and Customer Development, each headed by one of the Founder(s)/CEO. Below is another detailed description of this process (also available online). Then when they become large, they can switch to the traditional models.
You should absolutely read this if you are in a start-up mode. This may help you avoid many (possibly deathly) mistakes. More on http://www.startup-book.com/2011/08/3...
July 16, 2012
(4.0) Good stuff, helpful resource, especially for enterprise software
* "Customer Development" should be the focus, rather than blind execution of product development
** You've got a product vision, so find your potential customers and cultivate them, learn from them
** Validate your vision, refine as appropriate
** Don't ramp up sales/marketing efforts till you have a repeatable, proven process for selling (and be sure it's repeatable for the mainstream market, not early adopters
* Know whether your entry is into a new market, existing market, niche market within existing market, low-cost entry into existing market
* Assess the market landscape...if existing market, is it a monopoly, duopoly etc.
* Recognizing these will help you guide your strategy (e.g. how long to expect sales to pick up (e.g. typically very long if a new market, "the chasm") for marketing/sales...don't scale up too soon
There's some really good stuff here, including checklists etc. It's really a manual for moving through from concept to market leader. I appreciate the thoughtfulness of the bibliography section as well; I'll definitely be adding some more books from there, as there are organized recommendations with quick summary and justification for the recommendaitons.
A few criticisms however:
* it's very focused on enterprise customers, does give some attention to consumer products, but not much, particularly in early phases where you're talking to your customers, looking among them for advisors etc.
* Terribly copyedited, which is odd since I'm reading the 4th edition. Plenty of time to have cleaned some of that up, even for self-published book. (e.g. two commas in a row, comma before period, sentences that make no sense)
* Figures are sloppy and suffer as a result. They could be tightened up considerably to make easier to read. Seems like someone cranked them out in PowerPoint and didn't assess for readability
* "Customer Development" should be the focus, rather than blind execution of product development
** You've got a product vision, so find your potential customers and cultivate them, learn from them
** Validate your vision, refine as appropriate
** Don't ramp up sales/marketing efforts till you have a repeatable, proven process for selling (and be sure it's repeatable for the mainstream market, not early adopters
* Know whether your entry is into a new market, existing market, niche market within existing market, low-cost entry into existing market
* Assess the market landscape...if existing market, is it a monopoly, duopoly etc.
* Recognizing these will help you guide your strategy (e.g. how long to expect sales to pick up (e.g. typically very long if a new market, "the chasm") for marketing/sales...don't scale up too soon
There's some really good stuff here, including checklists etc. It's really a manual for moving through from concept to market leader. I appreciate the thoughtfulness of the bibliography section as well; I'll definitely be adding some more books from there, as there are organized recommendations with quick summary and justification for the recommendaitons.
A few criticisms however:
* it's very focused on enterprise customers, does give some attention to consumer products, but not much, particularly in early phases where you're talking to your customers, looking among them for advisors etc.
* Terribly copyedited, which is odd since I'm reading the 4th edition. Plenty of time to have cleaned some of that up, even for self-published book. (e.g. two commas in a row, comma before period, sentences that make no sense)
* Figures are sloppy and suffer as a result. They could be tightened up considerably to make easier to read. Seems like someone cranked them out in PowerPoint and didn't assess for readability
May 3, 2023
I am torn between giving this book five stars and giving it two - it's an incredibly useful book to me personally, and I wish I'd read it years ago, but at the same time, it is turgidly written, complex, encrusted with typos and amateurish editing, and it is applicable to a narrow audience. However! If you are a member of that audience - entrepreneurs starting up a technology-based firm, especially one doing business-to-business - then it is incredibly useful, provided you can get through it and do what it says. My copy is heavily underlined and note riddled, a sure sign that I found it useful. I have purchased another copy for a friend - another good sign—and I will probably buy more. So I've settled on a rating of 3 stars with the caveat that some entrepreneurs will find it a life saved. The book is self-published and hard to find.
Update: Since I wrote this review, the book has been updated, the typos are fixed, and the editing is improved. I more strongly recommend it but with the same caveats. ~E
Update: Since I wrote this review, the book has been updated, the typos are fixed, and the editing is improved. I more strongly recommend it but with the same caveats. ~E
October 28, 2020
Мені дуже повезло прочитати цю книгу працюючи продутовим дизайнером. По дотошності, детальності і схематичності вона доходить до Спринта. Вона гарно описує реальність з якою стикається людина що працює в стартапі, особливо коли вона працює з дослідженнями користувачів, а також дає роудмепу і чекліст розвитку стартапу від ідеї до великої компанії.
January 8, 2019
This book was simply excellent! It helps to realistically identify the step that the startup is currently in and to take appropriate action.
Here are my key take-aways:
Customer Discovery
-A startup's goal is to understand customers and how they buy, and to build a repeatable financial model for these circumstances. (p. 10)
-"Premature selling is the immediate cause of the Death Spiral." (p. 14)
-When customers do not respond as expected, further execution on the same plan will lead to failure. (p. 29)
-"Startups, however, begin with a known product spec and tailor their Product Development to unknown customers. [...] In short, in big companies, the product spec is market-driven; in startups, the marketing is product-driven. [...] Product and Customer Development must go hand in hand. [...] In Customer Discovery, the Customer Development team strives to validate the product spec, not come up with a new set of features. Only if customers do not agree there's a problem to be solved, think the problem si not painful, or don't deem the product spec solves their problem, do the Customer and Product Development teams reconvene to add or refine features." (p. 37)
-Customer Discovery Step-by-Step: (1) State your hypothesis (Product Hypothesis, Customer & Problem Hypothesis, Distr. & Pricing Hypothesis, Demand Creation Hypothesis, Market Type Hypothesis, Competitive Hypothesis), (2) Test "Problem" Hypothesis (Friendly First Contacts, "Problem" Presentation, Customer Understanding, Market Knowledge), (3) Test "Product" Hypothesis (First Reality Check, "Product" Presentation, Yet More Customer Visits, Second Reality Check, 1st Advisory Board), (4) Verify (Verify the Problem, Verify the Product, Verify the Business Model, Iterate or Exit) (p. 40)
-Earlyvangelist characteristics: Has a problem, is aware of it, has been actively looking for a solution, assembled a solution out of parts, has a budget (p. 47)
-"You also want to articulate in writing both the business and product vision of why you started the company. Called a mission statement, at this point in your company's life this document is nothing more than 'what we were thinking when we were out raising money.' [...] When the company is confused about what product to build or what market you wanted to serve, refer to the mission statement."
-Both business and private customers have a higher total cost of ownership (TCO) than just the sales price of the product. For businesses, this is obvious (implementation/deployment, training, space), but for consumers, the needed changes in lifestyle, purchasing, or usage behavior are equally part of the TCO. (p. 57)
-How to pick a sales channel: "(1) Does the channel add value to the sales process? (2) What are the price and the complexity of the product? And (3) Are there established customer buying habits/practices?" (p. 68)
-"That means the further away from a direct sales force your channel is, the more expensive your demand creation activities are. Why? By their very appearance on a customer's doorstep a direct sales force is not only selling your product, they are implicitly marketing and advertising it. At the other extreme, a retail channel (Wal-Mart, a grocery store shelf or a website) is nothing more than a shelf on which the product passively sits." (p. 70)
-Develop an innovators list as a subset of your contact list. Innovators can well-respected companies, departments, or individuals. They will later help you as advisory board members and industry influencers. (p. 79)
-Always ask your contacts for further contacts. Always reference someone when calling an executive's secretary. Draft an email for your contacts that they can forward to their contacts. Follow up with a phone call: Say who referred you, say which problem you solve, and say that you want to find out how the executive's company is solving the problem right now. (pp. 80-81)
-Problem presentation: List problems, today's solutions, and the new solution (p. 82)
-Customer understanding: Find out how your customers spend their day. (p. 84)
-The goal of finding a good product concept is having a single paragraph feature that you can sell to many customers, not having a 10-page feature that you can only sell to 10 customers. (p. 89)
-There has to be an agreement between the Product and the Customer Development groups that: All features past the first version may be trashed, features for the first version may change or be deleted to get the product out, product development will provide a one-page 18-month or 3-release product schedule, determine the market type and the differentiating factors of your company. (p. 90)
-Draw the customers workflow in the presentation with "before" and "after." You are still not selling, only discovering whether the product is salable. (p. 91)
-You can ask visionary customers that seem to be very interested in buying if they would deploy the software enterprise-wide if it were free. Then you ask them what steps they would take when deploying the software. And then you ask if they would pay $1m and how they would find about such a product and what the approval cycle is. Ask who has the money. Ask potential channel partners what they need to have before placing an order. (pp. 93-94)
-There are four possible customer reactions: They love the product how it is, the wan additional features, they understand the product after a long explanation but did not do anything to have it sold to them, the customer does not see a need. "Additional features" is the most dangerous response. The two last categories are most typical for first round Customer Discovery. Software repackaging/modularization may help here. (pp. 95-97)
Customer Validation
-Sales Roadmap questions that need to be answered before executing any sales process: "Are we sure we have product/market fit? Who influences a sale? Who recommends a sale? Who is the decision-maker? Who is the economic buyer? Who is the saboteur? Where is the budget for purchasing the type of product you're selling? How many sales calls are needed per sale? How long does an average sale take from beginning to end? What is the selling strategy? Is this a solution sale? If so what are 'key customer problems'? What is the profile of the optimal visionary buyer, the earlyvangelist every startup needs?" (p. 111)
-The Customer Validation Team: Customer Validation should not be delegated to the VP of Sales as the startup is still in learning mode. (p. 111)
-Sales material: Website, sales presentations, demos, data sheets, price lists, contracts, billing system (pp. 118-120)
-Advisory board roles: Technical, business, customer, industry, sales/marketing (p. 135)
-Channel partners are not customers. Your have to create demand pull yourself. (p. 144)
Customer Creation
-Early marketing spending is worth nothing if you try to create a new market, if the customer base is small, and if company growth is limited by outside factors. (p. 160)
-New Lanchester Strategy: If a single company has more than 74% market share, a startup cannot face the competition, if the combined market share of the two largest competitors is greater than 74% and the first company is within 1.7 times the share of the second, it is also impossible for a startup to success, if a company has more than 41% market share and is at least 1.7 times larger than the second largest competitor, it is very difficult to enter, if a company has more than 26% market share, the market is unstable, if the market leader has less than 26% market share, a startup can also enter. The cost of entry for a startup vs. the leader's sales & marketing budget is 3:1 for market leader situations and 1.7:1 for polypolistic situations. (pp. 163-164)
-"Startups creating new markets will not create a market of substantial size to generate a profit until three or seven years from product launch." (p. 166)
-The first mover advantage is simply nonexistent. (p. 177)
Company Building
-Company building has 3 components: Build a mainstream customer base; build the organization, the management, and the culture; create fast-response departments. (p. 213)
-There is a third way between startup chaos and corporate rigidity. (p. 216)
-Stages in the Evolution from Startup to Large Company: Customer Development (team-centric) -> Company Building (mission-centric) -> Large Company (process-centric) (p. 217)
-Departments can be organized in an agile way by allowing efficient OODA loops (observe, orient, decide, act). (p. 248)
Here are my key take-aways:
Customer Discovery
-A startup's goal is to understand customers and how they buy, and to build a repeatable financial model for these circumstances. (p. 10)
-"Premature selling is the immediate cause of the Death Spiral." (p. 14)
-When customers do not respond as expected, further execution on the same plan will lead to failure. (p. 29)
-"Startups, however, begin with a known product spec and tailor their Product Development to unknown customers. [...] In short, in big companies, the product spec is market-driven; in startups, the marketing is product-driven. [...] Product and Customer Development must go hand in hand. [...] In Customer Discovery, the Customer Development team strives to validate the product spec, not come up with a new set of features. Only if customers do not agree there's a problem to be solved, think the problem si not painful, or don't deem the product spec solves their problem, do the Customer and Product Development teams reconvene to add or refine features." (p. 37)
-Customer Discovery Step-by-Step: (1) State your hypothesis (Product Hypothesis, Customer & Problem Hypothesis, Distr. & Pricing Hypothesis, Demand Creation Hypothesis, Market Type Hypothesis, Competitive Hypothesis), (2) Test "Problem" Hypothesis (Friendly First Contacts, "Problem" Presentation, Customer Understanding, Market Knowledge), (3) Test "Product" Hypothesis (First Reality Check, "Product" Presentation, Yet More Customer Visits, Second Reality Check, 1st Advisory Board), (4) Verify (Verify the Problem, Verify the Product, Verify the Business Model, Iterate or Exit) (p. 40)
-Earlyvangelist characteristics: Has a problem, is aware of it, has been actively looking for a solution, assembled a solution out of parts, has a budget (p. 47)
-"You also want to articulate in writing both the business and product vision of why you started the company. Called a mission statement, at this point in your company's life this document is nothing more than 'what we were thinking when we were out raising money.' [...] When the company is confused about what product to build or what market you wanted to serve, refer to the mission statement."
-Both business and private customers have a higher total cost of ownership (TCO) than just the sales price of the product. For businesses, this is obvious (implementation/deployment, training, space), but for consumers, the needed changes in lifestyle, purchasing, or usage behavior are equally part of the TCO. (p. 57)
-How to pick a sales channel: "(1) Does the channel add value to the sales process? (2) What are the price and the complexity of the product? And (3) Are there established customer buying habits/practices?" (p. 68)
-"That means the further away from a direct sales force your channel is, the more expensive your demand creation activities are. Why? By their very appearance on a customer's doorstep a direct sales force is not only selling your product, they are implicitly marketing and advertising it. At the other extreme, a retail channel (Wal-Mart, a grocery store shelf or a website) is nothing more than a shelf on which the product passively sits." (p. 70)
-Develop an innovators list as a subset of your contact list. Innovators can well-respected companies, departments, or individuals. They will later help you as advisory board members and industry influencers. (p. 79)
-Always ask your contacts for further contacts. Always reference someone when calling an executive's secretary. Draft an email for your contacts that they can forward to their contacts. Follow up with a phone call: Say who referred you, say which problem you solve, and say that you want to find out how the executive's company is solving the problem right now. (pp. 80-81)
-Problem presentation: List problems, today's solutions, and the new solution (p. 82)
-Customer understanding: Find out how your customers spend their day. (p. 84)
-The goal of finding a good product concept is having a single paragraph feature that you can sell to many customers, not having a 10-page feature that you can only sell to 10 customers. (p. 89)
-There has to be an agreement between the Product and the Customer Development groups that: All features past the first version may be trashed, features for the first version may change or be deleted to get the product out, product development will provide a one-page 18-month or 3-release product schedule, determine the market type and the differentiating factors of your company. (p. 90)
-Draw the customers workflow in the presentation with "before" and "after." You are still not selling, only discovering whether the product is salable. (p. 91)
-You can ask visionary customers that seem to be very interested in buying if they would deploy the software enterprise-wide if it were free. Then you ask them what steps they would take when deploying the software. And then you ask if they would pay $1m and how they would find about such a product and what the approval cycle is. Ask who has the money. Ask potential channel partners what they need to have before placing an order. (pp. 93-94)
-There are four possible customer reactions: They love the product how it is, the wan additional features, they understand the product after a long explanation but did not do anything to have it sold to them, the customer does not see a need. "Additional features" is the most dangerous response. The two last categories are most typical for first round Customer Discovery. Software repackaging/modularization may help here. (pp. 95-97)
Customer Validation
-Sales Roadmap questions that need to be answered before executing any sales process: "Are we sure we have product/market fit? Who influences a sale? Who recommends a sale? Who is the decision-maker? Who is the economic buyer? Who is the saboteur? Where is the budget for purchasing the type of product you're selling? How many sales calls are needed per sale? How long does an average sale take from beginning to end? What is the selling strategy? Is this a solution sale? If so what are 'key customer problems'? What is the profile of the optimal visionary buyer, the earlyvangelist every startup needs?" (p. 111)
-The Customer Validation Team: Customer Validation should not be delegated to the VP of Sales as the startup is still in learning mode. (p. 111)
-Sales material: Website, sales presentations, demos, data sheets, price lists, contracts, billing system (pp. 118-120)
-Advisory board roles: Technical, business, customer, industry, sales/marketing (p. 135)
-Channel partners are not customers. Your have to create demand pull yourself. (p. 144)
Customer Creation
-Early marketing spending is worth nothing if you try to create a new market, if the customer base is small, and if company growth is limited by outside factors. (p. 160)
-New Lanchester Strategy: If a single company has more than 74% market share, a startup cannot face the competition, if the combined market share of the two largest competitors is greater than 74% and the first company is within 1.7 times the share of the second, it is also impossible for a startup to success, if a company has more than 41% market share and is at least 1.7 times larger than the second largest competitor, it is very difficult to enter, if a company has more than 26% market share, the market is unstable, if the market leader has less than 26% market share, a startup can also enter. The cost of entry for a startup vs. the leader's sales & marketing budget is 3:1 for market leader situations and 1.7:1 for polypolistic situations. (pp. 163-164)
-"Startups creating new markets will not create a market of substantial size to generate a profit until three or seven years from product launch." (p. 166)
-The first mover advantage is simply nonexistent. (p. 177)
Company Building
-Company building has 3 components: Build a mainstream customer base; build the organization, the management, and the culture; create fast-response departments. (p. 213)
-There is a third way between startup chaos and corporate rigidity. (p. 216)
-Stages in the Evolution from Startup to Large Company: Customer Development (team-centric) -> Company Building (mission-centric) -> Large Company (process-centric) (p. 217)
-Departments can be organized in an agile way by allowing efficient OODA loops (observe, orient, decide, act). (p. 248)
January 18, 2018
Полезно про стартапы - какие типы бывают, как выходить на рынок, причины провала. Сократить бы раза в 2 размер, на мой взгляд, местами водянисто. Заметки ниже.
Разница между победителями и проигравшими проста. Когда топ-менеджмент компании с самого начала выходит из офиса и много и часто общается с потребителями, развитие продукта завершается успехом. Когда судьба продукта отдается полностью в руки департаментов по продажам и маркетингу, которые не вовлечены напрямую собственно в процесс разработки нового продукта, компанию ждет поражение. Здесь нет ничего сложного.
Настоящий предприниматель не сочтет за труд «снизойти» до потребителя, который сказал «нет», и постарается сделать так, чтобы «нет» превратилось в «да».
Именно способность учиться на своих ошибках отличает успешный стартап от тех, что исчезли без следа.
Все стартапы делятся на четыре основные категории:
● Те, что выводят новый продукт на существующий рынок.
● Те, что выводят новый продукт на новый рынок .
● Те, что выводят новый продукт на существующий рынок и пытаются ресегментировать данный рынок и создать дешевый продукт .
● Те, что выводят новый продукт на существующий рынок и пытаются ресегментировать данный рынок и создать нишевой продукт .
Составляя резюме, дайте предварительный ответ всего на один вопрос: выходит ли компания на существующий рынок, занимается ресегментацией сложившегося рынка или создает новый рынок?
Стартапу подходит еще одно правило этой стратегии: если вы решили штурмовать рынок, на котором доминирует монополист, вы должны быть готовы потратить на продажи и маркетинг в три раза больше лидера рынка. (Да-да, такова цена лобовой атаки Microsoft.) Цена выхода на рынок со множеством участников будет ниже, но вам все равно придется потратить на продажи и маркетинг в 1,7 раза больше средств, чем компания, с которой вы собираетесь конкурировать. (Выходя на существующий рынок, вы отбираете свою долю у нынешних участников, отсюда аналогии с военными действиями.)
Держа в уме заманчивую цель добиться доминирования на новом рынке (а доминантные игроки определяют стандарты, цены и позиционирование), добавлю одно последнее правило: стартапы, создающие новый рынок, не в состоянии создать его настолько большим, чтобы получить прибыль в период от трех до семи лет с момента запуска продукта. Эта отрезвляющая цифра родилась из наблюдений за результатами работы сотен высокотехнологичных стартапов за последние двадцать лет.
Ирония в том, что когда инвесторам оказывается нужен импульс и гибкость в деятельности компании, чтобы она получила массового потребителя, они спотыкаются о сложную бюрократическую систему, в то время как предпринимателям сложно бывает адаптировать свой стиль управления к успеху, которому они сами же и способствовали.
Разница между победителями и проигравшими проста. Когда топ-менеджмент компании с самого начала выходит из офиса и много и часто общается с потребителями, развитие продукта завершается успехом. Когда судьба продукта отдается полностью в руки департаментов по продажам и маркетингу, которые не вовлечены напрямую собственно в процесс разработки нового продукта, компанию ждет поражение. Здесь нет ничего сложного.
Настоящий предприниматель не сочтет за труд «снизойти» до потребителя, который сказал «нет», и постарается сделать так, чтобы «нет» превратилось в «да».
Именно способность учиться на своих ошибках отличает успешный стартап от тех, что исчезли без следа.
Все стартапы делятся на четыре основные категории:
● Те, что выводят новый продукт на существующий рынок.
● Те, что выводят новый продукт на новый рынок .
● Те, что выводят новый продукт на существующий рынок и пытаются ресегментировать данный рынок и создать дешевый продукт .
● Те, что выводят новый продукт на существующий рынок и пытаются ресегментировать данный рынок и создать нишевой продукт .
Составляя резюме, дайте предварительный ответ всего на один вопрос: выходит ли компания на существующий рынок, занимается ресегментацией сложившегося рынка или создает новый рынок?
Стартапу подходит еще одно правило этой стратегии: если вы решили штурмовать рынок, на котором доминирует монополист, вы должны быть готовы потратить на продажи и маркетинг в три раза больше лидера рынка. (Да-да, такова цена лобовой атаки Microsoft.) Цена выхода на рынок со множеством участников будет ниже, но вам все равно придется потратить на продажи и маркетинг в 1,7 раза больше средств, чем компания, с которой вы собираетесь конкурировать. (Выходя на существующий рынок, вы отбираете свою долю у нынешних участников, отсюда аналогии с военными действиями.)
Держа в уме заманчивую цель добиться доминирования на новом рынке (а доминантные игроки определяют стандарты, цены и позиционирование), добавлю одно последнее правило: стартапы, создающие новый рынок, не в состоянии создать его настолько большим, чтобы получить прибыль в период от трех до семи лет с момента запуска продукта. Эта отрезвляющая цифра родилась из наблюдений за результатами работы сотен высокотехнологичных стартапов за последние двадцать лет.
Ирония в том, что когда инвесторам оказывается нужен импульс и гибкость в деятельности компании, чтобы она получила массового потребителя, они спотыкаются о сложную бюрократическую систему, в то время как предпринимателям сложно бывает адаптировать свой стиль управления к успеху, которому они сами же и способствовали.
February 19, 2015
Очень и очень рекомендую данную книгу всем-всем-всем предпринимателям, менеджерам, инвесторам да и другим специалистам, которых интересуют вопросы запуска бизнеса, удержания «на волне», и его эффективное развитие.
Найти похожую книгу весьма редчайшее удовольствие. Одно из преимуществ данной работы это очень и очень качественный материал и легкая форма подачи, понятная даже для «чайников». А ещё вы найдёте в данной книги те советы, которые можно получить только у опытных практиков, а не у паркетных теоретиков. За эту книгу на заре своего предпринимательства я бы отдал всё своё имущество!!! И только сейчас, читая книгу, и оглядываясь назад я понял, увидел и осознал все эти десятки и сотни ошибок своего прошлого опыта, о многих которых даже не подозревал, и о некоторых, в существование которых было только смутное подозрение. И я УВЕРЕН, что у подавляющего числа ОПЫТНЫХ предпринимателей будет такое же впечатление.
Поэтому обязательно прочтите «Четыре шага к озарению» и вооружитесь мощным «оружейным комплексом» в виде знаний высшего уровня предпринимательской деятельности. И пусть она служить вам верой и правдой как лучшая инструкция по руководству бизнеса. И как верно подмечено в книге: «Только степень потёртостей страниц и количество закладок» должны быть прямо пропорциональными вашим успехам в личном деле.
Найти похожую книгу весьма редчайшее удовольствие. Одно из преимуществ данной работы это очень и очень качественный материал и легкая форма подачи, понятная даже для «чайников». А ещё вы найдёте в данной книги те советы, которые можно получить только у опытных практиков, а не у паркетных теоретиков. За эту книгу на заре своего предпринимательства я бы отдал всё своё имущество!!! И только сейчас, читая книгу, и оглядываясь назад я понял, увидел и осознал все эти десятки и сотни ошибок своего прошлого опыта, о многих которых даже не подозревал, и о некоторых, в существование которых было только смутное подозрение. И я УВЕРЕН, что у подавляющего числа ОПЫТНЫХ предпринимателей будет такое же впечатление.
Поэтому обязательно прочтите «Четыре шага к озарению» и вооружитесь мощным «оружейным комплексом» в виде знаний высшего уровня предпринимательской деятельности. И пусть она служить вам верой и правдой как лучшая инструкция по руководству бизнеса. И как верно подмечено в книге: «Только степень потёртостей страниц и количество закладок» должны быть прямо пропорциональными вашим успехам в личном деле.
May 25, 2014
A must-read if you're going to start an organization or business.
Some takeaways:
* In the early stages of start-up, focusing on 'execution' will put you out of business. Instead, you need a 'learning and discovery' process so you can get the company to the point where you know what to execute.
* Before you can build and sell a a product, you have to answer some very basic questions: 1. What are the problems our product solves? 2. Do customers perceive these problems as important? 3. How many customers do we need to be profitable? 4. What's the average order size?
* The ability to learn from missteps in the early days is what distinguishes a successful start-up from those whose names are forgotten.
* Don't set-out to prove your product is viable. Set-out to discover if there is a need for your product.
* The Four Building Blocks of Customer Creation: 1. Year-one objectives. 2. Positioning: both company and product. 3. Launch: both company and product. 4. Create demand for the product.
Some takeaways:
* In the early stages of start-up, focusing on 'execution' will put you out of business. Instead, you need a 'learning and discovery' process so you can get the company to the point where you know what to execute.
* Before you can build and sell a a product, you have to answer some very basic questions: 1. What are the problems our product solves? 2. Do customers perceive these problems as important? 3. How many customers do we need to be profitable? 4. What's the average order size?
* The ability to learn from missteps in the early days is what distinguishes a successful start-up from those whose names are forgotten.
* Don't set-out to prove your product is viable. Set-out to discover if there is a need for your product.
* The Four Building Blocks of Customer Creation: 1. Year-one objectives. 2. Positioning: both company and product. 3. Launch: both company and product. 4. Create demand for the product.
May 15, 2020
The best book I've read on customer discovery, i.e. how to figure out what customers want. Or more specifically, who will buy your product.
The 2nd half of the book was not very good at all. I could have stopped halfway and gotten 100% of the value I got from the book. The first half is about customer discovery. The 2nd half is about values, leading a company, scaling a team, etc.
This book is amazing at customer discovery, and not so amazing at the rest. That said, I learned a ton. Here were some key notes:
1) The initial product idea and feature list comes from the founder(s). You don't interview customers to build your feature list. The purpose of customer discovery is to find which customer, message, and market will resonate with your product as it is.
You may discover that the product needs to change, as you do your interviews. But don't start by going out and asking what customers want; instead start by building the product you have a vision for. Use interviews to find the market (and/or validate that it exists.)
2) Don't stop product development to wait for customer development. Customer development runs in parallel with product development, and will catch up to it. Having a product to show customers can help the customer development process.
3) Write down your hypothesis before interviewing customers. You should have written hypothesis on:
----- Product (what to build),
----- Customers (who they are),
----- Problem (what you're solving),
----- Channel / Pricing (where they'll learn about you),
----- Demand creation,
----- Market type (new vs existing, niching or low cost),
----- Competition
4) As you're interviewing customers, try to narrow down on the MINIMUM NUMBER of features that need to work before you can launch, and/or before customers will want to use your product.
5) The ideal customer has not only looked for a product like yours, but hacked together something like it to solve the problem for themselves.
6) Questions to ask in an interview include:
----- If you could wave a magic wand, what would you change? (About your problem, or competitor's product)
----- What's a day like for you?
----- What is the minimum set of features you need, to use this? What is the smallest scope the customer would actually use?
----- If you heard ______ in an ad, would you be compelled to try it? (Copy / tagline)
----- How did you hear about Personal Capital / Acorns / etc? (Competitor they're using)
----- What blogs, books, podcasts, etc do you read or listen to about money?
The 2nd half of the book was not very good at all. I could have stopped halfway and gotten 100% of the value I got from the book. The first half is about customer discovery. The 2nd half is about values, leading a company, scaling a team, etc.
This book is amazing at customer discovery, and not so amazing at the rest. That said, I learned a ton. Here were some key notes:
1) The initial product idea and feature list comes from the founder(s). You don't interview customers to build your feature list. The purpose of customer discovery is to find which customer, message, and market will resonate with your product as it is.
You may discover that the product needs to change, as you do your interviews. But don't start by going out and asking what customers want; instead start by building the product you have a vision for. Use interviews to find the market (and/or validate that it exists.)
2) Don't stop product development to wait for customer development. Customer development runs in parallel with product development, and will catch up to it. Having a product to show customers can help the customer development process.
3) Write down your hypothesis before interviewing customers. You should have written hypothesis on:
----- Product (what to build),
----- Customers (who they are),
----- Problem (what you're solving),
----- Channel / Pricing (where they'll learn about you),
----- Demand creation,
----- Market type (new vs existing, niching or low cost),
----- Competition
4) As you're interviewing customers, try to narrow down on the MINIMUM NUMBER of features that need to work before you can launch, and/or before customers will want to use your product.
5) The ideal customer has not only looked for a product like yours, but hacked together something like it to solve the problem for themselves.
6) Questions to ask in an interview include:
----- If you could wave a magic wand, what would you change? (About your problem, or competitor's product)
----- What's a day like for you?
----- What is the minimum set of features you need, to use this? What is the smallest scope the customer would actually use?
----- If you heard ______ in an ad, would you be compelled to try it? (Copy / tagline)
----- How did you hear about Personal Capital / Acorns / etc? (Competitor they're using)
----- What blogs, books, podcasts, etc do you read or listen to about money?
August 13, 2019
Despite being one of the first books on the topic of "lean" startup methodologies, it is obvious why it didn't catch on. The author gives complicated and tedious explanations of simple ideas. There is too much made up terminology and an overall textbook feel to it. The focus is completely on B2B companies which is fine as long as it was conveyed properly but that was not the case. Despite these shortcomings, the underlying ideas of the book are timeless.
September 30, 2021
This is actually two books masquerading as one. The first is full of great advice on how to identify a genuine customer need and validate it before creating a company around it. In my opinion, you should absolutely read this part, ideally 1-2 years before setting up shop. The second half is largely standard advice about scaling your product and marketing efforts as the mist around customer expectations starts to clear. The author Steve Blank has built many successful startups, consults for VC firms and is a passionate teacher at Stanford and Berkeley - https://steveblank.com/about. The operating context for the book seems to be B2B companies (no specific talk about SaaS vs On Prem) doing some kind of enterprise workflows and driven by sales + marketing.
I learnt a lot from the first two "Steps": Customer Discovery and Customer Validation. You should bounce back and forth between these steps till clarity is attained. In practice, these phases should feel substantially different from the "Product" development model where you spend most of your attention on the Product because the "Customer" part is thought to be well understood.
It takes experience and humility to acknowledge that discovering a worthwhile customer problem to solve and validating your understanding about it are easier said than done! It’s for this same reason I feel you should read this book a year or two before starting a company. Moreover, if you’re planning to launch a B2B product that also has to earn money from the get go, you better have domain expertise and a list of prospects. This book is too optimistic in assuming you can succeed without meeting either of these prerequisites.
Anyway, to list just a few of the many, many great points I took away from its first half:
1. "The facts" live outside your building. So go out and talk to customers, make lots of calls, buy lots of lunches.
2. The problem should be sufficiently painful that customers' eyes will light up when you start describing your solution. If you already have a solution ready, they should have no hesitation in reaching for their wallet.
3. Despite talking to customers, you'll be going with the founder's instincts on many decisions w.r.t the product. When you talk to prospects, try to sell the product you've built and not promise one-off changes. Don't try to convince, because that means your value proposition was not strong enough. If you meet a prospect who's not able to perceive the problem, or is only dimly able to comprehend the solution, move on.
4. Search till you find "earlyvangelists", who are people who are not only aware of the problem, but are actively looking for some kind of solution and have a budget to go with it. These are not equivalent to the "early adopters" of Crossing the Chasm (those would be people who are into novelty for its own sake).
5. Your end goal should be to find a repeatable roadmap of how customers buy, and a path to profitability.
At this point I should pause to point out - as the author also does repeatedly - how different this feels from a typical sales effort in larger companies. You're not compiling long lists of features, not promising what the customer asks for. Instead you're validating if you have a market for what you've built, takers for your vision. That's not to say disregard customer feedback entirely. But only examine them in aggregate and look for patterns in it before you start "pivoting".
6. There are four different market contexts, with massive implications for your customer discovery and adoption process: i) New product in existing market (without segmenting) ii) New product in new market iii) Segmenting existing market at low end iv) Segmenting existing market in other ways. The book deals with these four market types in great detail.
I started to feel my interest wane in the latter two Steps: Customer Creation and Company Building. Customer Creation is akin to marketing and demand generation. Assuming you’ve kept in mind the specific insights into your customers and the type of market, you should be able to refer to any good material about marketing. Ditto with Company Building. The book has some real life stories on how the role of the executive team should change as the company evolves, but nothing earth shattering.
A word of warning about the writing style: you could miss the wood for the trees due to the sheer verbosity of this book and the seemingly endless parade of bullet points (Five Characteristics of Earlyvangelists, Four Types of Markets, Four Phases of Customer Discovery where each Phase has its own A,B,C,D,E ..etc). There are also many workbook style questions you can ask yourself at various points during the Four Steps.
But Blank's obsession with detail begets two crucial features that are usually lacking in books of this type: i) You almost always know the Context for which a piece of advice is being given ii) You're also given ways to Verify whether the advice is actually working.
There's somewhat of a shortage of examples. Some chapters begin promisingly with anecdotes, but they're soon forgotten and you find yourself wading through paragraphs of prescriptive text on how to write down hypotheses, create presentations and so on. There's a surprisingly good Bibliography at the end, where Blank explains the origins of some of his ideas and recommends other books.
I learnt a lot from the first two "Steps": Customer Discovery and Customer Validation. You should bounce back and forth between these steps till clarity is attained. In practice, these phases should feel substantially different from the "Product" development model where you spend most of your attention on the Product because the "Customer" part is thought to be well understood.
It takes experience and humility to acknowledge that discovering a worthwhile customer problem to solve and validating your understanding about it are easier said than done! It’s for this same reason I feel you should read this book a year or two before starting a company. Moreover, if you’re planning to launch a B2B product that also has to earn money from the get go, you better have domain expertise and a list of prospects. This book is too optimistic in assuming you can succeed without meeting either of these prerequisites.
Anyway, to list just a few of the many, many great points I took away from its first half:
1. "The facts" live outside your building. So go out and talk to customers, make lots of calls, buy lots of lunches.
2. The problem should be sufficiently painful that customers' eyes will light up when you start describing your solution. If you already have a solution ready, they should have no hesitation in reaching for their wallet.
3. Despite talking to customers, you'll be going with the founder's instincts on many decisions w.r.t the product. When you talk to prospects, try to sell the product you've built and not promise one-off changes. Don't try to convince, because that means your value proposition was not strong enough. If you meet a prospect who's not able to perceive the problem, or is only dimly able to comprehend the solution, move on.
4. Search till you find "earlyvangelists", who are people who are not only aware of the problem, but are actively looking for some kind of solution and have a budget to go with it. These are not equivalent to the "early adopters" of Crossing the Chasm (those would be people who are into novelty for its own sake).
5. Your end goal should be to find a repeatable roadmap of how customers buy, and a path to profitability.
At this point I should pause to point out - as the author also does repeatedly - how different this feels from a typical sales effort in larger companies. You're not compiling long lists of features, not promising what the customer asks for. Instead you're validating if you have a market for what you've built, takers for your vision. That's not to say disregard customer feedback entirely. But only examine them in aggregate and look for patterns in it before you start "pivoting".
6. There are four different market contexts, with massive implications for your customer discovery and adoption process: i) New product in existing market (without segmenting) ii) New product in new market iii) Segmenting existing market at low end iv) Segmenting existing market in other ways. The book deals with these four market types in great detail.
I started to feel my interest wane in the latter two Steps: Customer Creation and Company Building. Customer Creation is akin to marketing and demand generation. Assuming you’ve kept in mind the specific insights into your customers and the type of market, you should be able to refer to any good material about marketing. Ditto with Company Building. The book has some real life stories on how the role of the executive team should change as the company evolves, but nothing earth shattering.
A word of warning about the writing style: you could miss the wood for the trees due to the sheer verbosity of this book and the seemingly endless parade of bullet points (Five Characteristics of Earlyvangelists, Four Types of Markets, Four Phases of Customer Discovery where each Phase has its own A,B,C,D,E ..etc). There are also many workbook style questions you can ask yourself at various points during the Four Steps.
But Blank's obsession with detail begets two crucial features that are usually lacking in books of this type: i) You almost always know the Context for which a piece of advice is being given ii) You're also given ways to Verify whether the advice is actually working.
There's somewhat of a shortage of examples. Some chapters begin promisingly with anecdotes, but they're soon forgotten and you find yourself wading through paragraphs of prescriptive text on how to write down hypotheses, create presentations and so on. There's a surprisingly good Bibliography at the end, where Blank explains the origins of some of his ideas and recommends other books.
June 12, 2022
Inverting the idea of a company from being product oriented to customer / problem oriented. What that means at a tactical level which was quite useful.
October 1, 2025
A profound guide to understanding the lifecycle of startups, showing why traditional business thinking doesn’t directly apply. Essential reading for aspiring entrepreneurs who want to save time, avoid costly mistakes, and build sustainable businesses faster.
December 1, 2017
Great book! I recommend it to everyone starting a new business or working on getting their product out in the market. It proposes a customer-centered rather than a product-centered approach, one I truly believe is the X factor in a start-up success.
February 19, 2015
provides fresh approach on how to find your customer through the customer development process. it is a good read with the lean startup.
June 26, 2015
should be read with the lean starup at the same time.
April 7, 2023
Four Steps to the Epiphany was a catalyst for the Lean Startup movement. Steve Blank presents an extremely thorough and iterative approach to efficiently building a business focussed on his customer centric “Customer Development” model. He provides classifications for different types of businesses according to market type and tangibly discusses the implications of each market type at each step.
A lot of modern startup advice is derived from this book and given to founders without context about the market or business stage the advice applies to. Read this book to understand the critical nuances!
The four steps are:
🔎 Customer discovery: assess whether the product solves visionary customer needs.
✔️ Customer validation: develop a sales model that can be replicated with visionary customers.
🔨 Customer creation: scale sales to visionary customers and start to cross the chasm to mainstream customers.
📈 Company building: transition the business from a chaotic startup to an established business.
Blank also outlines four market types that he believes have vastly different implications for how to grow a business:
- Existing market, new product
- New market, new product
- Existing market, low cost product
- Existing market, niche product
2 best takeaways:
- If you have a new product in a new market then you need to educate your market and be patient as it can take a long time.
- Learning about customers should be the primary goal for an early stage business. Don't take shortcuts.
My full notes are on my substack: https://lachysnotes.substack.com/p/fo...
A lot of modern startup advice is derived from this book and given to founders without context about the market or business stage the advice applies to. Read this book to understand the critical nuances!
The four steps are:
🔎 Customer discovery: assess whether the product solves visionary customer needs.
✔️ Customer validation: develop a sales model that can be replicated with visionary customers.
🔨 Customer creation: scale sales to visionary customers and start to cross the chasm to mainstream customers.
📈 Company building: transition the business from a chaotic startup to an established business.
Blank also outlines four market types that he believes have vastly different implications for how to grow a business:
- Existing market, new product
- New market, new product
- Existing market, low cost product
- Existing market, niche product
2 best takeaways:
- If you have a new product in a new market then you need to educate your market and be patient as it can take a long time.
- Learning about customers should be the primary goal for an early stage business. Don't take shortcuts.
My full notes are on my substack: https://lachysnotes.substack.com/p/fo...
November 18, 2018
The core gist of the Customer Development process parallel to a typical product development process is the core message and is very well articulated. Perhaps an article expanded into a book with a few skirmishes from the era long gone when customer validation happened primarily with ethnographical evidence only which today is not complete without considering the changing market conditions brought by cloud, BYOD, subscriptions and product->company versus company->product mindset.
The lean startup from Eric Reis (his student I think) and Business Model Canvas (Alexander Osterwalder) are more relevant and applicable IMHO.
The first and the last chapter are worth a good read through and thus am looking forward to reading his 'The Startup Owner's Manual' soon.
The lean startup from Eric Reis (his student I think) and Business Model Canvas (Alexander Osterwalder) are more relevant and applicable IMHO.
The first and the last chapter are worth a good read through and thus am looking forward to reading his 'The Startup Owner's Manual' soon.
July 9, 2023
85%
What makes this book really useful, Is it shows you how to target and exploit certain marketing advantages, So that you can win over market position.
It's a lot of hard work.,, No, not exactly hard but time consuming an expensive. So it's your job to make sure that it's The least stressful the least time consuming and the least expensive as possible.
So it did give me a few more ideas and build my confidence in marketing, And confidence is king baby.
What makes this book really useful, Is it shows you how to target and exploit certain marketing advantages, So that you can win over market position.
It's a lot of hard work.,, No, not exactly hard but time consuming an expensive. So it's your job to make sure that it's The least stressful the least time consuming and the least expensive as possible.
So it did give me a few more ideas and build my confidence in marketing, And confidence is king baby.
November 29, 2020
Very interesting book for entrepreneurs. Though it is a bit old already, most of what it says, is very common sense.
December 27, 2022
A very dense--but useful--read.
December 29, 2025
The original Startup 101 book. Pretty good; easy to read.
Notes:
- Traditional “Product Development” is flawed because it excludes “CUSTOMER Development.”
- Startups don’t fail because they lack a product; they fail because they lack customers and a proven financial model.
- Just because you can find some beta tester customers doesn’t mean they’re representative of a scalable mainstream market; the majority of people reside in the mainstream market.
- “In a startup, no facts exist inside the building, only opinions.”
- Premature scaling, especially on untested assumptions, is what causes a death spiral and unsustainable burn rate.
- Product Development model (wrong) = 1. Concept 2. Development 3. Testing 4. Launch
- Customer Development model (correct) = (1) Customer Discovery (2) Customer Validation (3) Customer Creation (4) Company Building
- Product Development and Customer Development are parallel processes.
- The goal of Customer Development is to find a market for the product as spec’d, not to develop or refine a spec based on a market that is unknown; in big companies, the product spec is market-driven, whereas in startups, the marketing is product-driven.
- A product that allows users to do something they couldn’t do before = creating a new market.
- Four Market Types: (1) New product in an existing market: competitors define the market, and the basis of competition is all about the product and the product features (2) New product in a new market: problem is how to convince a set of customers to buy your vision (3) New product resegmenting an existing market via low cost: find customers who will buy “good enough” product cheaper (4) New product resegmenting an existing market via niche: “would some part of this market buy a new product designed to address their specific needs?”
- Earlyevangelists also need to have the budget to purchase your product. Think about customer’s problem pains on a scale; the best Earlyevangelists will have enough pain to have made a makeshift solution, etc.
- Start product development based on your vision and experience as the founder and find customers willing to buy that product and then tailor the product to meet their needs. If no one buys the product as spec’d, then build some features customers have requested. Avoid an endless list of requests.
- You need to understand the customer pain at different levels of the company and for different users, economic buyers, decision makers, etc. Each person’s answer to “if you could wave a magic wand…” will give you the best way to present your product.
- Make a customer influence map of everyone that surrounds the user; this will be your sales roadmap.
- Calculate and demonstrate ROI to your customer, including payback time if possible. Earlyevangelists will use the ROI of your product to make the internal sale.
- Need to understand minimum feature set customers will pay for in short term; this is easier said than done.
- Sometimes asking the customer if they’d pay $1 million can prompt them to say something like “…I wouldn’t pay more than $____ for something like this!…” which can give you great insight.
- Who the influencers are in your industry may impact who you choose are your advisory board.
- When resegmenting an existing market, some questions to ask yourself are: (1) what needs of customers are unmet by existing suppliers (2) why couldn’t existing companies offer the same thing (3) given no customers yet exist in your new segment, what are realistic year 1-3 sales forecasts?
- The difference between a winning and a losing startup is that winners understand why customers buy.
- Contacting potential customers and convincing them to give you some of their time is the hardest step, but can be way easier if you have a referral or a compelling reference story. The best referral is from a peer within their company.
- A problem presentation is when you summarize your hypotheses about customer problems and some potential solutions, pausing to ask the customer if you’ve missed any problems, etc. Use this is an icebreaker. If they agree about the problems, ask them to explain why they think it’s important to solve them and how much this problem costs them (this’ll help inform your ROI later). Come up with (1) a list of problems (2) today’s solutions (3) new solutions. Get customer reactions and explanations and input at each stage.
- After speaking with customers, you should be able to say: “here were our hypotheses about our customers, their problems, and how they worked. Now here’s what they are saying their issues really are, and this is how they really spend their day.”
- The goal is to get a single paragraph list of features that can sell to hundreds or thousands of customers, not a list of ten features that can sell to ten customers.
- Product presentation at this point should include key product features, customer’s life before and after your product, how their day would look without or with your product, and a roadmap of features over the next 18 months. This is still not the selling phase yet, just discovering whether you have a salable product.
- Ask if the customer would deploy your product across their organization if it were free. Then ask if they would buy it if it were $1 million. Once you get an answer (ideally a number), then ask how much more they’d pay for professional services (i.e. customization and installation).
- Next, test your assumptions about distribution and customer’s approval and procurement process for your product.
- Customer and Product Development need to balance customer reactions with development time. The most dangerous customer responses are when they ask for more features. You need to understand that the first release shouldn’t be the ultimate product. Adopting this mindset is easier said than done. If you keep listening to the right customers, you’ll execute a successful product strategy.
- Call the top 5 customers in your pipeline ask if you gave them your product today for free, are they prepared to install and use it. If the answer is no, you have no customers on your forecast.
- Startups need a repeatable, scalable sales process.
- Early customer validation with Earlyevangelists who pay shouldn’t be confused with pure sales; this should be viewed as a phase to find and create a scalable and repeatable sales process.
- The goal of Customer Validation is to get to enough orders that prove your product solves customer needs.
- Value proposition = articulating in a single clear compelling message why your company is different and your product is worth buying. Value proposition needs to be emotionally compelling, oversimplified, and make or reinforce an economic case. Value proposition for a new product in an existing market should have an incremental performance and transformational value proposition that describes improvements and describes something people couldn’t do before.
- Even with a visionary supporting the purchase of the product, you still have to sell to four constituencies before closing the order: an executive, end users, CIO, and low-level IT.
- The only valid way to test your assumptions is to sell the product.
- Avoid treating Early Evaluators as customers because they’ll never pay for your product, but they can be good for testing.
- Earlyevangelists will fight for their organization to buy even incomplete products.
- While you are a startup, there is no demand for your product; think of sales distribution channels as bookshelves in a grocery store - until customers become familiar with the brand, they’ll never look for the product.
- For a niche market that you have resegmented within an existing market, describe how some equities or attribute of the product solves the problem your customer has in a way comparable products do not. Describe the benefits that the customer will get from solving their problem this new way.
- Re-read The Art of War for how to compete against a market incumbent.
- Goal of positioning is to control the public’s perception of a product as it relates to competitor’s alternatives.
Notes:
- Traditional “Product Development” is flawed because it excludes “CUSTOMER Development.”
- Startups don’t fail because they lack a product; they fail because they lack customers and a proven financial model.
- Just because you can find some beta tester customers doesn’t mean they’re representative of a scalable mainstream market; the majority of people reside in the mainstream market.
- “In a startup, no facts exist inside the building, only opinions.”
- Premature scaling, especially on untested assumptions, is what causes a death spiral and unsustainable burn rate.
- Product Development model (wrong) = 1. Concept 2. Development 3. Testing 4. Launch
- Customer Development model (correct) = (1) Customer Discovery (2) Customer Validation (3) Customer Creation (4) Company Building
- Product Development and Customer Development are parallel processes.
- The goal of Customer Development is to find a market for the product as spec’d, not to develop or refine a spec based on a market that is unknown; in big companies, the product spec is market-driven, whereas in startups, the marketing is product-driven.
- A product that allows users to do something they couldn’t do before = creating a new market.
- Four Market Types: (1) New product in an existing market: competitors define the market, and the basis of competition is all about the product and the product features (2) New product in a new market: problem is how to convince a set of customers to buy your vision (3) New product resegmenting an existing market via low cost: find customers who will buy “good enough” product cheaper (4) New product resegmenting an existing market via niche: “would some part of this market buy a new product designed to address their specific needs?”
- Earlyevangelists also need to have the budget to purchase your product. Think about customer’s problem pains on a scale; the best Earlyevangelists will have enough pain to have made a makeshift solution, etc.
- Start product development based on your vision and experience as the founder and find customers willing to buy that product and then tailor the product to meet their needs. If no one buys the product as spec’d, then build some features customers have requested. Avoid an endless list of requests.
- You need to understand the customer pain at different levels of the company and for different users, economic buyers, decision makers, etc. Each person’s answer to “if you could wave a magic wand…” will give you the best way to present your product.
- Make a customer influence map of everyone that surrounds the user; this will be your sales roadmap.
- Calculate and demonstrate ROI to your customer, including payback time if possible. Earlyevangelists will use the ROI of your product to make the internal sale.
- Need to understand minimum feature set customers will pay for in short term; this is easier said than done.
- Sometimes asking the customer if they’d pay $1 million can prompt them to say something like “…I wouldn’t pay more than $____ for something like this!…” which can give you great insight.
- Who the influencers are in your industry may impact who you choose are your advisory board.
- When resegmenting an existing market, some questions to ask yourself are: (1) what needs of customers are unmet by existing suppliers (2) why couldn’t existing companies offer the same thing (3) given no customers yet exist in your new segment, what are realistic year 1-3 sales forecasts?
- The difference between a winning and a losing startup is that winners understand why customers buy.
- Contacting potential customers and convincing them to give you some of their time is the hardest step, but can be way easier if you have a referral or a compelling reference story. The best referral is from a peer within their company.
- A problem presentation is when you summarize your hypotheses about customer problems and some potential solutions, pausing to ask the customer if you’ve missed any problems, etc. Use this is an icebreaker. If they agree about the problems, ask them to explain why they think it’s important to solve them and how much this problem costs them (this’ll help inform your ROI later). Come up with (1) a list of problems (2) today’s solutions (3) new solutions. Get customer reactions and explanations and input at each stage.
- After speaking with customers, you should be able to say: “here were our hypotheses about our customers, their problems, and how they worked. Now here’s what they are saying their issues really are, and this is how they really spend their day.”
- The goal is to get a single paragraph list of features that can sell to hundreds or thousands of customers, not a list of ten features that can sell to ten customers.
- Product presentation at this point should include key product features, customer’s life before and after your product, how their day would look without or with your product, and a roadmap of features over the next 18 months. This is still not the selling phase yet, just discovering whether you have a salable product.
- Ask if the customer would deploy your product across their organization if it were free. Then ask if they would buy it if it were $1 million. Once you get an answer (ideally a number), then ask how much more they’d pay for professional services (i.e. customization and installation).
- Next, test your assumptions about distribution and customer’s approval and procurement process for your product.
- Customer and Product Development need to balance customer reactions with development time. The most dangerous customer responses are when they ask for more features. You need to understand that the first release shouldn’t be the ultimate product. Adopting this mindset is easier said than done. If you keep listening to the right customers, you’ll execute a successful product strategy.
- Call the top 5 customers in your pipeline ask if you gave them your product today for free, are they prepared to install and use it. If the answer is no, you have no customers on your forecast.
- Startups need a repeatable, scalable sales process.
- Early customer validation with Earlyevangelists who pay shouldn’t be confused with pure sales; this should be viewed as a phase to find and create a scalable and repeatable sales process.
- The goal of Customer Validation is to get to enough orders that prove your product solves customer needs.
- Value proposition = articulating in a single clear compelling message why your company is different and your product is worth buying. Value proposition needs to be emotionally compelling, oversimplified, and make or reinforce an economic case. Value proposition for a new product in an existing market should have an incremental performance and transformational value proposition that describes improvements and describes something people couldn’t do before.
- Even with a visionary supporting the purchase of the product, you still have to sell to four constituencies before closing the order: an executive, end users, CIO, and low-level IT.
- The only valid way to test your assumptions is to sell the product.
- Avoid treating Early Evaluators as customers because they’ll never pay for your product, but they can be good for testing.
- Earlyevangelists will fight for their organization to buy even incomplete products.
- While you are a startup, there is no demand for your product; think of sales distribution channels as bookshelves in a grocery store - until customers become familiar with the brand, they’ll never look for the product.
- For a niche market that you have resegmented within an existing market, describe how some equities or attribute of the product solves the problem your customer has in a way comparable products do not. Describe the benefits that the customer will get from solving their problem this new way.
- Re-read The Art of War for how to compete against a market incumbent.
- Goal of positioning is to control the public’s perception of a product as it relates to competitor’s alternatives.
May 10, 2015
For a first-time entrepreneur, reading "Four Steps to the Epiphany" is like getting sucker-punched in the chest, but in the best possible way. Steve Blank rounds up all of those questions that you've had floating around in your mind but were too afraid to ask, illustrates why failure to answer these questions means failure for your business, and shows you a clear path towards answering these questions and growing your company.
I wish that I had gotten my hands on this book about 12 months ago because it would have made the process of starting a company a lot less hectic. Moving forward, this book is going to serve as an invaluable "How To" and roadmap as we begin to make our first sales and start hiring employees.
All that being said, perhaps this book is not one to read cover-to-cover. There is so much information in here that my head almost exploded every 5 pages. Trying to go through it all at once is just information overload. I think the real value of this book will be as a reference manual that I can come back to it and look at the relevant sections when the company reaches certain stages.
An incredibly insightful book and a must-have for any startup
I wish that I had gotten my hands on this book about 12 months ago because it would have made the process of starting a company a lot less hectic. Moving forward, this book is going to serve as an invaluable "How To" and roadmap as we begin to make our first sales and start hiring employees.
All that being said, perhaps this book is not one to read cover-to-cover. There is so much information in here that my head almost exploded every 5 pages. Trying to go through it all at once is just information overload. I think the real value of this book will be as a reference manual that I can come back to it and look at the relevant sections when the company reaches certain stages.
An incredibly insightful book and a must-have for any startup
March 13, 2012
An exceptional book that deserves its own category. Rough in spots as it's from the author's keystrokes to your page. You can quite literally take this book in hand and use it as a field manual on growing your business. Mr. Blank rightly points out within the starting pages that most business have failed before they even started, illustrates clearly why no amount of time or money will fix them, and what the more successful approach is and how to use it.
Charts, graphs, and words with definitions you can look up in the dictionary, this book is the real thing. A little BS 'business' speak to keep that audience reading, but mostly just hard core facts about the reality of bringing a product to market and making money from it. It's a lot harder than you think, and this book will help you get there or do you the favor of keeping you from starting and wasting your time and money before you do. A must read for anyone in a start-up who wants to survive.
Charts, graphs, and words with definitions you can look up in the dictionary, this book is the real thing. A little BS 'business' speak to keep that audience reading, but mostly just hard core facts about the reality of bringing a product to market and making money from it. It's a lot harder than you think, and this book will help you get there or do you the favor of keeping you from starting and wasting your time and money before you do. A must read for anyone in a start-up who wants to survive.
June 22, 2017
The book that has reached the "recommended reading" status at many entrepreneurship courses and coined the term "customer validation" needs no introduction. Written by a Silicon Valley icon, serial entrepreneur and business professor at Berkeley and Stanford, it advocates that the secret formula to building companies, and new products in general, is finding who your customer is and what products do they actually need. It's written as a methodical textbook, with chapters dedicated to individual topics like customer research, product development, and marketing, each with a to-do list of actions and metrics to follow, aided with real world examples from Steve's own companies and those that he advised.
If you're a startup founder or product manager, this book should definitely be high on your list (and in your library).
If you're a startup founder or product manager, this book should definitely be high on your list (and in your library).
May 25, 2021
Information and ideas: 5 stars
Editing and content layout: 2 stars
Great work from an informational perspective. The idea behind the journey to an epiphany (discovering and creating a successful startup) is transforming in its own sense, but the book is written very amateurishly and divided into too many repetitive concepts.
There's a reason why so many books don't pick up, even though they contain the most intelligent information. This is surely one of them. Steve's ideas are revolutionizing, but his gifts fall short when it comes to delivering the idea in a straightforward fashion.
Would recommend to everyone starting or running a B2B startup. This book acts as a bible or a textbook, not as a pleasant to read and fun literature.
Editing and content layout: 2 stars
Great work from an informational perspective. The idea behind the journey to an epiphany (discovering and creating a successful startup) is transforming in its own sense, but the book is written very amateurishly and divided into too many repetitive concepts.
There's a reason why so many books don't pick up, even though they contain the most intelligent information. This is surely one of them. Steve's ideas are revolutionizing, but his gifts fall short when it comes to delivering the idea in a straightforward fashion.
Would recommend to everyone starting or running a B2B startup. This book acts as a bible or a textbook, not as a pleasant to read and fun literature.
December 11, 2010
This is the best book I've read about starting a company, full of key insights about how startups differ from established organizations-- and the practical implications of how to run your business based on this core difference. An in-depth manual/how-to-guide/workbook all in one, the concepts in here are ridiculously valuable and will assist anyone interested in bringing a product to market and achieving the mythical "product-market fit". This is the first book I recommend to people in startups/entrepreneurs working on their own ideas, and it's something that can be referred to often at any point in the life-cycle of a fledgling business.
January 13, 2019
This is an amazing text(book) for anyone building a business that they want to grow into a profitable company - small or large. While geared toward tech start ups, the strategies Blank discusses are cross cutting and could be applicable to a multitude of industries. As a bonus, the appendices include recommendations for follow on reads and sample documents that can be modified for your own use.
March 13, 2012
Step by step guide to running your company/startup, with a lot of details about every moment
March 30, 2013
A should-read book on creating and building new products for knowledge workers and entrepreneurs.
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