I had the pleasure of seeing Steve Blank at a LeanLA event at UCLA Anderson last week. It was epic. Everyone in the SoCal tech community came out, and I learned a lot of useful stuff from the creator of the customer development movement himself.

Below are my notes on the talk.

Background

• Steve did 8 startups in 21 years
  
• Retired because wanted to see his kids grow up
  
• See his post: Epitaph for an Entrepreneur
  

Introduction

• Realized so many processes for product pev but no processes for customer dev so wrote a book about it based on what he learned
  

What's a startup?

• 6 types of startups
  

Lifestyle startup

• Known customer with known product
  
• Pay for their hobby
  
• Surfing instructor
  

Small biz startup

• Work to feed family
  
• Grocery store, plumber
  
• Exit criteria: profitable biz, existing team
  
• 99.7% of all companies employ 50% of total US workers
  
• 5.7 million small businesses with < 500 people
  

Scalable startups

• Unknown customers
  
• Unknown features
  
• TAM > $500M
  
• Attract VC because VCs want obscene returns (like the mob)
  

Search, build, execute

• Startups search for a scalable biz model
  
• Founders are not going to be CEO of big company because they will get fired
  
• Large companies execute on biz model
  
• In middle, founders depart and professional mgmt comes in
  
• When you find a repeatable biz model, VC will then figure out if you will be the executing operating exec or someone else
  

Buyable startup

• Goal is to solve problem for internet, mobile, gaming apps
  
• Sell $5-50m acquisition
  
• Super-angels fund these
  

His startup definition: a startup is a temporary organization used to search for a repeatable and scalable business model.

Business model found

• Product-market fit
  
• Repeatable sales model
  
• Managers hired
  

Big companies good at sustaining innovation

• Existing market, known customer
  
• Known product features
  
• In a large company, a disruptive innovation creates a new division
  
• Or external competitor does disruptive innovation
  
• Counter disruption by building, partnering, or acquiring IP, talent, product, customers, business
  

Social entrepreneurship startups

• Don't want to make money
  
• Solve pressing social problems
  
• Social enterprise: profitable
  
• Social innovation, new strategies
  

Each of 6 startup types requires different skills

• Startups are not smaller versions of large companies
  
• Large companies execute
  
• Startups search
  
• Accountants don't run startups
  
• Startups require metrics, not accounting
  
• Save accounting until you have something to account
  
• Startup metrics are only ones that matter for board meetings
  
• Customer acquisition cost
  
• Viral coefficient
  
• Customer lifetime value
  
• Average selling price / order size
  
• Monthly burn rate
  

Customer validation versus sales

• Large company sales are scalable, have price list, revenue plan, data sheets; VPs of sales play golf, have gray hair, have a sales organization that sells in a scalable way
  
• Startups look for customer validation
  
• Large company execs comfortable with certainty and can't adjust quickly
  
• Startups: pricing, features unstable, one-offs, sales done by founders
  
• Sales titles the same but the job specs are completely different
  
• Startups: agile development, not QA and Tech Pubs
  
• Maximize releases per day
  
• Continuous learning
  
• Minimum feature set
  
• Large companies plan, business plans describe knowns, features for line extensions
  
• Startups model and test
  
• Focus on business model generation
  
• No business plan survives contact with customers

Business model: 9 building blocks

1. Customer segments
   
2. Value propositions/product or service
   
3. Channels: how deliver
   
4. Customer relationships: how will create demand
   
5. Revenue streams: what will pay for
   
6. Key resources: world class engineers, team
   
7. Key activities
   
8. Key partners, suppliers
   
9. Cost structure
   

Business model canvas

• Start with multiple business models and sketches
  
• These are just hypotheses
  

Customer development

• The founders get out of the building and search for the business model
  
• Customer discovery
  
• Customer validation (pivot back)
  
• Customer creation
  
• Company building
  

Use MVP in first 2 steps

• Smallest feature set that gets you the most orders/learning/feedback/failure
  
• Pivot = change in 1 or more business model components
  
• Iteration without crisis
  
• Fast, agile, and opportunistic
  
• Pivot cycle time matters
  
• Minimum feature set with instant customer feedback
  

Second decade: web, mobile, cloud

• Distribution channel: physical or virtual
  
• Products: physical or virtual
  
• Customers often teach you explicitly how to price the product
  
• First test customer segment and value prop
  

Student examples from Stanford Lean Launchpad class

• Lots of pivots
  
• Students blogged progress
  
• Photos of interviews
  
• Videos posted
  
• Surveys posted
  
• AB testing results posted
  
• Use Lean Launchlab
  

His slides on slideshare

Miscellaneous

• Slides on SlideShare
• Talk to press when your positioning has been stable for several weeks
• Dysfunctional families the best creators of founding CEOs because used to constant chaos and change
• Bring order out of chaos in life
  

Recommended books

• The Innovator's Dilemma
  
• The Innovator's Solution
  
• The Lean Startup
  
• Business Model Generation
  
• The Four Steps to the Epiphany
  

I finally made it through William Gibson's Neuromancer, which was on my reading list for a while. (I'm trying to mix it up a bit with some fiction.)

A ton has been written about this book, which many say was one of the most seminal works of science fiction of all time. I'll just concentrate on my own takeaways and the things I found most interesting in the book.

First of all, my biggest reaction came as a fan of The Matrix. Did the creators of the movies take 90% of their inspiration from this book, or is it just me? The locations, the scenes, the "jacking in to the matrix," even some of the characters (Molly/Trinity, Case/Neo) -- they're almost copies. I guess this might be an example of the saying, "imitation is the highest form of flattery" (or that "good artists borrow, great artists steal"). I love The Matrix, but I am now more down on it since I see it as less original.

Overall, I found the book extremely well-written and quite different in its language than other science fiction I have read. The biggest thing in the book that made me think was the issue of technology to change our physical bodies and minds -- upgrades and implants. Things like heads-up displays (augmented reality), improved physique, geolocation -- wait a minute, is this sci-fi or real life? It's exciting and scary that these things are converging. Should there be a line we draw? When are we no longer human? Or is humanity just defined by our brain/mind, so if we change everything else we're still human? What if we change/improve/fix our brain with a machine? What if a machine runs our brain?

The epilogue of the book was actually one of the most interesting chapters for me to read as it was written by another sci-fi author analyzing Gibson's work. The analysis focused on how Neuromancer was a projection of Gibson's past and present onto his vision of the future. How much of our hope (or fear) about the future is defined by our past and current reality?

Fun book -- definitely recommended to any Matrix fans out there.