Nivi · March 20th, 2009
Steve Blank, the king of customer development, has started a blog at steveblank.com. And he’s on Twitter too: @sgblank. Steve is one of the great startup mentors of all time and he is using his blog to share 30 years of Silicon Valley war stories. Start at the beginning, and read every word he writes.
According to his book, Four Steps to the Epiphany, Steve is a “retired entrepreneur who… has been in 8 startups in operational roles from CEO to VP of Marketing… These startups resulted in five IPO’s, and three very deep craters.”
Marc Andreessen calls Steve “one of the most strategic thinkers you will find on the topic of starting high-tech companies… buy [his book], read it, keep it under your pillow and absorb it via osmosis.”
Steve’s theories are elaborate, thoughtful, and thorough. Most important of all, they’re based on 30 years of success and failure — they’re tested, not hypothetical.
A few people in the world have built big companies. Even fewer have done it many times. And even fewer can teach us how to do it. Now it’s up to us to learn.
Here’s a snippet from one of Steve’s posts, There’s a Pattern Here, to get you started:
“So what is it that makes some startups successful and leaves others selling off their furniture? Simply this: startups are not small versions of large companies. Yet the processes that early-stage companies were using were identical to that of large corporations. In hindsight it appeared clear that startups that survive the first few tough years do not follow the traditional product-centric launch model espoused by product managers or the venture capital community. Through trial and error, hiring and firing, successful startups all invented a parallel process to product development. In particular, the winners invent and live by a process of customer learning and discovery. It’s a process that doesn’t exist in large companies with existing customers and markets. But it is life and death for a new venture.
“I call this process “Customer Development,” a sibling to “Product Development,” and each and every startup that succeeds recapitulates it, knowingly or not.
“The “Customer Development” model is a paradox because it is followed by successful startups, yet articulated by no one. Its basic propositions are the antithesis of common wisdom yet they are followed by those who succeed.”
Topics Customer Development · Resources
I am a huge fan of Steve Blank, and while he coined the term “customer development” he was not the only person to recognize the value of marketing, which is what we used to call “creating a customer” before he effectively re-branded it.
“Four Steps to the Epiphany”, self-published in 2004, is an extremely useful as a how-to guide for early market exploration. But Blank cites no sources or other references besides a passing mention to “Crossing the Chasm” by Geoffrey Moore. And yet there are clearly many contemporary strands of thought as well as numerous antecedents. It’s not my intent to diminish Blank’s accomplishment, but to position it in a larger context of both market exploration and what’s involved in being a successful “change agent.”
A handful of representative examples:
The concept of the co-evolution of product feature set, messaging, and target niche were also clearly articulated by Mark Leslie in “The Sales Learning Curve” that he was giving as a presentation in 2003 and ultimately an HBR article in 2006.
Bijoy Goswami of Bootstrap Austin and a 2006 http://www.bootstrapbootcamp.com/ also has a “Demo, Sell, Build” model that appears to be independently derived from his experiences of bootstrapping and working with bootstrappers.
Frank Robinson and the team at SyncDev (http://www.productdevelopment.com/) have a “sell design build” model that they have been consulting on for a decade. Their “minimum viable product” approach certainly mirrors Blank’s methodology
“Getting it Right the First Time” by John Katsaros and Peter Christy published in 2005 outlines a set of “market research” techniques for identifying markets before they exist and likely customers from a large set of prospects.
Don Reinertsen at http://www.reinertsenassociates.com/ coined the phrase “Fuzzy Front End” for the early part of the design process in “Blitzkrieg product development: Cut development time in half.” Electronic Business, January 15, 1985. He was also concerned with capturing the evolving nature of early feature requirements as they are refined by early customer feedback and results from product architecture planning.
Peter Drucker in his 1973 “Management: Tasks, Responsibilities, and Practices” defines marketing as an equal partner with innovation (or product development). He wrote “Because the purpose of business is to create a customer, the business enterprise has two–and only these two–basic functions: marketing and innovation. Marketing and innovation produce results; all the rest are costs. Marketing is the distinguishing, unique function of the business.”
Blank’s “Four Steps to the Epiphany” is a landmark book, derived from his extensive experience as an entrepreneur, but it’s situated in a richer tradition of practices for market discovery and exploration that entrepreneurs would benefit from familiarizing themselves with.
Customer Development is a great way to describe the process that successful startups need to follow. Kudos to Steve for articulating it succinctly. Sean Murphy’s comments are also well taken. One other relevant publication is the Sales Learning Curve published in Harvard Business Review in 2006 (http://harvardbusinessonline.hbsp.harvard.edu/b02/en/common/item_detail.jhtml;jsessionid=HIXULDCWS0ONSAKRGWDSELQBKE0YIISW?id=R0607J&_requestid=62844). This article describes a more general process of learning about prospects that is relevant for large companies launching new products (or at least into new markets) as well as for startups.
It is absolutely key for startups to get to know their customers very well – not only their business needs (which is relatively obvious) but their buying behaviors and decision cycles among other things.
Ed
Pittsburgh, PA