1. Why Fighter Pilots Run Startups Steve Blank Stanford - School of Engineering U.C. Berkeley - Haas School Of Business www.steveblank.com Twitter: sgblank

2. Early-Stage Ventures

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

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

5. I Wrote This

6. I Write a Blog www.steveblank.com

7. Six Short Stories

8. Not All Startups Are Equal

9. Small Business Startup Small Business Startups

17. Company can grow to $100m/year

18. Business model found

19. Focused on execution and processScalable Startup

21. Company can grow to $100m/year

22. Business model found

23. Focused on execution and process

25. Typically needs venture (risk) capital

27. Company can grow to $100m/year

28. Business model found

29. Focused on execution and process

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

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

35. Professional Mgmt

36. Process

38. No Business Plan survives first contact with customers

39. So Search for a Business Model

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

43. Startups Continually Pivot (Iterate)

44. Startups versus Companies

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

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

50. Cash Flow Statement

52. Viral coefficient

53. Customer Lifetime Value

54. Average Selling Price/Order Size

55. Monthly burn rate

57. Cash Flow Statement

59. Scalable

60. Price List/Data Sheets

62. Pricing/Feature unstable

63. Not yet repeatable

65. Scalable

66. Price List/Data Sheets

68. Feature Spec’s

70. Feature Spec’s

72. Minimum Feature Set

74. Waterfall Development

75. QA

77. Waterfall Development

78. QA

80. Continuous Learning

81. Self Organizing Teams

82. Minimum Feature Set

84. Known features for line extensions

85. Known customers/markets

87. Unknown feature set

88. Unknown business model

89. Model found by iteration

90. Plan describes “knowns”

91. Known features for line extensions

92. Known customers/markets

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

95. Customer Risk Versus Technology Risk

97. Enterprise Software

98. Enterprise Hardware

99. Communication Hardware

100. Communication Software

101. Consumer Electronics

102. Game Software

103. Semiconductors

104. Electronic Design Automation

105. Cleantech

106. Med Dev / Health Care

107. Life Science / Biotech

108. Personalized MedicineLarge Company Transition

110. Enterprise Software

111. Enterprise Hardware

112. Communication Hardware

113. Communication Software

114. Consumer Electronics

115. Game Software

116. Semiconductors

117. Electronic Design Automation

118. Cleantech

119. Med Dev / Health Care

120. Life Science / Biotech

121. Personalized MedicineCustomer Risk Large Company Transition

123. Enterprise Software

124. Enterprise Hardware

125. Communication Hardware

126. Communication Software

127. Consumer Electronics

128. Game Software

129. Semiconductors

130. Electronic Design Automation

131. Cleantech

132. Med Dev / Health Care

133. Life Science / Biotech

134. Personalized MedicineLarge Company Transition Technology Risk

136. Enterprise Software

137. Enterprise Hardware

138. Communication Hardware

139. Communication Software

140. Consumer Electronics

141. Game Software

142. Semiconductors

143. Electronic Design Automation

144. Cleantech

145. Med Dev / Health Care

146. Life Science / Biotech

147. Personalized MedicineCustomer and Technology Risk

149. Enterprise Software

150. Enterprise Hardware

151. Communication Hardware

152. Communication Software

153. Consumer Electronics

154. Game Software

155. Semiconductors

156. Electronic Design Automation

157. Cleantech

158. Med Dev / Health Care

159. Life Science / Biotech

160. Personalized Medicine

161. Huge payoff in biotech for solving technology problem

162. In other industries you’re giving away your hard workTechnology Risk

164. Enterprise Software

165. Enterprise Hardware

166. Communication Hardware

167. Communication Software

168. Consumer Electronics

169. Game Software

170. Semiconductors

171. Electronic Design Automation

172. Cleantech

173. Med Dev / Health Care

174. Life Science / Biotech

179. Solving For Customer Risk:Customer Development

180. Solving For Customer Risk:Customer Development Get the Hell Out of the Building

181. Solving For Customer Risk:Customer Development Get the Hell Out of the Building Country

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

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

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

185. Because: The smarter the founders the more likely, “I know what customers want” Usually wrong Usually come from military intelligence Startups are not an intelligence test

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

189. Hire Sales VP

190. Hire 1st Sales StaffSales

192. Hire Sales VP

195. Hire Sales VP

198. Waterfall

199. Q/A

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

203. Passionate earlyvangelists?

205. Iteration without crisis

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

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

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

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

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

212. Leadership Versus Management

213. Scalable Startup Transition Large Company Leadership Versus Management

214. Scalable Startup Transition Large Company Leadership Versus Management

215. Scalable Startup Transition Large Company Leadership Versus Management Search

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

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

218. Why Fighter Pilots Run Startups

220. Routine

222. Rapid, unanticipated changes

223. Changes lead to disorientation

226. Winning requires constant assessment of change and ways to mitigate risk

227. Iterating faster than competitors yields substantial advantage = Victory

228. 86 Boyd’s OODA Loop Observe Orient Decide Act ImplicitGuidance& Control ImplicitGuidance& Control UnfoldingCircumstances CulturalTraditions Observations GeneticHeritage Decision(Hypothesis) Analyses &Synthesis Action(Test) FeedForward FeedForward FeedForward NewInformation PreviousExperience OutsideInformation InteractionWithEnvironment Interaction w/Environment

229. Customer Development = OODA Loop Observe Orient Act Decide

231. It’s about Resilience

232. It’s not about winning arguments inside the company

234. Thanks www.steveblank.com