Stanford Graduate School of Business

This post is from Anthony Yu, who is a social entrepreneur with Urban Light, a 501c3 providing direct services for sexually exploited boys and teenagers in Chiang Mai, Thailand. He is interested in applying Steve Blank’s principles of customer development in the social field. You can follow him at @baconstarvation.

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The following is a synopsis of Steve Blank’s interview as part of the E-Provocateur series at the Stanford GSB.

All credit for the concepts below should be given to Steve Blank - for developing these ideas - and to Stanford’s Center for Entrepreneurial Studies and Andy Rachleff, for hosting and being an awesome interviewer, respectively.

For those angry with the tenets of customer development, please immediately direct all apples, oranges, and sasquatch meat stick projectiles at Steve Blank. His wonder-beard will subsequently consume these items and fire a comically large cannon ball at you, for we know these customer development tenets to be honorable and true. 

Twitter Handles

• Host: @StanfordEntrepr
• Steve Blank: Father of Customer Development @sgblank
• Andy Rachleff: Stanford GSB Lecturer, Benchmark Capital Co-Founder @arachleff
• Event hashtag: #seprov

Technological startups are not smaller versions of larger companies. (Here are Steve Blank’s slides on this subject matter.)

• Startups search, for at least two years, for new, scalable, and repeatable models.
• Large companies, on the other hand, execute large business models. 
• Business school skill sets can be toxic to early stage start ups.
• If a person is in fact an entrepreneur, both McKinsey and startups should not both be seen as equal, viable life paths.

Entrepreneurship is a calling, not a job.

• It’s like being an artist: it’s something you have to get out of your system.
• Founders are not normal people and see things that normal people do not.
• Caveat: A lot of founders, however, are hallucinating.
• (The points above do not necessarily apply to joining a founder’s team as a non-founder.)

Customer development cannot be outsourced.

• It’s not possible to outsource customer development and do something along the lines of hiring a customer development manager, or pushing the role to a VP of sales.
• Founders must do customer development themselves.
• It’ll take a while, but a great founder will listen to customers and determine ways to pivot their products into product market fit. (More on this topic from Steve Blank.)

MBAs are not necessarily suited to be sole founders of a technological startup.

• However, MBAs are capable of being co-founders in a good mix of individuals, operating executives, and founders of non-technological companies.
• Engineers almost always run the teams of successfully technological start-ups.

In many situations, second-mover advantage provides more benefit than first-mover advantage in a new market.

• Simply having first mover advantage does not push tech ahead a few years. 

The venture capitalist secret memo for founders:

• For some venture capitalists, if a company has discovered liquidity, then they’ll start to look to replace the founder with an operating executive. 
• Many business school graduates are adept and can perform the role as operating executive quite well.
• When it comes time to execute, not all founders will have the chance to move onto the next steps of execution. Again, a lot of founders can be replaced by an operating executive. 

Other key points:

• Steve Blank has cracked the code, not to make one specific individual a great entrepreneur, but rather to make a larger population of entrepreneurs less likely to fail overall.
• After customer development proof, the next challenge for startups to figure out is how to scale.
• Military organizations (ex: Roman legions) reflect the growth of startups very well. 

Twitter highlights with #seprov:

Stanford Business (@StanfordBiz): “We have a special word in Silicon Valley for what we call failed entrepreneurs - they’re called experienced entrepreneurs. @sgblank #seprov”

@karenlee: “A simple but clear distinction by @sgblank: Large companies execute known business models. Startups search & create new ones. #seprov”

@alanchiu: “You cannot outsource customer development. The founder has to do it personally. @sgblank #seprov”

@mduboe: “A disproportionate # of founders are from dysfunctional families. Ability to see order out of chaos is a huge advantage” #seprov @sgblank”

@mduboe: “Consumer Internet companies are NOT technology companies” #seprov @sgblank”

@StanfordEntrepr: “The most successful entrepreneurs are technologists but there are no hard and fast rules @sgblank #seprov”

@kslicer: “a start-up = temporary organizaton designed to search for a repeatable and scalable business model @sgblank @StanfordBiz #seprov”