Startup Epiphanies
Market Research
August / September 2005
Volume 3 Number 4
I have found that much of the reading material dished up to entrepreneurs is uninspiring fare. An occasional savory morsel but in general a diet consisting of overly cheerful success narratives, dreary guides to business plan writing, and dense theoretical tomes. For that reason, I was pleasantly surprised to come across a book that all technology entrepreneurs will actually want to read.
Steven Gary Blank's The Four Steps to the Epiphany: Successful Strategies for Products that Win (CafePress, 2005) details an overall process for how startups should go about developing successful products but is also filled with practical advice that touches on market research, sales, marketing and even company organization.
Blank, a serial entrepreneur who currently teaches at the Haas School of Business at the University of California, Berkeley, has extracted key learnings from his extensive experience with startups to come up with a roadmap for success that emphasizes the importance of the process that he dubs "customer development" as an alternative to traditional product development models.
"The Customer Development model of a startup starts with a simple premise: learning and discovering who a company's initial customers will be, and what markets they are in, requires a process separate and distinct from product development...Before any of the traditional functions of selling and marketing can happen, the company has to prove that a market could exist, verify that someone would pay real dollars for the solutions the company envisions and then go out and create the market. These testing, learning and discovery activities are at the heart of what makes a startup unique and they are what makes the customer development process so different from the product development process."
Underpinning the process is the assumption that startups need to design the initial product with just enough features to meet the needs of what Blank calls "earlyvangelist" customers before getting bogged down in developing the detailed functionality needed for later, mainstream customers.
Customer development is presented as a journey that begins with "customer discovery," which involves understanding the customer problem environment and uncovering exactly how customers make decisions. Think of it as testing initial guesses about who the customers might be and why they might buy. This was a particularly meaty section of the book replete with useful specifics.
Customer discovery is followed by "customer validation," whereby a repeatable sales process is developed, and finally by "customer creation," which focuses on creating demand and driving this demand to the sales channel. Blank sees company building—€”or transitioning from the early, discovery-driven organization to a more formal structure—€”as the final step in the customer development process. All of this is outlined very clearly, although I also would have liked to see the section on customer creation, which includes "crossing the chasm" to reach mainstream customers, expanded to include the rich detail of the customer discovery chapter.
Those who might be worrying that this is an overly theoretical work can rest assured. Blank peppers his narrative with many concrete, real-world examples and presents the various tasks associated with customer development as checklists and charts; multiple worksheets are included as appendices.
Some of the tips Blank provides are perhaps not central to his story but extremely useful nonetheless. He has some great suggestions on how to get a feel for the price mind-set of potential customers, and the pages he devotes to understanding channel partners should be required reading for novice entrepreneurs. Even the brief discussion of advisory boards and some of the nuances of using them was one of the most useful I have come across.
A few minor quibbles: first, very early stage startups consisting of only one or two people might find it dispiriting that many of Blank's examples seem to assume multiple warm bodies available to carry out the many customer development tasks. Also, the author might have addressed the issue of how product category might impact the development process, as the "first build it simple and add features later" doctrine may be easier to follow in areas like software than in medical products or other fields where regulatory issues or standards come to bear.
I have to admit that I approached this book cautiously at first. The fact that it was not readily available anywhere but at cafepress.com did not inspire confidence and the multiple typos and lack of an index were also a bit disconcerting. However, once the utility of the book became clear I concluded that the author was most likely just following his own advice—€”serving up a "minimal feature set" version for the first launch. With any luck he will follow up soon with a more full-featured volume for the mainstream reader.
Grace Brill is market research director of Technology Ventures Corp.
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