startups search for a business model
April 23, 2010
Steve Blank is probably most well known for this picture about embracing change:
Observations about Silicon Valley:
- $500K is the new $5M
- Seed Funds are providing entrepreneurial education
- Customer Development / Lean Startup adoption: We are all collectively getting smarter at a scary rate.
99.7% of all companies are <500 employees and employ half of the people in the country. In contrast, a scalable startup is designed to grow big and it typically needs risk capital. (Note: venture capital was originally called “adventure capital.”)
Your job as an entrepreneur is to search for a scalable and repeatable business model. Then build a business around it. Founders depart before the company grows to a large business:
- Search
- Build
- Grow
No business plan survives contact with customers.
Startups search and pivot. Small and large companies execute.
Startups should focus on:
- metrics, not accounting.
- customer validation, not sales.
- customer development, not product management.
- agile development, not engineering.
Lean startups use agile and customer development to find profits. (A high percentage of company founders come from dysfunctional families, but that’s another topic.)