Steve Blank on Launching a Lean Startup

Steve Blank, a retired serial entrepreneur, has had his share of hits and misses: He founded the business software firm Epiphany, which was later acquired for $329 million, and he’s also started duds, such as the video game company Rocket Science.

Based on his experiences, Blank (pictured) developed a startup philosophy, which he shares in a book, The Four Steps to the Epiphany, and at classes at Stanford, UC-Berkeley, and Columbia universities. (One student, Eric Ries, wrote the recent best-seller The Lean Startup.) Last fall, Blank also began leading a course for the National Science Foundation to help train scientists and engineers as entrepreneurs.

Blank’s philosophy is that entrepreneurs need to reach out to potential customers and partners early in the process of building a company. Then they need to test their idea over and over again — and be willing to change it, sometimes radically — in response. “We throw them out of the building,” Blank says, referring to students in his NSF class, known as Innovation Corps, or I-Corps. “In order to be successful, they have to understand how their product impacts their customer.”

Businesses have a process for product development, and they need to establish one for developing customers, too, Blank explains. Entrepreneurs need to understand their customers’ top problems, how much they’re willing to pay to solve them, and whether they’ll pay over and over again for the solution. That means making hundreds of phone calls to conduct interviews and maintain contact with people.

Entrepreneurs also need to understand their market and how their product fits into it, Blank adds. Is it cheaper? Does it fill a niche? Or will it be good enough to create a new market? Although this approach seems intuitive, many Silicon Valley entrepreneurs go the opposite route: They draw up a business plan, seek funding, hire engineers, and then finally develop the product, only to see it fail because it didn’t attract enough customers, he says. “Ninety-nine percent of business plans fail, so startups go from failure to failure.”

Outside the traditional classroom, Blank shares his philosophy and thoughts on his blog. Some of his past lectures and his slide presentations are posted online at Academic Earth. And, in February, Blank will offer a free online course, the Lean Launchpad, through Stanford.

About Ellen Lee

Ellen Lee is a business and technology freelance writer in San Francisco. Reach out to her at ellenleeonline@gmail.com.
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