developing it. I’m going to dump it and look for a substitute.” So I called Bob and suggested we grab a coffee.
I asked him how things were going and got the update on how the earlyvangelists were using the product. As I had heard, they were ecstatic. But Bob said he was worried he hadn’t found the right customer segment yet. “I’m not sure I can get all of these guys to pay me big bucks,” he said. “That’s why I stopped coding, and I’m spending all my time out in the field still talking to more customers.” “What does your VC say you ought to be doing?” I asked. “Oh, he hasn’t had much time for me, his firm almost never does seed deals. It turns out I was an exception.” Oh, oh.
The conversation was starting to make the hair on the back of my neck stand up. Bob had gotten to a place most founders never do—his product was a “gotta have it for people with big budgets.” He should have been back rapidly coding, iterating and finding out what feature set would get him to paying customers.
Instead he had produced barely 3 weeks of progress in the last 5 months. His prototype was rapidly wearing out its welcome.
A Lack of Nerve
When I pressed Bob on this he admitted, “No I guess my engineers aren’t very good. But I hired guys who were cheap because I wasn’t sure if my hypotheses were right. Didn’t you tell us to test our hypotheses first?” Now it was my time to be surprised. “Bob, you’ve validated your hypotheses better than any startup I’ve ever seen. You found that out in the first month. You got customers begging you to finish the product so they could buy it. You should have been hiring world-class talent and building something these CIO’s will pay for. It’s not too late. It’s time to grab them by the throat and go for it.”
I wasn’t ready for the answer, “Steve, I’ve been reading all about premature scaling and making sure everything is right before I go for it. I want to be sure I get all of this right. I’m afraid I’ll run out of money.”
I thought I’d make one more run at it. “Bob,” I said, “few entrepreneurs get the first time response you have from an early product. At your rate you’re going to burn through your cash trying to get it perfect. It’s a startup. You’ll never have perfect information. You’re sitting on a gold mine. Grab the opportunity!”
I got a blank stare.
We made some more small talk and shook hands as he left.
Bob was in the wrong business, not the wrong market. He wanted certainty, comfort, and security.
I stared at my coffee for a long time.
Carpe diem—make your lives extraordinary.
Lessons Learned
- Yes, premature scaling is a cause of startup death
- Yes, you need to get out of the building and test your hypotheses
- But, when an opportunity smacks you in the head for gosh sake grab it with both hands and don’t let go
- If you can’t, get out of the startup game.
Author: Steve Blank
A prolific educator, thought leader and writer on Customer Development for Startups, Steve Blank is a retired serial entrepreneur who teaches, refines, writes and blogs on “Customer Development,” a rigorous methodology he developed to bring the “scientific method” to the typically chaotic, seemingly disorganized startup process. Now teaching entrepreneurship at three major universities, Blank co-founded his first of eight startups after several years repairing fighter plane electronics in Thailand during the Vietnam War, followed by several years of defense electronics work for U.S. intelligence agencies in “undisclosed locations.” Four Steps to the Epiphany, Blank’s fast-selling book, details the Customer Development process and is increasingly a “must read” among entrepreneurs, investors, and established companies alike, when the focus is optimizing a startup’s chances for scalability and success.
After 21 years driving 8 high technology startups, today Steve teaches entrepreneurship to both undergraduate and graduate students at U.C. Berkeley’s Haas School of Business, Stanford University’s School of Engineering and the Columbia/Berkeley Joint Executive MBA program. His “Customer Development” teaching and writing coalesce and codify his experiences and observations of entrepreneurs in action, including his own and those he advises. “Once removed from the day-to-day intensity of founding a startup, I was able to observe a pattern that distinguishes successful startups from failures,” Blank says. In 2009, he earned the Stanford University Undergraduate Teaching Award in Management Science and Engineering. The San Jose Mercury News listed him as one of the 10 Influencers in Silicon Valley. In 2010, he was earned the Earl F. Cheit Outstanding Teaching Award at U.C. Berkeley Haas School of Business. Despite these accolades, Steve says he might well have been voted “least likely to succeed” in his New York City high school class.
Steve Blank arrived in Silicon Valley in 1978, as boom times began. His early startups include two semiconductor companies, Zilog and MIPS Computers; Convergent Technologies; a consulting stint for Pixar; a supercomputer firm, Ardent; peripheral supplier, SuperMac; a military intelligence systems supplier, ESL; Rocket Science Games. Steve co-founded startup number eight, E.piphany, in his living room in 1996. In sum: two significant implosions, one massive “dot-com bubble” home run, several “base hits,” and immense learning leading to The Four Steps.
An avid reader in history, technology, and entrepreneurship who seldom cracks a novel, Steve has followed his curiosity about why entrepreneurship blossomed in Silicon Valley while stillborn elsewhere. It has made him an unofficial expert and frequent speaker on “The Secret History of Silicon Valley.”
Steve’s interest in combining conservation with best business practices had Governor Arnold Schwarzenegger appoint him a Commissioner of the California Coastal Commission, the public body which regulates land use and public access on the California coast. He also serves on the Expert Advisory Panel for the California Ocean Protection Council. Steve serves on the board of Audubon California, was its past chair, and spent several years on the Audubon National Board. A board member of Peninsula Open Space Land Trust (POST), Blank recently became a trustee of U.C. Santa Cruz and a Director of the California League of Conservation Voters (CLCV). Steve’s proudest startups are daughters Katie and Sara, co-developed with wife Alison Elliott. The Blanks live in Silicon Valley.
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