The barriers for starting a company have come down. Today the total available markets for new applications are hundreds of millions if not billion of users, while new classes of investors are popping up all over (angels, superangels, archangels, and even seraphim and cherubim have been spotted).
Entrepreneurship departments are now the cool thing to have in colleges and universities, and classes on how to start a company are being taught over a weekend, a month, six weeks, and via correspondence course.
If the opportunity is so large, and the barriers to starting up so low, why haven’t the number of scalable startups exploded exponentially? What’s holding us back?
It might be that it’s easier than ever to draw an idea on the back of the napkin, but it’s still hard to quit your day job.
Napkin Entrepreneurs
One of the amazing consequences of the low cost of creating web and mobile apps is that you can get a lot of them up and running simultaneously and affordably. I call these app development projects “science experiments.”
These web science experiments are the logical extension of the Customer Discovery step in the Customer Development process. They’re a great way to brainstorm outside the building, getting real customer feedback as you think through your ideas about value proposition/customer/demand creation/revenue model.
They’re the 21st century version of a product sketch on a back of napkin. But instead of just a piece of paper, you end up with a site that users can visit, use and even pay for.
Ten of thousands of people who could never afford to start a company can now start several over their lunch break. And with any glimmer of customer interest they can decide whether they want to:
- run it as a part-time business
- commit full-time to build a “buyable startup” (~$5-$25 Million exit)
- commit full-time and try to build a scalable startup
But it’s important to note what these napkin projects/test are not. They are not a company, nor are they are a startup. Running them doesn’t make you a founder. And while they are entrepreneurial experiments, until you actually commit to them by choosing one idea, quitting your day job and committing yourself 24/7 it’s not clear that the word “founder or entrepreneur” even applies.
Lessons Learned
- The web now allows you to turn your “back of the napkin” ideas into live experiments
- Running lots of app experiments is a great idea
- But these experiments are not a company and you’re not a “founder”. You’re just a “napkin entrepreneur.”
- Founding a company is an act of complete commitment.
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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