Steve Blank on Customer Development Process for Startups

I was an early fan of Steve Blank’s customer development model. This post was written when “Four Steps to the Epiphany” was only available on Cafe Press and documents the early set of principles he espoused.

Steve Blank on Customer Development Process for Startups

Steve Blank gave a great tutorial last August at TIE on his “Customer Development” and “Customer Validation” methodology. These are the first two steps of “Four Steps to the Epiphany,” his textbook on how high technology startups should approach the marketing and business development challenges they face. His slides are here (note that this is a PDF file)

Blank outlined the default high tech startup process and key phases for engineering team

  1. Seed Stage: develop concept
  2. Product Development
  3. Alpha & Beta Test
  4. Launch – First Customer Shipment

and then looked at how other customer facing functions contribute (note Seed Stage omitted because customer oriented typically not involved).

Engineering Product Development Alpha / Beta Test Launch /
First Customer Ship
  • Marcom Materials
  • Positioning
  • Hire PR Agency
  • Early Buzz
  • Create Demand
  • Launch Event
  • Branding
  • Hire VP Sales
  • Hire Sales Staff
  • Build Sales Organization
  • First Bus. Dev. Hire
  • Do Deals to Support FCS

Answering his own question “What’s Wrong With This?”

  • Embeds premise of “Build it and They Will Come” that only works for life and death products like a cancer cure.
  • Ignores real risks for most new technologies
    • NOT Can we make it work?
    • Will Customers Accept it?
    • Will Markets Adopt
  • Has Everyone Chasing the First Customer Ship as the Goal
    • Sales & Marketing costs are front loaded
    • De-emphasizes Learning & Discovery to Focused on Execution
    • Execution & Hiring Predicated on Business Plan Hypotheses
  • Heavy spending hit if product launch is wrong
  • You don’t know if you’re wrong until you’re out of money.

His prescription for the fact that most startups die from a lack of customers not a product development failure is to propose a customer development process that runs in parallel to the product development process. In fact, this is what most bootstrappers do, they focus on customers and markets from day one because they don’t have enough resources not to.

In addition to the slides Steve has one of the best books for product development management in a startup called “Four Steps to the Epiphany” that outlines in excellent detail his customer development methodology.

Postscript: I went to buy a couple copies of Steve’s book and found that they were $10 cheaper on CafePress, so if you are thinking of buying a copy, compare the Amazon link above with Four Steps to the Epiphany on CafePress.

See Blog Posts in Customer Development Category for more information.

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