Steven Gary Blank, usually known as just Steve Blank (b. 1953?), is a retired serial entrepreneur, founding and/or part of 8 startup companies in California’s Silicon Valley. Today he is best known as a teacher at multiple universities. He is also the author of the Customer Development model for early stage companies. This model attempts to view entrepreneurship as a practice that can be managed rather than just purely an art form to be experienced.
He started his career at 3M/Interactive Systems in Ann Arbor, Michigan. Moving to Silicon Valley in 1978 he worked at ESL, Zilog, Convergent Technologies, MIPS Computers (now MIPS Technologies), Ardent Computer, and SuperMac Technologies and was founder/CEO of Rocket Science Games and a founder at E.piphany. After retiring from E.piphany the day before its IPO in September 1999, Blank served on two public boards (Macrovision and Immersion) and several private companies. He continues to selectively advise Silicon Valley startups.
Blank teaches entrepreneurship at Stanford University Graduate School of Engineering [1], U.C. Berkeley Haas Business School and a joint MBA class with Columbia Business School and Haas.
Blank has collected an informal history of Silicon Valley, which was presented as a Google TechTalk called .
Blank is the Chairman of Audubon California. He is on the board of Peninsula Open Space Trust [2]. He was appointed to the California Coastal Commission,[3] and has made major gifts to preserve the California Coast, including funding the visitors center at Aņo Nuevo State Reserve[4].
Customer Development is a risk reduction methodology for early stage startups. Its premise is that startups are not smaller versions of large companies. Instead these early stage ventures require new tools and techniques. Key tenets are: constant contact with potential customers, continual product iteration by shipping as early as possible for product refinement based on customer feedback. Cash burn is kept low until the onset of adoption at which point additional funding can be sought to refine the model and to scale a proven model. Customer Development has four steps; Customer Discovery focuses on understanding customer problems and needs, Customer Validation on developing a sales model that can be replicated, Customer Creation on creating and driving end user demand, and Company Building on transitioning the organization from one designed for learning and discovery to a well oiled machine engineered for execution. (Blank, 2006). Customer Development works in parallel with Agile Development Methodologies to create products.
The key points of Customer Development are:
1. Get out of the building. Very few technology startups fail for lack of technology. They almost always fail for lack of customers. Yet surprisingly few companies take the basic step of attempting to learn about their customers (or potential customers) until it is too late - it's just so easy to focus on product and technology instead. True, there are the rare products that have literally no market risk; they are all about technology risk (i.e. life sciences and a "cure for cancer"). For everyone else you need to get some facts to inform and qualify our hypotheses ("fancy word for guesses") about what kind of product customers will ultimately buy.
2. Theory of market types. Market Types is a theory that helps explain why different startups face wildly different challenges and time horizons. There are three fundamental situations that change what your company needs to do: creating a new market, bringing a new product to an existing market, and re-segmenting an existing market. If you're entering an existing market, competition comes from the incumbent players. When creating a new market, it may take years before you get traction with early customers.
3. Finding a market for the product as specified. Customer Development tries to find the minimum feature set required to get early customers.
4. Phases of product & company growth. Customer Development posits that startups go through four stages of growth; Customer Discovery (when you're just trying to figure out if there are any customers who might want your product), Customer Validation (when you make your first revenue by selling your early product), Customer Creation (akin to a traditional startup launch,) and Company Building (where you gear up to Cross the Chasm and realign management.
5. Learning and iterating vs. linear execution. In the early stage of a startup companies are focused on figuring out which way is up. They really don't have a clue what they should be doing, and everything is guesses. In a traditional startup model, they would probably publicly launch their product and company during this phase, failing or succeeding spectacularly. Only after a major, public, and expensive failure would they try a new iteration.
6. Premature Execution. An insight of Customer Development is that startups need time spent in a mindset of learning and iterating, before they try to launch. During that time, they can collect facts and change direction in private, without dramatic and public embarrassment for their founders and investors.
Refer to page 13 in the following presentation for Customer Development diagram:[5]
