Greycroft - Why Accountants Don’t Run Startups
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- Startups are focused on searching for a scalable and repeatable business model through continuous customer validation and pivoting if needed. In contrast, large companies execute established business models through planning and accounting. - Traditional processes like marketing, sales, engineering are inappropriate for startups still searching for a model. Startups require agile development and customer development focused on hypothesis testing. - Once a startup finds product/market fit and a repeatable sales process, it transitions to a large company focused on growth, processes, and management over leadership. Accounting takes priority over metrics like in large companies versus the search focus of startups.
Greycroft - Why Accountants Don’t Run Startups
- 1. Why Accountants Don’t Run StartupsSteve BlankStanford - School of EngineeringU.C. Berkeley - Haas School Of Businesswww.steveblank.comTwitter: sgblank
- 3. I Drew ThisCustomerDiscoveryCompany BuildingCustomerValidationCustomer CreationPivot
- 4. I Called It:Customer DevelopmentCustomerDiscoveryCompany BuildingCustomerValidationCustomer CreationPivot
- 5. I Wrote This
- 6. A Few People Read It
- 7. I Write a Blog www.steveblank.com
- 9. Not All Startups Are Equal
- 10. Small BusinessStartupSmall Business Startups
- 11. Small BusinessStartup- Business Model found- Profitable business Existing team< $10M in revenueSmall Business Startups
- 12. Small BusinessStartup- Business Model found- Profitable business Existing team< $10M in revenueSmall Business Startups5.7 million small businesses in the U.S. <500 employees
- 13. 99.7% of all companies
- 14. ~ 50% of total U.S. workershttp://www.sba.gov/advo/stats/sbfaq.pdf
- 15. Small Business Startup:Internet EditionSmall BusinessStartup- Business Model found- Profitable business Existing team< $10M in revenueThe Internet allows a new class of Small Businesses
- 16. Not all businesses on the Internet are “Scalable Startups”Large Company Sustaining InnovationSustaining InnovationTransitionScalableStartupLarge Company Existing Market
- 17. Incremental improvementsLarge Company Disruptive InnovationNew DivisionTransitionLarge CompanyDisruptive Innovation New Market
- 18. New tech, customers, channelsScalableStartupLarge Company>$100M/yearScalable Startup
- 19. ScalableStartupLarge Company>$100M/yearTotal Available Market > $500m
- 20. Company can grow to $100m/year
- 21. Business model found
- 22. Focused on execution and processScalable Startup
- 23. ScalableStartupLarge Company>$100M/yearTotal Available Market > $500m
- 24. Company can grow to $100m/year
- 25. Business model found
- 26. Focused on execution and process
- 27. Typically requires “risk capital”Scalable Startup In contrast a scalable startup is designed to grow big
- 28. Typically needs risk capital
- 29. What Silicon Valley means when they say “Startup”Very Different Startup GoalsSmall BusinessStartup- Business Model found- Profitable business Existing team< $10MScalableStartupLarge Company Total Available Market > $500m
- 30. Company can grow to $100m/year
- 31. Business model found
- 32. Focused on execution and process
- 33. Typically requires “risk capital”Venture Firms Invest in Scalable StartupsSmall BusinessStartupScalableStartupLarge Company
- 34. What VC’s Don’t Tell You:The TransitionScalableStartupTransitionLarge CompanySearchBuildGrow
- 35. What VC’s Don’t Tell You:The Transition – Founders LeaveScalableStartupTransitionLarge CompanyFounders depart
- 37. Process
- 38. Beginning of scaleScalableStartupTransitionLarge CompanyBusiness Model found
- 39. i.e. Product/Market fit- Repeatable sales model- Managers hiredWhat’s A Startup?A Startup is the organization used to search for a scalable business model
- 41. No Business Plan survives first contact with customers
- 42. So Search for a Business Model
- 43. The Search for a Business ModelA Business Plan is static
- 44. A Business Model diagrams how a company creates, delivers and captures value – it’s dynamic
- 45. Or in English: How a company makes moneyEmphasis On Hypotheses Testing
- 46. Startups Continually Pivot (Iterate)
- 47. Startups Search and PivotThe Search for the Business ModelScalableStartupTransitionLarge CompanyBusiness Model found
- 48. i.e. Product/Market fit- Repeatable sales model- Managers hired
- 49. Startups Search, Companies ExecuteThe Execution of the Business ModelThe Search for the Business ModelScalableStartupTransitionLarge Company- Cash-flow breakeven- Profitable- Rapid scale- New Senior Mgmt~ 150 peopleBusiness Model found
- 50. Product/Market fit- Repeatable sales model- Managers hired
- 51. Metrics Versus AccountingThe Execution of the Business ModelScalableStartupTransitionLargeCompanyTraditional AccountingBalance Sheet
- 52. Cash Flow Statement
- 53. Income StatementMetrics Versus AccountingThe Search for the Business ModelThe Execution of the Business ModelScalableStartupTransitionLargeCompanyStartup Metrics Customer Acquisition Cost
- 55. Customer Lifetime Value
- 56. Average Selling Price/Order Size
- 57. Monthly burn rate
- 58. etc. Traditional Accounting Balance Sheet
- 59. Cash Flow Statement
- 60. Income StatementCustomer Validation Versus SalesThe Execution of the Business ModelScalableStartupTransitionLargeCompanySalesSales Organization
- 61. Scalable
- 62. Price List/Data Sheets
- 63. Revenue PlanCustomer Validation Versus SalesThe Search for the Business ModelThe Execution of the Business ModelScalableStartupTransitionLargeCompanyCustomer Validation Early Adopters
- 65. Not yet repeatable
- 67. Scalable
- 68. Price List/Data Sheets
- 69. Revenue PlanCustomer Development VersusProduct ManagementThe Execution of the Business ModelScalableStartupTransitionLarge CompanyProduct Management Delivers MRD’s
- 70. Feature Spec’s
- 71. Competitive AnalysisCustomer Development Versus Product ManagementThe Search for the Business ModelThe Execution of the Business ModelScalableStartupTransitionLarge CompanyProduct Management Delivers MRD’s
- 72. Feature Spec’s
- 73. Competitive AnalysisCustomer Development Hypothesis Testing
- 74. Minimum Feature Set
- 75. PivotsEngineering Versus Agile DevelopmentThe Execution of the Business ModelScalableStartupTransitionLarge CompanyEngineering Requirements Docs.
- 77. QA
- 78. Tech PubsEngineering Versus Agile DevelopmentThe Search for the Business ModelThe Execution of the Business ModelScalableStartupTransitionLarge CompanyEngineering Requirements Docs.
- 80. QA
- 81. Tech PubsAgile Development Continuous Deployment
- 83. Self Organizing Teams
- 84. Minimum Feature Set
- 85. PivotsStartups Model, Companies PlanThe Execution of the Business ModelScalableStartupTransitionLarge Company Plan describes “knowns”
- 86. Known features for line extensions
- 88. Known business modelStartups Model, Companies PlanThe Search for the Business ModelThe Execution of the Business ModelScalableStartupTransitionLarge CompanyUnknown customer needs
- 89. Unknown feature set
- 90. Unknown business model
- 91. Model found by iteration
- 92. Plan describes “knowns”
- 93. Known features for line extensions
- 95. Known business modelStartups Don’t Last ForeverScalableStartupTransitionLarge Company- Cash-flow breakeven- Profitable- Rapid scale- New Senior Mgmt~ 150 people Business Model found
- 96. Product/Market fit- Repeatable sales model- Managers hiredYou failif you remain a startup!
- 97. How Do Startups Search For A Business Model? The Search is called Customer Development
- 98. The Implementation is called Agile DevelopmentThe Lean Startup The Search is called Customer Development
- 99. The Implementation is called Agile DevelopmentCustomer Development
- 100. Customer DevelopmentGet the Hell Out of the Building
- 101. More startups fail from a lack of customers than from a failure of product development
- 102. Then why do we have:process to manage product development?
- 103. Then why do we have:process to manage product development?no process to manage customer development?
- 104. Product Development ModelConcept/Seed RoundProduct Dev.Alpha/Beta TestLaunch/1st Ship
- 105. Tradition – Hire MarketingConcept/Seed RoundProduct Dev.Alpha/Beta TestLaunch/1st Ship- Create Demand- Launch Event- “Branding”- Hire PR Agency- Early Buzz Create Marcom Materials- Create PositioningMarketing
- 106. Tradition – Hire SalesConcept/Seed RoundProduct Dev.Alpha/Beta TestLaunch/1st Ship- Create Demand- Launch Event- “Branding”- Hire PR Agency- Early Buzz Create Marcom Materials- Create PositioningMarketing Build Sales Organization
- 107. Hire Sales VP
- 108. Hire 1st Sales StaffSales
- 109. Tradition – Hire Bus DevelopmentConceptProduct Dev.Alpha/Beta TestLaunch/1st Ship- Create Demand- Launch Event- “Branding”- Hire PR Agency- Early Buzz Create Marcom Materials- Create PositioningMarketing Build Sales Channel / Distribution
- 110. Hire Sales VP
- 111. Pick distribution ChannelSalesBusiness Development Hire First Bus Dev
- 112. Do deals for FCSTradition – Hire EngineeringConceptProduct Dev.Alpha/Beta TestLaunch/1st Ship- Create Demand- Launch Event- “Branding”- Hire PR Agency- Early Buzz Create Marcom Materials- Create PositioningMarketing Build Sales Channel / Distribution
- 113. Hire Sales VP
- 114. Pick distribution ChannelSalesBusiness Development Hire First Bus Dev
- 115. Do deals for FCSEngineering Write MRD
- 116. Waterfall
- 117. Q/A
- 118. Tech PubsProduct DevelopmentConcept/Bus. PlanProduct Dev.Alpha/Beta TestLaunch/1st Ship+CustomerDevelopmentCompanyBuildingCustomerDiscoveryCustomerValidationCustomer CreationCustomer Development
- 119. Customer DiscoveryCustomerDiscoveryCustomerValidationCompanyBuildingCustomerCreationStop selling, start listeningTest your hypothesesContinuous Discovery
- 120. Customer ValidationCustomerDiscoveryCustomerValidationCustomer CreationCompanyBuildingPivotRepeatable and scalable business model?
- 122. Pivot back to Discovery if no customersThe Pivot The heart of Customer Development
- 124. Fast, agile and opportunisticSo What Does Engineering Do?
- 125. Traditional Product DevelopmentUnit of progress: Advance to Next StageWaterfallRequirementsDesignProblem: knownSolution: knownImplementationVerificationMaintenanceSource: Eric Rieshttp://startuplessonslearned.blogspot.com
- 126. When the Customer Problem is Known“Product Owner” or in-house customer Problem: KnownSolution: UnknownSource: Eric Rieshttp://startuplessonslearned.blogspot.com
- 127. Agile - Customer Problem is KnownUnit of progress: a line of working code“Product Owner” or in-house customer Problem: KnownSolution: UnknownSource: Eric Rieshttp://startuplessonslearned.blogspot.com
- 128. When the Customer Problem is UnknownProblem: UnknownSolution: UnknownSource: Eric Rieshttp://startuplessonslearned.blogspot.com
- 129. Lean Startup- Customer Problem is UnknownUnit of progress: learning about customersProblem: UnknownSolution: UnknownSource: Eric Rieshttp://startuplessonslearned.blogspot.com
- 131. ScalableStartupTransitionLarge CompanyLeadership Versus Management
- 132. ScalableStartupTransitionLarge CompanyLeadership Versus Management
- 133. ScalableStartupTransitionLarge CompanyLeadership Versus ManagementSearch
- 136. Why Startups Aren’t Run By Accountants
- 137. Inventor of the Modern CorporationScalableStartupTransitionLarge Company
- 138. Inventor of the Modern CorporationScalableStartupTransitionLarge CompanyAlfred P. Sloan
- 139. Alfred P. SloanScalableStartupTransitionLarge CompanyGeneral Motors, President/Chairman Cost Accounting
- 140. MIT Sloan School
- 141. Sloan Foundation
- 142. etc. Founder of General MotorsScalableStartupTransitionLarge Company
- 143. Founder of General MotorsScalableStartupTransitionLarge CompanyBilly Durant
- 144. Billy DurantScalableStartupTransitionLarge Company Leader in horse-drawn buggy’s
- 145. Fired by board, starts Chevrolet
- 146. Regains control of GM
- 147. Fired by board, GM ~$3.6 billion** GM Net sales in 1921 $304.5M = $3.6 Billion today
- 148. Durant Versus SloanScalableStartupTransitionLarge Company
- 149. Durant Versus SloanDies, rich, honored and famousDurant Versus SloanDies managing a bowling alley
- 150. Dies, rich, honored and famousDurant Versus SloanAccountantDies managing a bowling alley
- 151. Dies, rich, honored and famousYou are hereScalableStartupTransitionLarge Company