by: Wade Steenhoek
Startups must get out of the building first.
“You don’t build it for yourself. You know what people want and you build it for them.” And for the better part of the last 50 years since this quote was uttered by Walt Disney, the road to entrepreneurial success is littered with startups that have largely ignored this advice. It wasn’t ignored due to arrogance or simple stubbornness (most of the time). There simply was a misunderstanding of how startups truly operated. With my recent trip to Silicon Valley to take a deep dive into the lean startup methodology offered by Steve Blank and the National Science Foundation, several fundamental flaws in our approach to entrepreneurship were identified by Blank and his team.
The first flaw is an underlying belief in that startups are simply a smaller version of a large company. We’ve come to recognize that this is simply not true. Startups are a temporary organization searching for a repeatable, scalable business model. Successful startups are steeped in search mode until they find a business model that is sustainable. They never enter the execution phase of a company until this is clear through an evidence-based reality.
Using the business model canvas as a starting point, successful startups recognize that the canvas is merely a set of educated guesses about their business. The canvas provides the basis to develop experiments to test your hypotheses. This evidence-based approach is called customer discovery and is the heart of successful startups.
Blank will tell you there are no answers inside the building. You have to get out of the building to determine if the problem is worth solving. That seems so obvious but too often, entrepreneurs focus on their product instead of the customer’s problem. “Winners understand why customers buy. Losers never do.” Steve Blank’s team suggests that over 100 customer discovery interviews are critical to truly understanding your customer.
Once you clearly understand the customer’s problem through this evidence-based approach, you can develop your product in a way that allows you to invest as few of your precious resources as possible, yet, still solving the core customer problem. This process is called the Minimum Viable Product, which is designed to get a barely functioning product in customer’s hands quickly, so it can be tested in the real world. Using agile development techniques borrowed from the IT circles, entrepreneurs can quickly and cost-effectively refine their products based on actual customer use and feedback. This application and iteration process, in near real time, allows startups to quickly respond to market opportunities.
Startup entrepreneurs face daunting odds and Blank’s selfless goals are helpful to startups and they, in turn “fail less”. By getting out of the building and finding out what customers actually want, innovators and game changers truly have a fighting chance to disrupt the marketplace. Walt Disney himself would be proud.
Wade Steenhoek is an Entrepreneurship Lecturer with the University of Iowa and runs the Des Moines cohort of Venture School. He can be reached at wade-steenh[email protected] or 515 418-0365. This post originally appeared on IASourceLink blog, December 1, 2015.