Thursday, September 19, 2013

Four Steps To The Epiphany

As Ben Graham is credited with fathering value investing, so can Steve Blank be credited with starting the Lean Startup school of thought. Startups (defined to include both brand new companies as well as innovative groups within established firms of any size) are traditionally seen as risky businesses, but with his book Four Steps To The Epiphany, Blank spawned a revolution that is changing that.

The stereotypical startup builds its product, and then tries to sell it to its intended customer group. The problem with this "if you build it, they will come" mentality is that much of the time, nobody comes. Blank's solution is to add a customer development process in parallel to the product development process. This customer development process ensures that paying customers will exist, that the product will be adhering to their needs, and that revenues will therefore follow. The key change to the traditional model is that the product isn't built with only the founder's vision in mind, but also with paying customers' feedback.

Blank argues that successful startups have already followed this process. It's just that no one has articulated these ideas in a structured way. He describes a number of cases of companies where they either failed or survived depending on whether they adhered to these principles.

The book reads like a prequel to Eric Ries' The Lean Startup. If you read only one, I would recommend Ries' book. Though Blank had the key insights to create the lean school of thought, Ries was able to build on and refine those early ideas.

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