Steve Blank: definition of a startup

I’m horrified to discover that I haven’t posted anything much focusing on Steve Blank’s work on Startups, customer discovery and iteration.

His definition of a startup is a great place to start:

A startup is a temporary organization formed to search for a repeatable and scalable business model.

Steve Blank – The Startup Owners Manual

And here’s a little more:

Entrepreneurs who have run a startup know that startups are not small versions of big companies. Rather they are different in every possible way – from goals, to measurements, from employees to culture. Very few skills, process, people or strategies that work in a startup are successful in a large established company and vice versa because a startup is a different organizational entity than a large established company.

Therefore, it follows that:
a)  Startups need different management principles, people and strategies than large established companies
b)  Any advice that’s targeted to large established companies is irrelevant, distracting and potentially damaging in growing and managing a startup

Steve Blank – A Startup is Not a Smaller Version of a Large Company

This is a really useful insight: modelling early-stage organisations on large and successful organisations has its uses – Jim Collins suggests that big companies start thinking and acting like big companies before they become big – but we need to appreciate that they’re fundamentally different organisations.

An early stage organisation is all about the search, asking questions like:

  • How do we make the change we seek?
  • How do we make our ideas work in the real world?
  • How do we serve more people and have more of an impact?
  • Where will the money come from?

Finding answers to these questions is dependent on taking risks, trying things out and making mistakes – and is fundamentally messy. It’s supposed to feel chaotic.

Steve Blank argues that a mature business – is primarily focused on exploiting a proven business model. That is, they’ve found something that works, that people want, and that pays for itself, and the challenge is to get it into the hands of as many people as possible and fight off competition. I think mature non-profits are (or should be) a bit different (we should always be looking for new and better ideas, new people to serve in new ways) – but it’s a helpful perspective. Established organisations ask questions like:

  • How can we continue to grow and to serve more people with our product?
  • How can we get more efficient at what we do?
  • How can we secure our position?
  • What will we be doing in five years’ time, and how should we budget for it?

There’s stability, predictability, a degree of safety… and (Clayton Christensen would argue), almost inevitable decline. It seems to be the case that when you’re starting out, you wish you could become a ‘proper’ organisation, and once you’ve become established, you’re desperate for the excitement and dynamism of the start.

Don’t it always seem to go, that you don’t know what youve got til its gone?

Joni Mitchell

I'd love to hear your thoughts and recommended resources...