Sunday, May 13, 2012

Steve Blank: startup is about searching for business model

Steve Blank recently did an interview with Gigaom discussing startups and how our understanding of building successful startup has changed over the years.  It used to be that startups are funded by VCs for creating a great business plan, but Blank now sees startup as being in search of the right product market fit.  Finding the right product market fit takes trial and error, and startups must reduce this risk by testing the market theories and how product is received by customers by adopting lean startup methodology (at least the high tech startups).

Blank defines startup team as following:
Startup is a temporary organization designed to search for repeatable and scalable business model.
Listening to Blank's interview, I realized that they way we think about startup has fundamentally changed from the last decade.  Because of virtual computing resources in the cloud and consumerization of IT, lot of barriers for startups have been significantly lowered, thanks to Amazon EC2 and Apple iPhone, iPad and App Store.

Creating a company to solve a problem and pivoting to find the right product market fit is not a theory from academia, but description of what's already happening in software startup scenes for several years now.  New breed of twenty-something entrepreneurs without formal business background are creating companies, and some are becoming successful in building profitable companies.

Sometimes not knowing the earlier failure helps these new comers because people who tried and failed earlier tend to be dismissive of the ideas that they tried.  Their earlier failure tends to blind them of the changed market condition or customer taste.  Young entrepreneurs do not have memory of these failures and they can pursue the idea from fresh perspective.  Knowing too much can actually hurt in some cases.

There are four other video interview clips available on Gigaom.  I recommend them to any aspiring entrepreneurs.

1 comment:

  1. looks like twentysomethings know better than rest of us. Experience, knowledge etc appears to be thing of the past. Even 14y.o. start to teach us what to do and how.

    I am quite sure this weird situation cannot stay for long because it is against nature.