No one ever said entrepreneurship was easy – but if you believe Steve Blank, who helped coin the “lean startup” movement in Silicon Valley, entrepreneurship is one of the most “tough, dirty” jobs out there.
Appearing in a virtual interview with National Post columnist Rick Spence, Blank was the lunchtime keynote presenter at the OCE Discovery conference in Toronto on Tuesday. Speaking to about 2,500 attendees via satellite link, Blank shared the lessons he’s learned through his 21 years of running eight different startups, as well as his take on entrepreneurship today.
We’ve rounded up Blank’s thoughts into four points here:
1. Startups are not mini-versions of larger corporations.
When Blank first began working with startups in the Valley more than two decades ago, he found the conventional thinking was that startups were just smaller companies emulating larger ones. There would be a business plan, hypotheses tested out in the market, and so on – and there wouldn’t be much tolerance for failure.
“In the old days, investors would expect you to execute per the plan. And if there was any failure, it was your problem. You’ve personally failed,” Blank said, adding there would be a firing en masse of all of the C-suite.
“Nowadays we know something a lot more important. We know startups go from failure to failure, learning as fast as they can.”
He added this greater acceptance of the possibility of failure is because people now understand that startups are not about following their larger counterparts’ tried, true, and proven business models – they’re more focused on carving out new ones, and that’s a key part of the lean startup methodology.
2. Don’t just stay sheltered inside your office – get out there and talk to your customers.
Whether you call it customer development, growth, or plain old sales and marketing – whatever its name, the point is, you should always talk to customers to prove your idea is useful and will gain traction in the market, Blank said.
“There are no facts inside your building. You might be the smartest person in your building, but there’s no possible way you’re smarter than the collective intelligence of your potential customers … All you have are a series of untested hypotheses,” he said, adding customers are the people who can tell you if your idea solves a problem they care about, or if you’re just “hallucinating,” as he put it.
Talking to customers isn’t reserved for an extroverted VP of sales, either. A startup founder needs to get out there, make eye contact, and talk to people to find out what they really need – and, very crucially, whether they are willing to pay for your product. Because at the end of the day, it’s the founder’s job to generate revenue for the company, Blank said.
“Most people will be nice to you until you ask for money. Asking for money is the toughest thing for a founder, particularly a non-business founder to do,” he added. “And you will get good at it, or you will starve to death and go out of business. Selling is not someone else’s job … sales is now your job.”
3. Here in Canada, we need to attract more venture capitalists (VCs) if we want our startups to succeed and grow.
While Blank said he’s run across a lot of smart, talented startup founders in Canada, he said we’re missing something vitally important to a startup-friendly economy – the money to back up our ideas.
“The massive disadvantage if you’re Canadian – you guys are way too nice. And I’m only being half-facetious,” he said. He added while he recognizes the “niceness” factor is a cultural stereotype, he said he feels there’s more of a “Darwinian” atmosphere in Silicon Valley and elsewhere in the U.S. That’s why people go to the Valley – to be part of that culture and that atmosphere.
What Canada really needs are more risk-tolerant VCs, Blank said – VCs who are willing to be even “crazier than entrepreneurs” and to supply generous Series A and Series B funding.
“Without that, you just have one hand clapping.”
4. Don’t even think about becoming a startup entrepreneur if you’re not in love with the concept of creating something.
Since startups are so prone to failure, Blank said it’s almost distressing to see how cool startups have now become, especially since many people have not prepared themselves for disappointment.
Blank gave an example of his own days as a startup entrepreneur. Out of his eight ventures into startup-land, two have been disasters – in his words, one of them “left a crater so deep, it has its own iridium layer.”
He recalled having to call his mother to explain he had lost $35 million – but that he was also getting another $12 million for his new startup from the same VCs who had backed his previous idea. That failure and the subsequent experience is part of the story of entrepreneurship, he said.
“What makes a founder and entrepreneurship? … That’s probably the million-dollar question,” Blank said, adding he sees startup founders as similar to artists – people who see something that others don’t.
“Founders have a different emotional makeup than people who have nine-to-five jobs … They couldn’t care less whether they made a billion dollars or not. Yeah, you might,” he said. “But boy, getting your product used by millions of people, or seeing your idea from a sketch on a napkin in use in hospitals or a drug or a robot – if you don’t have that passion, you’re confusing it with a job.”