Four Steps to the Epiphany
Summary
Four Steps to the Epiphany was a catalyst for the Lean Startup movement. Steve Blank presents an extremely thorough and iterative approach to efficiently building a business focussed on his customer centric “Customer Development” model. He provides classifications for different types of businesses according to market type and tangibly discusses the implications of each market type at each step.
The four steps are:
Customer discovery: assess whether the product solves visionary customer needs.
Customer validation: develop a sales model that can be replicated with visionary customers.
Customer creation: scale sales to visionary customers and start to cross the chasm to mainstream customers.
Company building: transition the business from a chaotic startup to an established business.
Blank also outlines four market types that he believes have vastly different implications for how to grow a business:
Existing market, new product
New market, new product
Existing market, low cost product
Existing market, niche product
Tangible
Suspend reality to gather information. For example, when exploring pricing with a customer, you could use the following questions, “Suppose this was free, how many would you buy?” then “Suppose this cost $1M, how many would you buy?”
Only work with visionary customers in Customer Discovery and Customer Validation. Don’t discount your predicted product price to make sales as this implies you don’t understand the market as well as you thought.
If you have a new product in a new market then you need to educate your market and be patient as it can take a long time.
Lachy’s note: a lot of startup advice is derived from this book and given to people without context about the market or business stage the advice applies to. Read this book to understand the critical nuances!
Surprising
You have to find product market fit at least twice. Once for your visionary customers, and then again for your mainstream customers.
This is the original Lean Startup book but the startups in the book are still thought of as having VPs and Directors even at the Customer Validation stage.
Lachy’s Notes: I suspect that if the book was updated the size of the teams would be substantially smaller given the modern startup tooling.
Resonant
The CEO must build the sales roadmap for a startup (ie. workout the process of how to sell the product) as opposed to leaving this to a VP Sales. A VP Sales is likely to assume any issues arising are due to the sales process due to incentivisation and focus.
Learning about customers should be the primary goal for an early stage business. Sales should be conducted with the purpose of learning about customers in Customer Discovery and Customer Validation so that when sales is scaled in Customer Validation there is a deep understanding of the product-market.
Visionary customers need to be sold on the vision more than that product. Focus on selling the vision and benefits clearly to them, they don’t require the product details as much. This will change for mainstream customers.
Links
Check it out yourself! Four Steps to the Epiphany