Steve Blank’s 9 Deadliest Startup Sins

Jun 24, 2019

For many startup founders, starting a new company can sometimes feel like navigating a minefield, not knowing if one step in the wrong direction could end up blowing up in your face. Knowing which areas to avoid, can be the difference between a rapidly growing business and forever closing the doors to your once promising venture.

Steve Blank, Silicon Valley legend, known for his serial entrepreneurship, best-selling books like The Four Steps to the Epiphany and his success with transforming how startups are created, shared in one of his popular books, The Startup Owner’s Manual, 9 of the deadliest startup sins all founders should avoid.

We’re going to dive into each of these 9 deadly sins Steve highlights and expand on each one from our perspective and experience from working with countless healthcare startup founders over the course of the years.

Steve Blank’s 9 Deadliest Startup Sins:

Sin #1 – Assuming you know what the customer wants

“…on Day One, a start-up has no customers, and unless the founder is a true domain expert, he or she can only guess about the customer, problem, and business model”

Customer discovery and validation are integral to the success of a startup. After all, the customer is just that—the one buying your product. He/she has distinct motivations, behaviors, and problems that are central to your proposed business model. Do your research, make hypotheses, test, iterate and repeat.

Sin #2 – The “I know what features to build” flaw

The #1 reason why startups fail – no market need. Tackling problems that are interesting to solve rather than those that serve a market need is the top reason for failure. Maybe doctors wanted more patients, not an efficient office. Before you build, ask your target demographic, “Is this what you want?”

Sin #3 – Focusing on the launch date

“The product launch and first customer ship dates are merely the dates when a product development team thinks the product’s first release is “finished.” It doesn’t mean the company understands its customers or how to market or sell to them, yet in almost every start-up, ready or not, departmental clocks are set irrevocably to “first customer ship.”

Get your MVP out the door. From here, be quick to iterate & pivot as your continually receive feedback from your customers. Being nimble is required at a startup — while your investors and Board may believe the launch date is an end-all-be-all, even dates require some flexibility.

Sin #4 – Emphasizing execution instead of testing, learning, and iteration

Unlike an established company with established processes and products, nothing is ‘final’ in the early stages. Focus on testing, learning, retesting, then execution can follow.

Sin #5 – Writing a business plan that doesn’t allow for trial and error

“Traditional business plans and product development models have one great advantage: They provide boards and founders an unambiguous path with clearly defined milestones… The problem is, none of these metrics are very useful because they don’t track progress against your start-up’s only goal: to find a repeatable and scalable business model.”

As a young company, your goal is to BECOME repeatable and scaleable, but you’re not there yet. A business plan provides excellent structure and framework to build said goals, but the plan should be viewed as ‘editable’ as you continue to develop and evolve.

Sin #6 – Confusing traditional job titles with a startup’s needs

“Most startups simply borrow job titles from established companies…The demands of customer discovery require people who are comfortable with change, chaos, and learning from failure and are at ease working in risky, unstable situations without a roadmap.

A startup is not an established company. I think we know that one. If you worked at a long-standing company, (you may have been bored for one) your title would have set expectations and parameters, but at a startup…ambiguity & chaos are the norm. CEO truly means Chief Everything Officer.

Sin #7 – Executing on a sales and marketing plan

“Hiring VPs and execs with the right titles but the wrong skills leads to further trouble as high-powered sales and marketing people arrive on the payroll to execute the “plan.” Executives and board members accustomed to measurable signs of progress will focus on these execution activities because this is what they know how to do (and what they believe they were hired to do). Of course, in established companies with known customers and markets, this focus makes sense.

And even in some start-ups in “existing markets,” where customers and markets are known, it might work. But in a majority of startups, measuring progress against a product launch or revenue plan is simply false progress, since it transpires in a vacuum absent real customer feedback and rife with assumptions that might be wrong.”

Sin #8 – Prematurely scaling your company based on a presumption of success

You will create many plans, quotas, and goals— but remember the path of a startup is not linear, but a rollercoaster of curly cues with peaks, valleys and (hopefully) gradual incline. While it’s exciting to make that first sale, just because one person might have bought into your idea, doesn’t mean others will follow. Understanding the importance of sample size and measuring success based off of that will lead you to make better informed decisions for your company.

Sin #9 – Management by crisis, which leads to a death spiral

“…when sales aren’t happening according to “the plan”…the sales VP is probably terminated as part of the “solution”…When real results come in, the smart startups pivot or change their business model based on the results. It’s not a crisis, it’s part of the road to success.

Read Steve Blank’s full article here or check out his book, “The Startup Owner’s Manual” for more on Customer Discovery.

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