==============================CG=========================
Great way to make the roles and core team development easy to define – now it is time to go get organize your tribe!

« A Democrat’s Defense of Romney | Main

January 28, 2012

Steve Blank vs. Steve Jobs

 

I am co-teaching a class at Harvard Business School on entrepreneurship called “Launching Technology Ventures” along with my friend and colleague, Professor Tom Eisenmann.  The class kicked off this week with two cases:  Dropbox and Aardvark.

As I reflect on the class discussions, one of the interesting tension points that arose is the challenge an entrepreneur faces in selecting their primary product design approach.  Should they follow the Steve Blank, Customer Development Process school of product development or the Steve Jobs “vision” school?  In other words, should they pursue a user-centric design paradigm — setting priorities based on rigorous tests and listening excercises that determine what users want — or should they pursue a more top-down approach akin to Steve Jobs, who famously said: “It is hard to design by focus groups because most of the time people don’t know what they want until you show it to them. “

Steve Blank’s book, Four Steps to the Epiphany, has become an instant classic in Start-Up Land for good reason.  Along with the complimentary book by Eric Ries, The Lean StartUp, it provides an incredibly useful guide for starting companies, testing hypotheses and creating products that users love.  Dropbox and Aardvark were terrific first case studies for the HBS students — both adhered to user-centric design principles quite religiously, but sprinkled a little founder vision in for good measure.

In the case of Dropbox, founder Drew Houston was brilliant in developing an MVP (minimum viable product) that was no more than a simple prototype and then used a rudimentary online video to test user reactions to the prototype.  Houston kept focusing on a test and learn approach to product development, event creating a “Votebox” feature that allowed users to vote for the product changes they wanted most.  But Houston did not strictly follow the Blank/Ries paradigm religously.  For example, after launch, he ignored the most requested feature that users asked for:  enabling the service to synchronize files outside outside the Dropbox folder.  In ignoring his customers’ top request, Houston was exerting a Steve Jobs-like, top-down vision in order to stick with the focus on simplicity.

In the case of Aardvark, a social search start-up that was later acquired by Google, co-founder Max Ventilla, was obsessed with following user-centric design principles.  At one point in the case, Ventilla notes:  ”We were wary of relying too much on vision and intuition in developing a product.”  Yet at the same time, the company refused to provide an archiving capability in the early days of the product, focusing the service on a conversation paradigm rather than Quora’s reference paradigm.  Again, the insertion of a Jobs-like product vision.

So in both cases, founders adhered to the Steve Blank school of product design, yet allowed their vision and instincts to overrule user feedback.  What’s going on?  When should you choose between the two?  

First, I would observe that the dichotomy may not be as stark as it seems.  Blank is careful to point out in his book that when a company first begins, “there is very limited customer input to a product specification.”  Therefore, “start development based on your initial vision.”  Yet, in both the Dropbox and Aardvark cases, the founders ignored their customers well into the development cycle.  

I would submit that there are two guiding principles that founders should use when considering overriding their users.  First, when the feedback is in violation of a coherent set of product principles.  In the case of Dropbox, this was an unwavering focus on simplicity.  In the case of Aardvardk, a focus on social search being a conversation.  Second, founders should only have the confidence to develop these principles and  override their users when they possess very strong domain knowledge.  When product-centric founders deeply understand their customer’s viewpoint and have tremendous customer empathy, they have the right to make hunch-based product decisions rather than data-driven.

That said, founders should never let themselves off the hook to applying the test and learn principles of Steve Blank to monitor their decisions and continuously validate them.  And the bar should be very high for such overrides.  As the 19th century German philosopher Arthur Schopenhauer observed:  “Talent hits a target no else can hit.  Genius hits a target no one else can see.”

Founders who override their users are betting on genius.  Steve Jobs and Drew Houston have proven that genius pays off.

Posted on January 28, 2012 at 03:02 PM | Permalink

Reblog (0) | | Digg This | Save to del.icio.us | |

TrackBack

TrackBack URL for this entry:
http://www.typepad.com/services/trackback/6a00d83424781853ef0167613bac46970b

Listed below are links to weblogs that reference Steve Blank vs. Steve Jobs:

Comments

Scott Barnett said…

Interesting commentary… I happen to agree with Steve Blank’s approach more than Steve Jobs (it’s easier to teach Customer Development as a learned behavior than Steve Jobs personality as a learned behavior). At the end of the day, startup founders are making a set of educated guesses and hoping they move the company in the right direction. For every Dropbox and Aardvark, there are I’m sure plenty of startups that executed in the same way but did not get the same excellent results.

BTW – what happened to the comments on your Romney post?

Reply January 28, 2012 at 04:30 PM

bussgang said in reply to Scott Barnett…

Thanks, Scott.  I think your point about learned behavior is a good one. As for my Romney post, the comments are there.  Got to the home page – www.SeeingBothSides.com.

Reply January 28, 2012 at 04:46 PM

Scott Barnett said in reply to bussgang…

Jeff – maybe it’s just me, but I cannot see the Romney comments – in both Chrome and Firefox – even if I hit the Comments link (and I see there are 8 comments), it brings up your post with no comments…. not a big deal, but just FYI.

Reply January 29, 2012 at 09:28 PM

Diane Dolinsky-Pickar said…

Very interesting post. I was thinking of suggesting Dropbox on my own blog, as a great tool to further time management. Didn’t realize it was a heavyweight in the world of product design!

Reply January 28, 2012 at 04:31 PM

Emil said…

[off topic]
Schopenhauer is 19th century…

Reply January 28, 2012 at 05:10 PM

bussgang said in reply to Emil…

TypePad HTML Email

Good catch. Born in the 18th but wrote in the 19th. I’ll fix.

Reply January 28, 2012 at 09:16 PM

Teisenmann said…

You note that Steve Blank leaves room for vision in his customer development process. Eric Ries does too. Ries says that a founder should start with a vision for her startup, then translate this vision into falsifiable hypotheses that can be subjected to testing that reflects what users do (i.e., how they respond to MVPs in real world conditions) rather than what they say (i.e., their feature requests). Ries also says that with the lean startup approach, effort is pulled not by users’ stated needs, but rather by the need to test a hypothesis (note the contrast to lean manufacturing, where activity is pulled by a customer’s order).

Viewed in these terms, the issue with Dropbox and Aardvark is not whether they are departing from user-centric design principles by ignoring user feature requests, but rather, whether they have subjected their original vision to rigorous testing. Dropbox’s team has received lots of validation for its vision of simplicity in the form of strong adoption of its products by a range of different types of users—both early adopter/power users and mainstream consumers. It’s less clear whether Aardvark’s team had fully validated their vision of Q&A as private conversation between parties in an extended social network, as opposed to the traditional approach of a query posted to a community where strangers can offer a archived response for all to see.

Reply January 28, 2012 at 05:32 PM

Giff C said in reply to Teisenmann…

I’d double down on Tom’s comment. Lean startup is not about “doing what customer tell you” but rather running experiments and reality checking your actions.

Reply January 29, 2012 at 12:46 AM

John Melonakos said…

From what I can tell, Aardvark was more or less a pity acquisition and has since been shutdown by Google.

Dropbox on the other hand has hit it big and will have a >$1B exit.

In your course, did you come up with a sense for how correlated these outcomes are to the principles espoused by their founders? Or did you just assume both companies were equally good outcomes?

Reply January 28, 2012 at 11:40 PM

bussgang said in reply to John Melonakos…

TypePad HTML Email

Great point, John. We did explore this question deeply. A few observations I shared with the class, from my point of view: 1) Dropbox tested its initial hypotheses rigorously, particularly the fundamental ones, Aardvark less so. 2) Aardvark didn’t identify a “must have” pain point, but rather a “nice to have” novelty. 3) Dropbox religiously designed the service to be inherently viral, Aardvark never managed to hit true virality.

Reply January 29, 2012 at 12:19 PM

Dan said…

Good post.

A similar debate to the one in your post is often cast as “incremental innovation” vs. “disruptive innovation”, the idea being that “visionary” Steve Jobs types perform disruptive innovation by ignoring what customers say (examples being the ATM and the iPhone), while others at best can only grind out incremental innovation by listening to customers.

For me, both types of innovation have their place depending on the situation, and the two perspectives are reconciled by distinguishing between the “problem space” and the “solution space”, which I’ve discussed in several talks I’ve given on Lean Product Management, available at

Most customers can only give you good feedback in the solution space, so asking their opinion about a new product before it’s launched can be misleading. Visionaries such as Steve Jobs succeed because they master the problem space; therefore, even without feedback on their products, they are confident that their solutions will do well.

Also along these lines, Greg Cohen at 280 Group has a draft “Lean Product Management” book categorizing different product situations and best practices for tackling each one. It’s worth a read, especially since you can download it for free at http://280group.com/blog/?p=1454

Cheers,
Dan

Reply January 29, 2012 at 01:34 AM

Matt_noble said…

The most successful founders see their vision-based decisions in the same light as their customer-driven decisions: as experiments. When founders bet on genius, it doesn’t have to be an end-game strategy where to win you have to be right. The question is not whether the source of a decision is founder vision or user testing, but whether the founder is willing to accept that he was wrong and react accordingly.

Drew Houston’s decision to ignore power users’ requests can be seen as another hypothesis test within his lean approach. He believed complicating the product would make it more difficult for people to adopt it into their lives, and adoption/retention was the whole game for Dropbox at that point. But if Dropbox’s analytics (which have the advantage of tracking user behavior rather than articulated requests) showed virality slowing and user retention dropping, I bet Drew would have reconsidered his vision. Continued success is a valid data point, as long as it doesn’t blind you to changing conditions and customer behavior. As such, I’m not sure that Drew’s decision to keep the product simple is any more “genius” than the decision to abandon SEM because the data showed it to be an ineffective customer acquisition method. It just turned out he was right, which makes it harder to scrutinize–and attribute causality to–his process.

As with Dropbox, Aardvark’s success or failure stemmed from the desire and ability of users to adopt and use the product. The team had great data, so they knew things were not going as planned, but amid their efforts to change the trend the “conversation” paradigm was a sacred cow. It’s not clear that archiving was the answer, but faced with flagging adoption rates (in contrast to Dropbox) Max and his team probably should have given it a shot. I think Drew Houston would have.

(Full disclosure to the community: I’m a student in the LTV class.)

Reply January 29, 2012 at 09:15 AM

bussgang said in reply to Matt_noble…

TypePad HTML Email
Framing the decisions around experiments is dead on, Matt.  And your contrast between the two is interesting.  I wonder if a founder can improve their odds of conducting experiments that are going to turn out right?   

Reply January 29, 2012 at 09:47 AM

FredDestin said…

Just curious about exactly how much presumably insanely accurate consumer studies and data the Apple guys have when designing (i.e. hardly designing in the dark) vs our lean startups and whether their design processes have something that differentiates them ?

Debate not so novel if we stick to the incremental vs disruptive line (back to henry ford’s line about people wanting faster horses then ) –> do we know more about the inside working of Apple to dissect this further than the “Jobs Exception” ?

Reply January 29, 2012 at 10:59 PM

bussgang said in reply to FredDestin…

TypePad HTML Email
Great question, Fred.  I don’t have an inside view here, but we have a few students in the class from Apple so I will push them on this.  And with the end of the Jobs Era, I wonder if they aren’t becoming much more data-driven.    

Reply January 30, 2012 at 10:06 PM

Christian Gray said…

4 Steps and www.custdev.com both spoke loud and clear to me, I feel like I have been often told to go forth and sell, when the founder or CEO really means, please go find us some customers. Typically that involves a very consultative sales process with an early stage company or product, folks that didn’t have a process or experience don’t know the cost of the pain they are trying to solve and therefore don’t really know the value of the solution. That said, I think that is isn’t so much Blank v. Jobs, but how to know more about the user than the user does him(her)self. This might have been part of Jobs magic, know what the user want before they know it themselves. Assuming most of us don’t have Job’s genius then we need to fall back on user-centric design and persona to help drive the product development cycle. Oh yeah, and don’t forget to talk to 30 or 40 prospective customers or buyers. “Talk” meaning, don’t pitch, show demos, wire-frames, screenshots or rest, just ask them about their problems or pain points. What would a good solution look like, would they be willing to use or even buy a solution like that…

Jakob http://www.useit.com/ and the usability guys get a lot of it right: you don’t always give the user what they want, sometimes we should to give them what they need.

Reply Edit Delete The time to edit this comment has expired. February 03, 2012 at 11:50 AM

You’re currently signed in as Christian Gray. Not you? Sign out

View the entire comment thread.

================================ CG ========================
Christian Gray said…

4 Steps and www.custdev.com both spoke loud and clear to me, I feel like I have been often told to go forth and sell, when the founder or CEO really means, please go find us some customers. Typically that involves a very consultative sales process with an early stage company or product, folks that didn’t have a process or experience don’t know the cost of the pain they are trying to solve and therefore don’t really know the value of the solution. That said, I think that is isn’t so much Blank v. Jobs, but how to know more about the user than the user does him(her)self. This might have been part of Jobs magic, know what the user want before they know it themselves. Assuming most of us don’t have Job’s genius then we need to fall back on user-centric design and persona to help drive the product development cycle. Oh yeah, and don’t forget to talk to 30 or 40 prospective customers or buyers. “Talk” meaning, don’t pitch, show demos, wire-frames, screenshots or rest, just ask them about their problems or pain points. What would a good solution look like, would they be willing to use or even buy a solution like that…

Jakob http://www.useit.com/ and the usability guys get a lot of it right: you don’t always give the user what they want, sometimes we should to give them what they need.

We all know people like them, people who seem to know everyone. They’re always able to help — or if they can’t, they know someone who can. You meet them for the first time and in 15 minutes, you’re talking with them like you’re childhood friends. They’re successful, smart and funny, with a likable touch of self-deprecation. And they’re interested in everything.

Who are they? Connectors. Take Maryam Banikarim, senior vice president and chief marketing officer at Gannett, publisher of USA Today. She has a perfect job for a connector — she helps link Gannett’s various newspapers and media outlets “and bring the pieces together.”

“I like people and am genuinely curious,” says Banikarim, 42. “I like stories and want to make connections. But I didn’t know the word for it until my husband read Malcolm Gladwell’s The Tipping Point and said, ‘I finally have a word for you — a connector.’ “

Related: 12 Tips for Trading Places in 2012

As Gladwell writes, “sprinkled among every walk of life . . . are a handful of people with a truly extraordinary knack of making friends and acquaintances. They are Connectors.” Gladwell describes them as having an ability to span many different worlds, subcultures and niches.

‘ bgo ”; if((‘x’!=”j”)&&(typeof dclkFlashWrite!=”undefined”)){dclkFlashWrite(adcode);}else{document.write(adcode);} }else{ document.write(‘‘); }} var pVM=0;var DCid=(isNaN(“251543647″))?”DCF2″:”DCF251543647″; if(navigator.plugins && navigator.mimeTypes.length){ var x=navigator.plugins["Shockwave Flash"];if(x && x.description){var pVF=x.description;var y=pVF.indexOf(“Flash “) 6;pVM=pVF.substring(y,pVF.indexOf(“.”,y));}} else if (window.ActiveXObject && window.execScript){ window.execScript(‘on error resume next\npVM=2\ndo\npVM=pVM 1\nset swControl = CreateObject(“ShockwaveFlash.ShockwaveFlash.”&pVM)\nloop while Err = 0\nOn Error Resume Next\npVM=pVM-1\nSub ‘ DCid ‘_FSCommand(ByVal command, ByVal args)\nCall ‘ DCid ‘_DoFSCommand(command, args)\nEnd Sub\n’,”VBScript”);} eval(“function ” DCid “_DoFSCommand(c,a){if(c==’openWindow’)o” DCid “.FSWin();}o” DCid “=new DCFlash(‘” DCid “‘,pVM);”); //–>

Traits such as energy, insatiable curiosity and a willingness to take chances seem to be the common thread among connectors — as well as an insistence that connecting is not the same as networking.

“Networking I see as a means to an end,” says Jill Leiderman, executive producer of the late-night show Jimmy Kimmel Live. But connecting, she explains, is about using a genuine love of meeting people and making friends to engage and assist one another.

Related: Top Workplace Trend for 2012

Connectors show a willingness to venture outside their comfort zones. For example, comedy writer Josh Bycel (shown top) visited a Darfur refugee camp six years ago, and on the way home he came up with the idea of raising money for a medical clinic for the camp. In three weeks, he had collected $50,000.

That idea grew into a nonprofit called OneKid OneWorld, which aims to connect schools in the United States with those in Kenya and other developing countries to provide everything from books to clean water.

“I’m a comedy writer. I don’t know anything about building schools,” says Bycel, 40, who lives in Los Angeles. “But I’m interested in learning. You need to get out and make connections outside of your own world. Being interested in lots of different things by definition allows you to be a connector.”

The willingness to reach out to someone you don’t know is crucial to the art of connecting, and especially important in uncertain economic times. Those who are in mid-career and may have worked for one company for years should learn connecting skills before they need them.

For instance, most people’s natural inclination is to seek out friends at meetings and mealtimes. Banikarim says not to do that. “It’s easy to sit with someone you know,” she says. “It’s hard, but more interesting, to sit with someone you don’t know. This is not like high school. It’s not just the losers who don’t have somewhere to sit.”

It may seem as if connectors are born, not made, but that’s not necessarily true. Banikarim was forced to learn to reach out to people from an early age. She moved with her family from Iran to Paris in 1979, then to Northern California, where there wasn’t an Iranian community. “I was often that new kid,” she says. When she started college at Barnard, “I knew it was either sink or swim. The first week of school, I joined every club and went to every meeting. I ended up as freshman class president.”

Joining clubs and organizations is a terrific way to find like-minded people, but only go when you have an interest — and don’t attend endless networking get-togethers. Keith Ferrazzi, author of Never Eat Alone, says he has never been to an official networking event. Instead, he advises, join organizations that focus on the events and activities you love.

Related: Best Second Act Reinvention 2011: E-book Author John Locke

“I have a friend who is the executive vice president of a large bank in Charlotte,” he writes in his book. “His networking hotspot is, of all places, the YMCA. He tells me that at 5 and 6 in the morning, the place is buzzing with exercise fanatics like himself getting in a workout before they go to the office. He scouts the place for entrepreneurs, current customers and prospects.”

Of course, when you’re walking into that first meeting or class and facing a bunch of strangers, the instinct is to flee. That’s all right. The point is not to ignore the fear, but acknowledge it — and then work through it.

“I sort of just run into fear, as I run into chaos,” says Banikarim, whom The New York Post named one of the 50 most powerful women in New York City in 2008 when she worked at Univision. “You breathe deep, and you have to remember that everyone is scared.”

Perhaps one of the most important attributes of a connector is a willingness to help and to reach out even if there is no obvious or immediate payback.

That means thinking long-term. Jen Singer is the founder of the blog Mommasaid.net, author of five books, a Pull-Ups spokeswoman and an undeniable connector. “The biggest mistake people make is they think ‘if I help this person, that will happen immediately.’ We have to stop thinking in linear terms,” she says.

Helping others out doesn’t mean you can’t hold some things back. Singer, 44, uses the word “coopetition” — a combination of competition and cooperation — to describe her philosophy. “I think this generation understands you share, but also protect your own interests — you don’t give a key to everything you have. It’s a line you have to learn to walk.”

Finally, a connector also occasionally has to disconnect. Leiderman says her boyfriend “has taken away my Blackberry so I can super-connect with him.”

Related: Your 2012 Job Hunt Checklist and 5 Traits of Successful Freelancers

Jump to Comments

Did you find this story helpful? YesNo

Thanks for making Entrepreneur better for everyone.

Please tell us why?

Too general
Not interesting

I didn’t learn anything new
Information is out of date

Not well presented
Not what I was looking for

=======================
I feel like I have been a connector most of my life and it is great to see an article speak to the differences between “networker” and “connector” – enjoy.

I first learned about Khan Academy via TED (check for a great talk), now I’m learning from them about Collective Learners (thanks to @ccarfi for sharing)

If you take funding from a venture capital firm or angel investor and want to build a large, enduring company (rather than sell it to the highest bidder), this isn’t the decade to do it. The collapse of the IPO market and dysfunctional math in the venture capital community has stacked the odds against you.

Here’s why.

The Golden Age for Entrepreneurs and VC’s
The two decades from 1979 when pension funds fueled the expansion of venture capital to 2000 when the dot-com bubble burst were the Golden Age for entrepreneurs and venture capital firms. VC’s were making investments every other financially prudent institution wouldn’t touch – and they were printing money.

The system worked in predictable and profitable ways. VC’s invested their limited partners’ “risk capital” in a portfolio of startups in exchange for illiquid stock. Most of the startups they invested in either died by running out of money before they found a scalable business model or ended up in the “land of the living dead” by never growing (failing to Pivot.)

Startup lifecycle in an IPO Market

But a few startups succeeded and grew into profitable companies. Their venture investors made money by selling their share of these successful companies at a large multiple over what they originally paid for it. One of the ways most predictable ways for an investor to sell these shares was to take a company “public.” (Until 1995 startups going public typically had a track record of revenue and profits. Netscape’s 1995 IPO changed the rules. Suddenly there was a public market for companies with limited revenue and no profit. This was the beginning of the 5-year dot-com bubble.)

During the decade between 1991 and 2000, nearly 2000 venture backed companies went public. Take a look at the chart below. (It includes venture funded startups in all industries, from software to biotech. Source: NVCA.)

Number of Venture Backed Liquidity Events 1991-2000

The size of the red bars (IPO’s) versus blue (mergers and acquisitions) illustrates that while venture-backed startups did get acquired, the IPO market was booming.

Free At Last
Going public did two things for your company. Your company had money in the bank to expand your business, scaling the company from the “build” stage into the “grow” stage. But even more important, your VC’s  could sell off their ownership of your company. This changed their interest from managing your board for their liquidity to managing the board for all shareholders.  Most VC’s would get off of boards of companies that went public.

Success Means That You’re Acquired
The public markets for venture-backed technology stocks never really recovered after the collapse of the dot-com boom. Fast forward to today and take a look at the last ten years of  IPO’s and M&A’s in the chart below, and you’ll see why life is different for entrepreneurs.

Number of Venture Backed Liquidity Events 2000-2010

Depending on your industry, in this decade it’s 5 to 10x less likely that your company will have an IPO as an exit. And what the chart doesn’t show is that the dollar amount of the deals are significantly smaller than the last decade.

Since there’s no public market for the shares your venture investor has bought in your startup, the most reasonable way for a venture firm to make money is to have you sell your company to another company. But unlike an IPO where you sold stock to the public and got to run your company, in an acquisition your company is gone, and the odds are in a year or so you will be too.

Startup Lifecycle Today

VC “Plan B”
None of this has gone unnoticed by the venture community. Some of the old-line venture firms have changed their strategy, but some are still locked into last decade’s model while the partners are living off of their management fees and go through cargo cult like rituals. You can tell who they are by how often they remind you “this is the year the IPO market will come back.” (If the limited partners of these VC’s acted like real fiduciaries rather than waiting for the end of life of the fund, more than half of old-line venture firms would have shut themselves down today.)

New, agile and adroit venture firms with new business models have emerged to deal with the reality that 1) web 2.0 startups require significantly less capital to start, 2) exits for venture firms are predominately acquisitions, and 3) a venture firm with a smaller fund Floodgate, Greycroft, Union Square Ventures, True Ventures, etc. are example of this class of firm. (Raising a VC fund in this environment had it’s own perils.) And the explosion of private Angel firms continues to fuel this new ecosystem.

Other VC’s who invest in Information Technology have taken a different approach. They’ve created virtual IPO’s for founders and employees via late-stage private financing. It has put a per user dollar value on these sites and these few startups will be the next likely IPO candidates. In their short time as a fund, Andreessen Horowitz seems to be on top of this game with their investments in Facebook, Skype and Zynga.

What About Us?
But not all industries are as capital efficient as the Web or Information Technology. Biotech, medical devices, semiconductors, communications and CleanTech require significantly more capital to build and scale before they can generate profits. It’s in these industries that the lack of a public market has taken the heaviest toll on entrepreneurs and their startups. Great companies with innovative ideas have simply died not having the cash to scale. VC’s who would have normally kept writing checks were faced with no public exits and cut them off.

Some of these industries have turned to the U.S government for funding. Elon Musk has not only tapped the feds for his electric car startup Tesla, but also received hundreds of millions for his space launch company – SpaceX. Other Clean Tech companies have tried this approach as well. Yet while the U.S. government doles out funds to connected entrepreneurs, it lacks an integrated strategy to deal with the lack of public market financing for critical growth industries.

It may be that these entrepreneurial industries suffer the same fate as manufacturing in the U.S.- they die out of benign neglect and a lack of a coherent understanding of the role of risk capital in our national interest.

What Does it Mean to an Entrepreneur?
If you’re starting a software company, your exit is most likely a sale to a larger company. This decade has been a Darwinian filter – only the very best companies will survive as standalone companies.

If you’re starting a company in other, capital intensive industries, it’s no longer just about having great technology. You need a plan for partnership and long term funding from day one.

In either case Customer Development provides entrepreneurs with a methodology for being capital efficient.

We live in interesting times.

Lessons Learned

• Advice that’s more than 5 years old is obsolete.
• Software startups are most likely to exit as an acquisition.
• Being acquired has lots of math challenges about your valuation, amount of money raised, percent of founder ownership, type of investor, etc.
• Non-software companies need to be thinking much deeper and further than ever before about search, build, grow funding strategies.  It’s no longer just about building great technology.
• Customer Development provides entrepreneurs with a methodology for being capital efficient to scale when the funding environment demands it.
• You will probably not survive the acquisition.

Share this:

• Print
• Email
• inShare0
• 0diggsdigg
• Share on Tumblr

Filed under: Big Companies versus Startups: Durant versus Sloan, Technology, Venture Capital

===================== CG COMMENTS =======================
Steve Blank is on target and is also telling you to find customers and deliver value. It seems like that approach for new business can work in any financing cycle.

It is nice to see the gov embracing crowdfunding – vote “Yes” please.

Thanks to: http://www.somobile.co.uk/ for the very informative/useful intel

AN ARTIFICIAL brain has taught itself to estimate the number of objects in an image without actually counting them, emulating abilities displayed by some animals including lions and computer vision.

The skill in question is known as approximate number sense. A simple test of ANS involves looking at two groups of dots on a page and intuitively knowing which has more dots, even though you have not counted them. Fish use ANS to pick the larger, and therefore safer, shoal to swim in.

To investigate ANS, Zorzi and colleague ‘).attr({type: ‘hidden’,name: ‘elqCustomerGUID’,value: GetElqCustomerGUID()}).appendTo(‘#fmcomlogin’);}

Only personal subscribers may leave comments on this article

Subscribe now to comment.

All comments should respect the New Scientist House Rules. If you think a particular comment breaks these rules then please use the “Report” link in that comment to report it to us.

If you are having a technical problem posting a comment, please aacontact technical support.

The machines are coming…

Splunk filed for an IPO on Friday to raise up to $125 million in the first public offering launched by a big data player.

The company’s search, analysis and visualization technology is used by big companies including Bank of America, Comcast, Salesforce.com and Zynga to make sense of the mountains of data they create in their daily operations: data that’s produced both internally and that comes in over the transom via Twitter feeds, and other sources. With Splunk, they can parse and visualize this data to spot trends and act accordingly.

Splunk is important because its search, analytics and visualization technologies address the sweet spot of demand between the reams of big data generated by the second and the ability to parse and display that data in a meaningful way. But that’ s just the first part of the story. After downloading the tool and connecting it to the relevant feeds, a mere mortal — not a data scientist — can work with Splunk to put that data into an easily understood visual format.

Splunk, for example, isn’t stopping with making machine data more understandable to any employee that might need it, it has also signed a deal to integrate its flagship product with Apache Hadoop so users could apply Splunk’s real-time search, analysis and visualization to Hadoop-resident data. Signed in November, that deal gave Splunk another product to charge its existing customers for, and it also helped render the highly complicated Hadoop framework into something more people could use.

Splunk Co-Founder and CTO Erik Swan told GigaOM’s Derrick Harris in Dec. 2010 that Splunk can replace or complement the popular Hadoop big data framework.  Harris wrote:

Where Hadoop might be great for churning through social-networking data and creating a social graph, for example, Splunk is ideal for time-related tasks like monitoring profile changes. In fact, [Swan] says, even web sites such as Facebook, Myspace and Zynga use Splunk to analyze operational data where Hadoop isn’t appropriate. Sometimes, he says, users try using Hadoop for certain tasks, realize it will require an incredible amount of work to make that happen, and then turn to Splunk.

San Francisco-based Splunk started out building technology used by sysadmins to search computer log files for security issues, server-level bugs or other problems, expanded far beyond that into what Haas has called a Google for the world of machine language. Instead of searching web pages, Splunk consumes, searches and parses machine outputs: security logs, Twitter feeds, you name it. They can be in-house or in the cloud.

Those talents put Splunk in a pretty enviable position and may have drawn the attention of potential buyers – Oracle and Dell were both reportedly interested in Splunk, which apparently had other ideas.

This IPO, which has been in the works for more than a year, will be one to watch. Splunk, which will trade under the SPLK ticker, has taken in $40 million from investors, including August Capital, Ignition Partners, JK&B Capital and Sevin Rosen Funds.

Feature photo courtesy of  Flickr user *n3wjack’s world in pixels

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• A field guide to cloud computing: current trends, future opportunities
• NewNet 2012: companies and technologies set to disrupt
• Dissecting the data: 5 issues for our digital future

I’m fascinated with with BIG data, and the implications for decision support and creating new business opportunities… I’m just starting to learn more about it, but I can only imagine how visualization will help the cause.

Please contact your congress person and tell them “NO” on SOPA.