Forward PartnersStartup general interest

Posit: A startup’s first goal shouldn’t be to search for a repeatable business model

Steve Blank gave us this now famous definition of a startup:

A startup is a temporary organization designed to search for a repeatable and scalable business model

At Forward Partners we are in full agreement with this definition (although we spell organisation with an s…) but have found that it is a bit confusing for startups in their first weeks and months.

I’m writing this post today having just read a Venturebeat post by Blank, which talks to one of the points of confusion. He titled it ‘Build, measure, learn’ doesn’t mean throwing things against the wall to see if they stick.

If you read the post above or Blank’s books (The Startup Owner’s Manual or The Four Steps to the Epiphany) he does write about what entrepreneurs should do at the very beginning of their startups. He advises to start by generating hypotheses using Ostevald’s Business Model Canvas and then build the minimum amount of product necessary to test the most important assumptions.

We have gone a step further.

Like Blank we advise entrepreneurs to be explicit about their assumptions and their hypotheses and we use the Business Model Canvas as a tool (part of our idea stage due diligence is to thoroughly analyse the Business Model Canvas in a workshop format), but then we insert a new stage.

We think the best next step is to find a point of emotional connection with customers.

The beauty of this step is that it’s simple to understand and easily actionable via a good customer development process. Lean aficionados will know that ‘Customer development’ is a Steve Blank concept, so credit where credit is due. What we’re doing differently is making it more prominent and defining the objective as finding that point of emotional connection.

The reason for the difference is that we are laser focused on early stage ecommerce companies and that’s where our thinking is targeted and where emotional resonance and the authentic relationships that follow are key to building a great brand and a large, sustainable business. Blank is writing for all sectors and across more stages, and his advice is necessarily more general.

Once a point of emotional connection is found then it’s time to jump onto the build-measure-learn loop and begin the search for a repeatable and scalable business model (i.e. we re-join Blank).