The Four Steps to the Epiphany: Successful Strategies for Products That Win

If you were to interview entrepreneurial high-tech CEO's having just sold their companies, or less than successful CEO's who wound them up, they would provide a great source of information; however their reflections could sound like Tiger Woods at his recent press conference, "Regrets, I've had a few....too few...I mean too many to mention". Underachievement of potential is an opinion many investors will have reached on exiting their high-tech investment. In a conversation with Nic Brisbourne, investment partner at Esprit Capital Ventures in London last week, we concluded that the principal factors causing underachievement are generally people, not product related and the root cause is nearly always poor sales and marketing execution. In hindsight CEO's will generally agree that they should have made changes earlier and knowing what they know now, can tell you what they would have done differently. But what if entrepreneurs had a method or set of best-practices that were proven to create early sales and marketing success in both startups and new product introductions in high-tech companies...would this change the odds of survival and over/underachievement and the value of the company on exit? I believe it would and am currently reading and absorbing the wisdom and four steps cover knowledge captured in Steven Gary Blank's "The Four Steps to the Epiphany", subtitled "successful strategies for products that win", a book about building successful high-tech companies. Blank is better known in the US than in Europe, having started 8 companies in CEO or Marketing roles, five of which were IPO's including names you may remember: E.piphany an enterprise software company, Ardent a Supercomputer company, two semiconductor companies MIPS Computers and Zilog and according to Blank 3 very deep craters. Blank teaches entrepreneurship and Customer Development at UC Berkeley's Haas Business School, in the Colombia/Berkeley MBA program and at Stanford University at the Graduate School of Engineering. I love this book!; it's the best advice I have ever read in one volume for entrepreneurs. So many times through this book I said aloud, "wow if i'd only known this back then..... Blank's core thesis in building companies is that there are four discrete stages in the process: 4 steps to the epiphany 1.Customer Discovery - is about finding out if there are customers for your idea and if and what they would be willing to pay for it, before you write a line of code. This must be done by leaving the office and talking to real potential customers and of course this removes the guess work in initial product specification - as the spec. is the founders vision and the mimimum working set required to win first customers (or earlyvangelists as Blank calls them). Customer Discovery removes pricing risk because prospects tell you what they would be prepared to pay and it removes the hiring and market failure risk of alternate approaches, including the popular "build it and they will come" start-up strategy. 2.Customer Validation creates a repeatable sales and marketing road-map based on the lessons learned in selling (not giving it away) to the first early customers. These first two steps validate the assumptions in your business model, that a market exists for your product, who your customers will be, the target buyers, establishes pricing, sales process and channels strategy. 3. Customer Creation builds on early sales success and after completion of Customer Validation. Blank states that customer creation is dependent on the market entry type which is governed by the nature of the product - is it a disruptive innovation or a me-too. Customer Creation strategies define the four types of start-up * Startups entering an existing market * Startups that are creating an entirely new market * Startups wanting to resegment an existing market as a low cost entrant * Startups that want to resegment an existing market as a niche player 4. Company Building is where the company transitions from its informal learning and discovery oriented Customer Development team into formal sales, marketing and business development teams to exploit the company's early success. If you are an entrepreneur or a sales, marketing or business development leader responsible for introducing new products or services, then this book is a must read.

The book is good and interesting. Steve gets all his experience on the table, and makes a wonderful case for "Customer development" and "Product development" going in parallel. I have been through a launch of a product, and much of what he mentions in the book have also been my reasons for failure - and that's truly insightful! Many of the situations in the book has had happened in my case - primarily because we've been majorly "product development"- centric and worked on "customer development" after the product had reached the MVP state - when we figured out that things don't work the way customers like. Also, the examples and case-studies in the book are very nice. Some of them, I can already identify with (Eg: SUN's great start), and many I knew not - but still very apt. Postmortem on failures is a very nice way of explaining way to succeed, and Steve does a good job at it! Some parts of the book becomes a little monotonous to read. I see some repetitions, and some very obscure text. I could actually skip some pages in between, and still get a gist of the chapters. This is the reason for 4/5 stars. What I would also appreciate is some stories on "success" stories of startups whose founders have read this book, and have actually applied the methods explained in there. Such stories adds that extra supportive information, and first-hand accounts of success based on this book. I believe future editions of this book might contain such stories...

Note: The review that follows is of the Third Edition, published in 2007. In this volume, Steven Gary Blank introduces and then explains in thorough detail the "Customer Development" model, one that he characterizes as "a paradox because it is followed by successful startups, yet has been articulated by no one [other than Blank, prior to its initial publication in 2005]. Its basic propositions are the antithesis of common wisdom yet they are followed by those who achieve success. It is the path that is hidden in plain sight." In fact, Blank insists that what he offers is a "better way to manage startups. Those that survive the first few tough years "do not follow the traditional product-centric launch model espoused by product managers of the venture capital community." And this is also true of product launches in new divisions inside larger corporations or in the "canonical" garages. Moreover, "through trial and error, hiring and firing, successful [whatever their nature and origin] all invent a parallel process to Product Development. In particular, the winners invent and live by a process of customer learning and discovery. I call this process `Customer Development,' a sibling to `Product Development,' and each and every startup that succeeds recapitulates it, knowingly or not." Wow! This really is interesting stuff and I haven't even begun to read the first chapter. Few start ups succeed, most don't, and Blank notes that each new company or new product startup involves (borrowing from Joseph Campbell) a "hero's journey" that begins with an almost "mythological vision - a hope of what could be, with a goal few others can see. It is this bright and burning vision that differentiates the entrepreneur from big company CEOs and startups from existing businesses." Although Blank suggests that the aforementioned "journey" involves a four-step process, it should be noted that not one but several epiphanies or at least revelations can and - hopefully - will occur during that process, one that is multi-dimensional rather than linear, from Point A to Point Z. These are among the dozens of reader-friendly passages I found of greatest interest and value: o Customer Discovery Step-by-Step (Page 30) o The Customer Discovery Philosophy (33-37) o Customer Discovery Summary (76) o The Customer Validation Philosophy (82-83) o Customer Validation Summary (118) o Customer Creation Step-by-Step (120) o Customer Creation Philosophy (123-124) o The Four Building Blocks of Customer Creation (129-132) o Customer Creation Summary (157) o Company Building Step-by-Step (158) o The Company Building Philosophy (162-163) o Company Building Summary (205) No brief commentary such as mine can possibly do full justice to the scope and depth of material that Steven Gary Blank provides in this volume but I hope that I have at least suggested why I think so highly of him and his work. Also, I hope that those who read this commentary will be better prepared to determine whether or not they wish to read it and, in that event, will have at least some idea of how the information, insights, and wisdom could perhaps be of substantial benefit to them and to their own organization.

I learned more from reading The Four Steps to the Epiphany than any other business book that I've read. It is a powerhouse that you must read if you're working in a startup, consulting, or any role involved with driving business strategy. Steve Blank hammers home several big ideas, the most prominent being that startups will greatly increase their chances of success by following a model called Customer Development as opposed to the traditional Product Development model. The Customer Development concept is only one of the big ideas that Blank introduces. Other big ideas include: - The identification of different market types and their associated impact on business strategy - The concept of a mission-centric organization as a transition between startup / learning oriented and process-oriented organizations Blank's experience, hard-earned through multiple successes and failures, clearly shows in the content. The book contains a step-by-step guide to each element of Customer Development, from the very earliest stages through the transition out of startup mode. He offers a nice balance of philosophy/theory and practical advice, illustrating his points with examples from his experience or well-known case studies. He demonstrates excellent breadth of knowledge, frequently offering points of view from various parts of the organization, including Marketing, Sales, Product Development, Management/Leadership, and the Board or venture capital companies. The book is split into six chapters - two introductory chapters then one for each of the four steps in the Customer Development process. Each chapter is long and packed with information. Each chapter concludes with a one page summary that serves as a quick reference guide. The appendix contains a checklist for each step in the Customer Development process as well as a useful bibliography with Blank's comments. Like other readers, I noted issues with the editing - words are missing, grammar is sometimes incorrect, and fonts are different throughout the book. However, these editing issues did not diminish my understanding of the content at all. I found them to be harmless compared to the quality of the concepts, ideas, and advice. In many ways, the editing reflected the spirit of Blank's message - get your product out there and try to sell it. One of my former jobs was in consulting, where I worked with a few startup companies. I wish that I read The Four Steps to the Epiphany years ago - the knowledge I gained from this book would have helped me tremendously in working with startup clients. The Four Steps to the Epiphany should be on the desk of every person who works for a startup company.

I've read a lot of business books over the last couple years as I've been considering starting a business for some time now. Of all the books that I've read, this one contains the most actionable advice that can be used to actually start something. I come from a background of engineering, so for me I've generally always thought of the business around the product and its features. My idea before was, "hey, I got an idea for this really cool product." There is nothing wrong with that philosophy, but what this book attempts to do is also introduce you to the marketing and sales aspects of starting a business instead of just the product. Really this book lays out a methodology of having a product development cycle, and IN PARALLEL, having a "customer development" cycle as Steve blank calls it - where you are constantly getting feedback from customers, and then actually proving that you can sell to them as your product is still being built. He lays out a fairly formal 4 step process involving Customer Discovery, Customer Validation, Customer Creation and Company Creation. Of course you will have to adapt this to your own business, but in particular in the early phases the ideas presented about Customer Discovery and Customer Validation are awesome. In the customer discovery phase you develop your own hypothesis as it were about your product, its selling point, the distribution channel, key features, etc. Then you "get out of the building" meet customers and basically ask them if this information is correct. Often times it is not. At first the book emphasizes finding a new customer niche, instead of changing the product, but you may change some of the features depending on customer feedback. You almost certainly will tweak aspects of your price point, distribution channel, and understanding of your market. In parallel the product development team develops the minimum viable product. Basically a version of the core product that offers key features and nothing more. The idea is to get the product to market as fast as possible - not to get first mover advantage (which doesn't exist) - but rather to start the customer dialogue as soon as possible, and not waste time or money. While the product development team develops product 1.0, perhaps before it is even released, in the Customer Validation phase, you SELL the product to your first visionary customers. The key here is that you haven't yet hired a full time sales or marketing team - you are trying to prove that you have a repeatable sales process first. If you can't sell to enough early customers, you go back to Customer Discovery and refine your initial hypothesis. You do NOT begin scaling up the company and burning cash until you've proven out your sales. Overall, this has been the best book so far on developing a business that I've read. I strongly recommend it, and yes there are a lot of typos and the images and flow charts aren't great, but that doesn't really matter - the material in it is solid.

There are a few good concepts in this book, but Blank seems to think that each one needs to be hammered in with multiple examples before you'll believe it. I get the feeling that a long article, maybe the size of one of the chapters in this book, would be able to impart all of the key information. If you DO find yourself skeptical to the "Lean Startup" movement, then maybe this is a good book for you; it certainly piles on the evidence that doing things the "old" way only works in established industries. If you're starting a company after being in Big Corp for years, it might be a good antidote to the processes that you typically follow in creating a product, and that tend to fail terribly when the product is at all innovative.

The book has a distinctive flavor of vc-funded enterprise software startups. The model of having enough money to have separate product and customer development teams before you've written a single line of code may exist in some imaginary world but not in the tech world of 2017. The book was written before Github, stackoverflow, anything as a service and the entire gig economy. If you need to go to trade shows to know what your customers need you are in the wrong business. His insights on vc mistakes and misfitting VP sales to innovative startups are true although observations of marginal value to the reader. Despite these flaws the last chapter on company building is a valuable contribution to beginning entrepreneurs, if they are capable of absorbing change, taking advice and have the good fortune to have the right role models and coaches. As a serial entrepreneur in transition to mission oriented company in my fifth startup clearclinica.com I found the last chapter a well built and thoughtful roadmap for change.

Although I had mentioned him in previous posts such as The Art of Selling and his Views on Entrepreneurship, I had never read Steve Blank's until now. I just finished reading The Four Steps to the Epiphany and I must just say it is a great book. I will explain into some details his theory but the main reason I love this book is how he explains why founders are critical in all the decisions of the early phases of a start-up. Not the usual "hire business people", but "learn and become an expert until you reach your limits". I should immediately add that it is not an easy book to read and certainly mostly useful to people in the process of launching a start-up or developing new products. His web site steveblank.com is also very informative, you will find tons of slides of his teachings on the web and I particularly recommend the list of books he suggests reading. Steve Blank is famous worldwide (mea culpa for not mentioning him more before) for his theory on the Customer Developement. Whereas we all know that the high-tech world is not about technology (no it's not; ideas and technologies are far from sufficient to explain this world), we have a tendency to focus on products (much more important than technologies) and markets (business vs. technology). But Steve Blank explains how products can be an illusion (if never sold to customers) and how markets can be extremely dangerous if not well understood; whereas what counts are the users of products, the people which make markets, i.e. the customers. He explains how important it is to interact with potential customers in an iterative manner (bottom-up) even before designing and developing the product, then while developing them and be careful about a top-bottom-only analysis of the markets. This is one of his famous slides where he explains that Product Development in isolation is deathly and should be done in parallel with Customer Developement only. Start-ups do not need teams in Marketing, Sales or Business Development, but only two teams, in Product Development and Customer Development, each headed by one of the Founder(s)/CEO. Below is another detailed description of this process (also available online). Then when they become large, they can switch to the traditional models. You should absolutely read this if you are in a start-up mode. This may help you avoid many (possibly deathly) mistakes.