Steve Blank answered the questions of Prof. Dr. Erhan Erkut from MEF University during their Fireside Chat on the stage of Startup Istanbul 2015 Conference.
Prof. Erkut started with a question about the inadequacies of classical MBA’s for entrepreneurs. Blank’s reply was that the MBA’s educate people to run existing companies. However startups were not smaller versions of larger companies. The main idea kicked off Lean Startup movement was that startups were temporary businesses searching or business models. In MBA’s they teach tools for executing business models but don’t teach the tools for searching business models.
Prof. Erkut’s second question was the risks entrepreneur faces and how to mitigate them through MBA. Blank replied that founders were driven by passion and faith, and they should turn that faith into fact. Lean Startup movement says that there are no facts inside the building, therefore founders should get outside and get some facts as early as possible. Lean Startup has 3 basic steps. First, to take all your hypothesis to construct the startup, second, to get out to the building and test those hypothesis and third, Physically built iterative and incremental version of product, the MVP, before first customer shipment.
Prof. Erkut then asked for answer to the dilemma, “Market for product” or “Product for market”. Steve Blank said that both were possible. Founders can be at a space where they understand the customers and then look for the product, or they can have the technology but looking for business. In either term, a product-market fit should be founded.
To the question about the meaning of MVP, Blank answered that MVP is whatever the founders can build in order to learn the most at a certain time. An MVP could be a PowerPoint slide, a spreadsheet or even a conversation. MVP changes over time to maximize learning, about customer segments, acquisition costs, channels. He ended his answer with a reminder that an MVP is not necessarily a smaller version of a finished product.
Then he redefined the terms startup and pivot. According to Blank, a startup is a temporary business designed to search a scalable and repeatable business model. Number 1 goal of startup is to become a large company, but the goal in early phase is to answer questions about business model and to use data as evidence that supports the right business model. He continued with redefining the term pivot, as a substantive change to any component of the business model. Customer segments, revenue model could be changed. Blank suggested a 72 hour hold for pivot, to test the changes before changing again. Blank reminded that it was a rare situation that a startup gets their initial assumptions correct.
Prof. Erkut then asked Steve Blank to excite the audience about failures. Blank’s reply was that a failed entrepreneur is called experienced in good startup clusters. A good cluster is where founders are asked what would be their next startup after their failure.
He then talked about similarities of founders with artists. They had a vision and blank canvas in front of them, trying to convince others to join them and investors to give money. Artists are taught some theory and perspective, just like entrepreneurship can be taught. Failure is experience; nobody can paint one painting and end up with masterpiece.
Blank ended his words with a call for governments to eliminate bureaucracy and paperwork rather than throwing money. In order to attract people from region to become a cluster, they should make it easier to attract and bring talent and resources to Turkey.