By Munish Dayal WG’15
As an avid follower of Steve Blank’s lean startup methodology, I was thrilled to learn that he was going to do a fireside chat on customer discovery and validation, hosted by Professor Len Lodish, at the Wharton Entrepreneurship Annual Summer Reception at WhartonǀSan Francisco. I’ve read up on Blank’s methodologies in my own time and been exposed to them in Professor Ethan Mollick’s Entrepreneurship class, and I’m trying to incorporate his framework in developing my own venture. I’m currently in my second year of Wharton’s EMBA program and a member of Wharton’s Venture Initiation Program (VIP), Wharton’s incubator program for students pursuing entrepreneurial ventures.
Here are some of the “big ideas,” as Steve Blank likes to refer to them, that I got out of the chat and the intense Q&A afterwards:
Don’t confuse passion with facts
According to Blank, who drew on his own experience of founding and running eight startups, entrepreneurs often confuse passion with facts and assume that their passion for solving a particular problem is shared by anyone else. Worse than that, startups face all kinds of known and unknown risks, including execution risks, regulatory risks, and competition, to name a few. Blank’s lean startup methodology evolved to address these problems, and consists of a management “stack” focused on deconstructing startup businesses into a series of testable hypotheses; customer development; and minimum viable products (MVPs). His extended discussion of MVPs had an immediate impact on me and caused me to rethink the approach that I’m currently using to build my MVP.
Focus your pitch to VCs on customer evidence
Blank advised that entrepreneurs should focus pitches on the evidence gained from talking to customers and the key lessons learned in developing their products. Once an entrepreneur is able to make a fundraising conversation an evidence based conversation, it’s a game changer because it not only de-risks the potential investment, but also clears a lot of the stock objections that can sink chances at raising capital.
The “secret that no VC will ever tell you”
Blank defines a “startup” as “a temporary organization designed to search for a repeatable, scalable business model”. However, nobody ever tells you that founders that succeed in finding a repeatable model can often find themselves out of a job! This can happen as the no-longer-needed role of “idea person” is replaced by experienced operating executives chosen by a startup’s investors. To guard against this risk, Blank advised the audience to consider asking venture capitalists during the fundraising process what portion of the companies in their portfolio still include the founding CEO that found a repeatable model.
These are just a few examples of the invaluable advice that Blank offered over the course of the evening. As a member of VIP, I was able to attend not only the fireside chat and following reception, but also a pre-program reception, at which VIP teams and advisors pitched their ideas and received individualized feedback from mentors, founders, and even Steve Blank himself. Throughout the evening, I met Wharton alumni, VIP participants, and fellow students and other members of the Wharton community that were either working at startups, working on their own ventures, or working on the investment side.
This event was just one example of the incredible opportunities open to full time and executive MBA students at WhartonǀSan Francisco. Wharton Entrepreneurship has run and organized countless opportunities for students to meet with venture capitalists, startup founders, CEOs, and entrepreneurs over the past year. I can’t wait to see what the future brings as I continue developing my entrepreneurial interests and complete my second year.
Bio: Munish Dayal is a practicing attorney and second year executive MBA student double majoring in finance and entrepreneurial management at WhartonǀSan Francisco. He is currently actively developing a startup company focused on the job search and discovery space and is a member of the Wharton Venture Initiation Program.