{"id":3980,"date":"2010-09-02T06:27:32","date_gmt":"2010-09-02T13:27:32","guid":{"rendered":"https:\/\/staging.opexlearning.com\/resources\/?p=3980"},"modified":"2017-03-03T23:26:06","modified_gmt":"2017-03-04T04:26:06","slug":"the-lean-startup-customer-and-market-risks","status":"publish","type":"post","link":"https:\/\/staging.opexlearning.com\/resources\/the-lean-startup-customer-and-market-risks\/3980\/","title":{"rendered":"Lean Startup Customer and Market Risks"},"content":{"rendered":"<div class=\"a296a24fa2fc69ef5487857f02f111e8\" data-index=\"9\" style=\"float: none; margin:10px 0 10px 0; text-align:center;\">\n<script async src=\"\/\/pagead2.googlesyndication.com\/pagead\/js\/adsbygoogle.js\"><\/script>\r\n<!-- Single Post readerboard -->\r\n<ins class=\"adsbygoogle\"\r\n     style=\"display:inline-block;width:728px;height:90px\"\r\n     data-ad-client=\"ca-pub-8207522353004717\"\r\n     data-ad-slot=\"1144967431\"><\/ins>\r\n<script>\r\n(adsbygoogle = window.adsbygoogle || []).push({});\r\n<\/script>\n<\/div>\n<!--powerpress_player--><p class=\"powerpress_links powerpress_links_flv\" style=\"margin-bottom: 1px !important;\">Podcast: <a href=\"https:\/\/staging.opexlearning.com\/resources\/media\/lean-startup\/steve-blank-customer-market-risk.flv\" class=\"powerpress_link_pinw\" target=\"_blank\" title=\"Play in new window\" onclick=\"return powerpress_pinw('https:\/\/staging.opexlearning.com\/resources\/?powerpress_pinw=3980-podcast');\" rel=\"nofollow\">Play in new window<\/a> | <a href=\"https:\/\/staging.opexlearning.com\/resources\/media\/lean-startup\/steve-blank-customer-market-risk.flv\" class=\"powerpress_link_d\" title=\"Download\" rel=\"nofollow\" download=\"steve-blank-customer-market-risk.flv\">Download<\/a><\/p><p class=\"powerpress_links powerpress_subscribe_links\">Subscribe: <a href=\"https:\/\/itunes.apple.com\/us\/podcast\/shmula.com-lean-leadership\/id930098243?mt=2&amp;ls=1#episodeGuid=https%3A%2F%2Fstaging.opexlearning.com%2Fresources%2F%3Fp%3D3980\" class=\"powerpress_link_subscribe powerpress_link_subscribe_itunes\" target=\"_blank\" title=\"Subscribe on Apple Podcasts\" rel=\"nofollow\">Apple Podcasts<\/a> | <a href=\"https:\/\/staging.opexlearning.com\/resources\/feed\/podcast\/\" class=\"powerpress_link_subscribe powerpress_link_subscribe_rss\" target=\"_blank\" title=\"Subscribe via RSS\" rel=\"nofollow\">RSS<\/a><\/p><p><div align=\"center\">\r\n<table border=\"1\" cellpadding=\"5\">\r\n<tbody>\r\n<tr>\r\n<td style=\"text-align: center;\"><strong>4 Steps to the Epiphany Video Series<\/strong><\/td>\r\n<\/tr>\r\n<tr>\r\n<td>\r\n<ul>\r\n\t<li><a title=\"customer and market risks video from steve blank\" href=\"https:\/\/staging.opexlearning.com\/resources\/the-lean-startup-customer-and-market-risks\/3980\/\">Customer and Market Risks<\/a><\/li>\r\n\t<li><a title=\"customer discovery explained by steve blank\" href=\"https:\/\/staging.opexlearning.com\/resources\/customer-discovery\/4008\/\">Customer Discover<\/a><\/li>\r\n\t<li><a title=\"customer development process from steve blank\" href=\"https:\/\/staging.opexlearning.com\/resources\/the-customer-development-process\/3988\/\">Customer Development Process<\/a><\/li>\r\n\t<li><a title=\"build your company by steve blank\" href=\"https:\/\/staging.opexlearning.com\/resources\/customer-development-company-building-standard-work\/4002\/\">Building a Company<\/a><\/li>\r\n\t<li><a title=\"organizational design in a startup\" href=\"https:\/\/staging.opexlearning.com\/resources\/startup-organizational-design-the-customer-development-team\/4013\/\">Startup Organizational Design<\/a><\/li>\r\n\t<li><a title=\"role of publicity in a startup\" href=\"https:\/\/staging.opexlearning.com\/resources\/publicity-and-the-lean-startup\/3998\/\">Publicity for your Startup<\/a><\/li>\r\n\t<li><a title=\"knowing your customer is important according to steve blank\" href=\"https:\/\/staging.opexlearning.com\/resources\/intimately-know-your-customer\/4017\/\">Know Your Customer<\/a><\/li>\r\n\t<li><a title=\"rethinking product development in a startup\" href=\"https:\/\/staging.opexlearning.com\/resources\/rethinking-product-development-a-customer-development-approach\/3973\/\">Rethinking Product Development<\/a><\/li>\r\n<\/ul>\r\n<\/td>\r\n<\/tr>\r\n<\/tbody>\r\n<\/table>\r\n<\/div>\r\n&nbsp;<br \/>\nProducts often don&#8217;t fail because of technology. Products and Organizations fail because of failure to find a market for their product. Put another way, we can&#8217;t just build products hoping that customers will come &#8211; that leads to one of the Toyota Seven Wastes &#8211; Overproduction, or, building something nobody wants.<\/p>\n<p>&nbsp;<\/p>\n<div class=\"university-transcript\">\n<h2>Steve Blank Customer and Market Risk Transcript<\/h2>\n<p>Steve Blank: I realized that this might actually be a fundamental problem with most startups, is that actually startups were burning money by starting sales, and marketing, and business development activities either on the web or physically in a real world way to early. Because if you think about it, here we are in Silicon Valley, at least those of us physically here, not those watching on TV.<\/p>\n<p>But for those of us here in the Valley, we take technical risks with products all the time. Investors put huge bets on all of you to do innovative things. Anybody have any idea what percentage of startups fail because their technology fails? Any idea? How many think it&#8217;s over 50% of startups fail because the technology didn&#8217;t work? All right. Over 50%? Over 25%? How many think it&#8217;s over 25% fail. Because technology doesn&#8217;t make&#8230;<\/p>\n<p>It turns out less than 10% of start-ups fail because the engineers were just rock. It turns out that most start-ups, and I&#8217;ll leave life sciences aside for a second, most startups in every other field other than life sciences, over 90% fail because they didn&#8217;t find a market and customers  full stop  big idea. Well, if that&#8217;s the case\u00a6 And go ask your favorite venture capitalist, our next guest. And you&#8217;re going to have a lot of them in this class and other class. Go ask them. If that&#8217;s the case, why is it that we have tons of methodologies? Some measure and help us getting the product right, but no methodologies to help us get the stuff about customers and markets right.<\/p>\n<p>Anybody ever been in a company in product management or know what product management people do? There are some people on the back of the room. There are entire tool sets on how to manage technology risk. Tons. But there are almost no tools to manage customer and market risk. Well, think about this, you are an entrepreneur. I have a great idea. Good. Let&#8217;s go build it. Oh, good. Let&#8217;s go raise money. Oh, let&#8217;s go sell it. You know what the next step is? Oh, we&#8217;re out of business. Because most of us grow up reading these wonderful stories about all the people who made a ton of money at Google, and Facebook, and other companies that, like, these are great examples.<\/p>\n<p>Do you ever notice they don&#8217;t bring in the people who you didn&#8217;t hear about? Because you wouldn&#8217;t come. How about bringing in the people who said, &#8220;You know, I created my last seven companies. So let me tell you why.&#8221; You&#8217;d go, &#8220;I don&#8217;t want to be one of those. I want to be Google and Facebook. That&#8217;s whose presentations I want to hear.&#8221; Any idea what the ratio is between the Googles, and Facebooks, and other start-ups? You know how many companies fail every year in Silicon Valley? Anybody want to guess? Know what the ratio is? I&#8217;m sorry?<\/p>\n<p>Woman: A thousand?<\/p>\n<p>Steve Blank: Over a thousand to one. Now, one of the nice things about human nature is everyone of you is going to be convinced that you&#8217;re going to be Google and Facebook. You have to be, right? I mean, that&#8217;s the passion of an entrepreneur. You have to be convinced. You know those other 999 companies? They were just idiots. I am much smarter than them because I have a better idea and we&#8217;re cool.<\/p>\n<\/div>\n<p>Steve Blank explains this principle in the context of product development.<\/p>\n<p style=\"text-align: center;\"><a href=\"https:\/\/www.amazon.com\/gp\/product\/0976470705?ie=UTF8&amp;ref_=sr_1_1&amp;s=books&amp;qid=1282662643&amp;sr=8-1&amp;linkCode=shr&amp;camp=213733&amp;creative=393173&amp;tag=sixsigma09-20\" target=\"_blank\"><img loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-3714 aligncenter\" title=\"four-steps-to-epiphany\" src=\"https:\/\/staging.opexlearning.com\/resources\/wp-content\/uploads\/2010\/08\/four-steps-to-epiphany.jpg\" alt=\"leanstartup book\" width=\"490\" height=\"248\" srcset=\"https:\/\/staging.opexlearning.com\/resources\/wp-content\/uploads\/2010\/08\/four-steps-to-epiphany.jpg 490w, https:\/\/staging.opexlearning.com\/resources\/wp-content\/uploads\/2010\/08\/four-steps-to-epiphany-300x151.jpg 300w\" sizes=\"(max-width: 490px) 100vw, 490px\" \/><\/a><\/p>\n<!--CusAds0-->\n<div style=\"font-size: 0px; height: 0px; line-height: 0px; margin: 0; padding: 0; clear: both;\"><\/div>","protected":false},"excerpt":{"rendered":"<p>Podcast: Play in new window | DownloadSubscribe: Apple Podcasts | RSSProducts often don&#8217;t fail because of technology. Products and Organizations fail because of failure to find a market for their product. Put another way, we can&#8217;t just build products hoping that customers will come &#8211; that leads to one of the Toyota Seven Wastes &#8211; [&hellip;]<\/p>\n","protected":false},"author":12327,"featured_media":9661,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"_genesis_hide_title":false,"_genesis_hide_breadcrumbs":false,"_genesis_hide_singular_image":false,"_genesis_hide_footer_widgets":false,"_genesis_custom_body_class":"","_genesis_custom_post_class":"","_genesis_layout":"","footnotes":""},"categories":[16,697],"tags":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v23.0 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Lean Startup Customer and Market Risks<\/title>\n<meta name=\"description\" content=\"Steve Blank explains how organizations fail, not because of technology, but because of failing to find a market for their product.\" \/>\n<meta name=\"robots\" content=\"noindex, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Lean Startup Customer and Market Risks\" \/>\n<meta property=\"og:description\" content=\"Steve Blank explains how organizations fail, not because of technology, but because of failing to find a market for their product.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/staging.opexlearning.com\/resources\/the-lean-startup-customer-and-market-risks\/3980\/\" \/>\n<meta property=\"og:site_name\" content=\"OpEx Learning\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/get.shmula\" \/>\n<meta property=\"article:published_time\" content=\"2010-09-02T13:27:32+00:00\" \/>\n<meta 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