INTERNATIONAL

ENTREPRENEURSHIP SUMMARY
SESSION 1: INTRODUCTION

Steve Blank (2013): Why the Lean Start-up changes everything

Main idea: Make the process of starting a company less risky
§ Lean start-up: favors experimentation over elaborate planning, customer feedback over
intuition, and iterative design over traditional “big design up front” development
Introduction § Turning conventional wisdom about entrepreneurship on its head: failing fast and continually
learning
§ Despite name, long term biggest payoffs gained by large companies embracing it
Fallacy of the § Conventional wisdom: create business plan—static document that describes size of
Perfect Business opportunity, the problem to be solved, and solution that new venture will provide
Plan o Research exercise written in isolation
o Assumption: possible to figure out most of unknowns of business in advance, before
you raise money and actually execute idea
o Only after building & launching product: substantial feedback from customers—when
sales force attempts to sell it
o After months/years of development, entrepreneurs learn hard way what customers
want
Learnings
1. Business plans rarely survive first contact with customers
2. No one requires five-year plans to forecast complete unknowns (Fiction/waste of time)
3. Start-ups are not smaller versions of large companies. (Don’t unfold in accordance with master
plans) Success: quickly from failure to failure, all the while adapting, iterating on, and
improving their initial ideas as they continually learn from customers

Critical different between traditional & lean start-up: while existing companies execute a
business model, start-ups look for one.
§ Shapes lean definition of a start-up: temporary organization designed to search for repeatable
and scalable business model

Three key principles of Lean Start-up:
1. Entrepreneurs accept that all they have a series of untested hypotheses—good guesses,
summarize hypotheses in framework called a business model canvas
2. Use a “get out of the building” approach called customer development to test their hypotheses,
emphasis is on nimbleness and speed (MVP & customer feedback)
3. Agile development hand-in-hand with customer development: eliminates wasted time and
resources by developing the product iteratively and incrementally
Stealth Mode’s § Stealth mode: to avoid alerting potential competitors to market opportunity exposing
Declining prototypes to customers only during highly orchestrated “beta” tests
Popularity § Lean start-up methodology makes those concepts obsolete: holds customer feedback matters
more than secrecy and that constant feedback yields better results than cadenced unveilings
Creating an § Some adherents claim that lean process can make individual start-ups more successful, claim
Entrepreneurial, too grandiose à Success is predicated on too many factors
Innovation- § Using lean methods across portfolio of start-ups results in fewer failures than traditional
Based Economy methods
§ Lower start-up failure rate could have profound economic consequences
o Forces of disruption, globalization, & regulation buffeting economies of every country
o Employment growth in 21st century will have to come from new ventures
o Creation of innovation economy that’s driven by rapid expansion of start-ups has
never been more imperative

Past: growth in number of start-ups constrained by five factors in addition to failure rate:
1. High cost of getting first customer and even higher cost of getting product wrong.
2. Long technology development cycles.
3. Limited number of people with appetite for risks inherent in founding or working at a start-up
4. Structure of venture capital industry: small number of firms each needed to invest big sums in
handful of start-ups to have a chance at significant returns
5. Concentration of real expertise in how to build start-ups, in US was mostly in entrepreneurial
hotspots on East and West coasts. (Less an issue in Europe and other parts of world)
§ Lean approach reduces first two constraints by helping new ventures launch products that
customers actually want, far more quickly and cheaply than traditional methods
o third by making start-ups less risky
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 INTERNATIONAL ENTREPRENEURSHIP SUMMARY
o Emerged at time when other business and technology trends likewise breaking down
barriers to start-up formation
o Combination of all these forces altering entrepreneurial landscape

§ Important trend is decentralization of access to financing
o Today’s entrepreneurial ecosystem, new super angel funds, smaller than traditional
hundred-million-dollar-sized VC fund, make early-stage investments + crowdfunding
§ Instantaneous availability of information is also a boon to today’s new ventures
o Biggest challenge: sorting through overwhelming amount of start-up advice
§ Lean start-up techniques initially designed to create fast-growing tech ventures
o But concepts equally valid for creating small businesses that make up bulk of economy
o If entire universe of small business embraced them, it would increase growth and
efficiency, and have a direct and immediate impact on GDP and employment
New Strategy for § Becoming clear that lean start-up practices are not just for young tech ventures
the 21st- § Focusing on improving existing business models is not enough anymore
Century o also needs to deal with ever-increasing external threats by continually innovating
Corporation o To ensure their survival and growth, corporations need to keep inventing new
business models
o This challenge requires entirely new organizational structures and skills
§ Managerial experts advanced thinking on how large companies can improve their innovation
processes
o Corporates begin to implement lean start-up methodology