OVERVIEW: 4 Steps to the Epiphany, Steve Blank

4 Steps to the Epiphany, Steve Blank


“Products with senior management out in front of customers early and often – win.”

Difference between “Fire, Ready, Aim” and “Ready, Fire, Aim”


Product Development: The Path to Disaster:

  1. Concept/Seed
    • Product, features, customers, channels, pricing.
  2. Product Development
    • Engineering designs product and starts building.
    • Marketing refines size of market and business plan, including sales demo.
  3. Alpha/Beta Test
    • Engineering works with small group of users to test bugs.
    • More fundraising.
  4. Launch/1st Ship
    • Purpose of whole project.
    • Building sales and marketing channels burns a lot of cash.


Issues with Product Development:

  • Where are the customers?
    • “Startups don’t fail because they lack a product; they fail because they lack customers and a proven financial model.”
  • Focus on 1st Launch: Product development thinks it is “finished”! WRONG!
  • Cost of getting product launch wrong is EXPENSIVE.


Important Differentiation in Startups (MARKET TYPE):

  • New product into an existing market.
  • New product into a new market.
  • Low-cost product into a resegmented market.
  • New product into niche resegmented market.


Premise of Customer Development model: “learning and discovering who a company’s initial customers will be, and what markets they are in.”


Customer Development: The Path to Epiphany:

  1. Customer Discovery
    • Get outside the building and find out who the customers are.
    • Find out what problem they actually have, and if your product is solving it.
    • “The job is to see whether there are customers and a market for the vision.”
  2. Customer Validation
    • Successfully sell the product repeatedly to early customers.
    • Proves you have a repeatable market who reacts to the product.
  3. Customer Creation
    • Create end-user demand, more heavy marketing.
    • Depends highly on Market Type.
  4. Company Building
    • From learning and discovery to formal departments and VPs.
    • Prevents premature scaling – opposite of “send as much as possible on customer acquisition before the music stops.”


Pros: low cash burn rate, it’s ok to screw up if you learn, cycles through each step…


MARKET TYPE changes everything a startup does:

Existing Market Resegmented Market New Market
Customers (existing) (existing) New/new usage
Customer Needs Performance
  1. Cost
  2. Perceived need
Simplicity & Convenience
Performance Better/faster
  1. Good enough at the low end
  2. Good enough for new niche
Low in “traditional attributes”, improved by new customer metrics.
Competition Existing incumbents Existing incumbents Non-consumption / other startups
Risks Existing incumbents
  1. Existing incumbents
  2. Niche strategy fails
Market adoption


In big companies: Product spec is market-driven. [that means you know your market, find a product for it]

In startups: Marketing is product-driven !!! [that means you know your product, now find a market for it]

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