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The Four Steps to the Epiphany

Steve Blank · 17 HN comments
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The bestselling classic that launched 10,000 startups and new corporate ventures - The Four Steps to the Epiphany is one of the most influential and practical business books of all time. The Four Steps to the Epiphany launched the Lean Startup approach to new ventures. It was the first book to offer that startups are not smaller versions of large companies and that new ventures are different than existing ones. Startups search for business models while existing companies execute them. The book offers the practical and proven four-step Customer Development process for search and offers insight into what makes some startups successful and leaves others selling off their furniture. Rather than blindly execute a plan, The Four Steps helps uncover flaws in product and business plans and correct them before they become costly. Rapid iteration, customer feedback, testing your assumptions are all explained in this book. Packed with concrete examples of what to do, how to do it and when to do it, the book will leave you with new skills to organize sales, marketing and your business for success. If your organization is starting a new venture, and you're thinking how to successfully organize sales, marketing and business development you need The Four Steps to the Epiphany. Essential reading for anyone starting something new.
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I have read several books and several blogs - you get some good bits from the all. Most of what you learn is by actually doing and discovering what works and what doesn't in your specific case.

I found Steve Blank (https://steveblank.com) the easiest to relate to and his book https://www.amazon.com.au/Four-Steps-Epiphany-Steve-Blank/dp... is particularly relevant to high tech products and services.

I think your question frames a negative in a positive light, "committing 100%". A better question could be, "should I give up my income with no knowledge that anyone will be interested in my product?"

Most likely case (if you have savings): you wind up back in the workplace having lead a more interesting life and having spent your savings.

Worst case: like someone I know you are not able to return the salaried position you once had.

Best case: you get on an accelerator programme, get some support/money and your product takes off.

You may like this book;

https://www.amazon.co.uk/Four-Steps-Epiphany-Successful-Stra...

Sep 27, 2020 · zkid18 on Ask HN: How to learn sales?
Has jumped into that boat with the identical background a couple month ago.

Here some resources I found useful to do first B2B sales and get a general understanding of the process.

1. Peter Levine course of sales for tech entrepreneurs https://a16z.com/2018/09/02/sales-startups-technical-founder...

2. Steve Blank's 4 steps to the epiphany https://www.amazon.com/Four-Steps-Epiphany-Steve-Blank/dp/09...

3. Close.io SaaS Sales Book https://close.com/resources/saas-sales-book/

4. The Sales Acceleration Formula: Using Data, Technology, and Inbound Selling to go from $0 to $100 Million by Mark Roberge https://www.amazon.com/gp/product/1119047072

Also I advice you to fasten you educational feedback loop as mush as you can. The last boo can help you with metrics as well.

mleonhard
What is an educational feedback loop and how can one accelerate it?
zkid18
study -> try selling -> fail -> study

or the better one:

study -> try selling -> success -> study even more

My claim is you don't have to do, say, MBA to study sales.

Here's some books

https://en.wikipedia.org/wiki/Crossing_the_Chasm

https://en.wikipedia.org/wiki/The_Innovator%27s_Dilemma

https://www.davidow.com/books/marketing-high-technology/

https://www.amazon.com/Four-Steps-Epiphany-Steve-Blank/dp/09...

Each of those books are projects (the order I put them in is more or less recommended) ... that's probably a couple months of careful study.

If you want to intersperse it with light reading, the following non-fiction novels are really good examples of the principles in practice (in not always obvious ways):

https://en.wikipedia.org/wiki/Masters_of_Doom

https://en.wikipedia.org/wiki/The_Soul_of_a_New_Machine

You can get used copies on ebay for about $3 each.

Thoughtfully engaging with the material is likely worth 1,000 times that.

Also the commonly cited Reid Hoffman, Seth Godin and Peter Thiel books I think are mostly a waste of time. Al Ries is ok (and quick) and Jim Collins is good if you're trying to turn around a 5,000 person company, but oh, if only I was so lucky.

Anyway, if you want to come back after reading those, I can give additional recommendations

I don't think there's one simple, straight-forward, cookie-cutter answer to this. There are a lot of different ways you could approach this, depending on ... stuff.

But to start... I would say you should begin not by thinking in terms of identifying a problem, but by thinking in terms of identifying a candidate problem. That is, some hypothesis that you can then turn around and try to validate. (I won't get all Popperian here and point out that you can really only invalidate hypotheses, but instead will just lean on our intuitive notion of what it means to validate a hypotheses).

Once you have a candidate hypotheses (or two, or three, whatever) there is a somewhat straight-forward process for how to validate it and (potentially) turn it into a business. That process is laid out and explained in The Four Steps to the Epiphany and The Startup Owner's Manual.

Anyway, back to our "candidate hypotheses". The most obvious way to generate one is from personal experience. Eg, if you have worked as, say, a surgeon, you will probably already know a lot about what problems surgeons face.

OTOH, if you think you want to sell to a certain domain, but you don't have actual experience in that domain, you could make it a point to cultivate personal relationships with people who are in that domain, as well as doing a deep-drive into "the literature" of that domain, taking classes, watching videos, etc. But at the end of the day, if you're going to try to build a business selling something to, say, fire departments, you're probably better off having been a firefighter.

It might be a tough nut to crack, and the logistics might be tricky, but you may be able to find a way to embed yourself in the domain you're interested in. Volunteering, or just asking to "shadow" somebody for a period of time (this is where those pre-existing personal relationships come into play).

Another angle is "problems that are so general that they always exist." There's a famous phrase, the exact words of which I forget, which summarizes this nicely... it's something like "people will always want to pay less for things, have more free time, be healthier, have more sex, etc." So if you can come up with something that addresses any of these highly general topics, you might have a good candidate. Alan Kay, in one of his videos[3][4] talks about referencing Donald Brown's book Human Universals[5] as a source for thoughts on these "universal" themes. There's a LOT of good stuff in those two videos, so if you haven't seen them yet, I'd highly advice watching them.

Another thought is to find places where people like to complain, and listen to their complaints. Find any forums, sub-reddits, or sites named something like "XYZSucks" and pay attention to what people are complaining about. Maybe you can build the replacement for XYZ that doesn't suck, or at least a complement / accessory for XYZ that mitigates some specific instance of suckage.

I'm sure there are a hundred other ways to approach this, so be creative.

[1]: https://www.amazon.com/Four-Steps-Epiphany-Steve-Blank/dp/09...

[2]: https://www.amazon.com/Startup-Owners-Manual-Step-Step/dp/09...

[3]: https://www.youtube.com/watch?v=id1WShzzMCQ

[4]: https://www.youtube.com/watch?v=1e8VZlPBx_0

[5]: https://en.wikipedia.org/wiki/Human_Universals

mindcrime
I forgot to mention this earlier, but there are also forums like the "SomebodyMakeThis" sub-reddit. Basically, a place for people to talk about things they wish existed. This could probably help seed some ideas for you as well.

https://www.reddit.com/r/SomebodyMakeThis/

valand
Thanks for the references.
https://hn.algolia.com/?query=starting%20company&sort=byPopu...

Beyond that, it's hard to say without more information. Have you looked at Startup School and their library[1] of information? If not, I suggest doing that, as it's a veritable gold mine of good information.

If what you're working on is intended to be a scalable startup (as opposed to, say, a laundromat, or a one-man consulting company, etc.) then I highly recommend reading either The Four Steps to the Epiphany[2] and/or The Startup Owner's Manual[3]. The latter is nominally the 2nd Edition of the former, but I find that there's enough difference in the content to justify reading both. If you're more enterprise focused, the former is more centered on that world. If you're doing something consumer focused, the latter title is more oriented towards that (but not to exclusion).

[1]: https://www.startupschool.org/library

[2]: https://www.amazon.com/Four-Steps-Epiphany-Steve-Blank/dp/09...

[3]: https://www.amazon.com/Startup-Owners-Manual-Step-Step/dp/09...

I'll just point you to this book as a starting point.

https://www.amazon.com/Four-Steps-Epiphany-Steve-Blank/dp/09...

yeukhon
Thanks.
Just for context for those who don't know who Steve Blank is, he is the author of two books that I admire the most in my journey starting up my own venture.

The story here gives the origin of one his most critical 'Epiphanies'... "Get out of the building".

"The Four Steps to the Epiphany" [1] and "The Startup Owner's Manual" [2]

[1] https://www.amazon.com/gp/product/0989200507/ref=as_li_tf_tl...

[2] https://www.amazon.com/gp/product/0984999302/ref=as_li_tf_tl...

The funny thing is that every Lean Startup founder who delays shipping struggles with excuses like this. Most customers in any market (consumer, SMB, enterprise) do not want to take a risk. He's ignoring the important advice in Moore's Crossing the Chasm [1] and Blank's Four Steps to the Epiphany [2]: the people who will buy a very early stage product are a tiny fraction of your total market; you have to aggressively find them.

That process is definitely different in an enterprise market. For whole-hog adoption, giant companies will want a mature solution. So instead you find ways to derisk it. Maybe it's a pilot program with a larger player. Maybe it's proving out the technology in an SMB context. Maybe you just find one mom-and-pop hotel who pays you not in money but in their time and data. Maybe you start with a single floor or even a single hotel room into which you preferentially book people who you think will be early adopters.

The M in MVP is for Minimum, and that applies not just to the product, but to the context of use. You start as small as possible, just enough to test your hypotheses. The smaller your tests, the faster you learn.

He makes another rookie mistake here: "I still need to buy the same number of tablets to rent to hotels, and can’t even really discount the product that much." Lean Startups are not cheap startups. It cost Toyota millions to build the first Prius, but they did not sell it for millions. That's fine, because the point of your early MVPs is not to cover the expenses. It's to learn things, including about what people will pay. In Lean thinking you price based on value, not cost, and then work hard to minimize costs while maintaining value.

[1] https://en.wikipedia.org/wiki/Crossing_the_Chasm

[2] https://www.amazon.com/Four-Steps-Epiphany-Steve-Blank/dp/09...

evrimfeyyaz
> The funny thing is that every Lean Startup founder who delays shipping struggles with excuses like this.

Honestly, that's the whole reason why I wrote that article. I'm struggling with that thought as well, but I don't think you're completely right on that.

> Maybe you start with a single floor or even a single hotel room into which you preferentially book people who you think will be early adopters.

This is exactly the plan I'm going with actually. But still, sourcing tablets, sourcing funds to buy them, and then developing an MVP takes time. It can't be too simple that it will be detrimental to their guest satisfaction, finding the balance is key, that's why the initial version is only room service.

> Maybe you just find one mom-and-pop hotel who pays you not in money but in their time and data.

Again, that's what I'm going after. Some people say that I should already charge them, and finding hotels that would pay for that at this stage is a waste of time, that's the point I was trying to make in the article. Finding a hotel that will pay with their time and data is exactly what I'm going after.

wpietri
Ok? I'm glad you're doing more than is described in what you initially wrote, but I can only respond to the thing you wrote.

I think these struggles are very similar to what people doing B2C startups go through. Nobody has a fully marketable product on day 1. Early tests of the value prop are key, and people do all sorts of things to prove that the value really is sufficient to build a business on before they get cash in hand.

But I think it's always important to keep in mind that until somebody actually does pay, it's all just a fantasy. And it's also important to keep in mind that as entrepreneurs we really want to preserve the fantasy. You know your market better than anybody here, and it's your money you're spending, so use your best judgment. This could be the optimal way forward.

However, the inability to find early adopters could also be evidence that there isn't really a market, that you're selling a nice-to-have. Or it could be evidence that your company doesn't have the sales capacity to move the product, even if you end up making something good. Until you actually make some sales (and more importantly, recurring sales), you won't know for sure. So every time you find a reason to delay that moment of truth, you should be suspicious.

evrimfeyyaz
Thanks a lot.

> So every time you find a reason to delay that moment of truth, you should be suspicious.

I couldn't agree more with this. My worry is that this thought is going to make me approach hotels a bit too early that will be a waste of time. Finding the right time and the right stage is the key.

One thing that is not mentioned in the article is that my initial idea was to develop white-labeled app for hotels that their guests could download. I got someone to introduce me to a hotel owner, and he got me into his hotel. At that stage, I didn't have an app. I'm a software developer, but I didn't even know how to develop for iOS. After they agreed, it took me about one and a half months to learn iOS development, develop the client and develop the back-end. They kind of lost interest. Without getting into much detail, there were other issues with that idea, evident from my other visits to some other hotels, so I pivoted into this. And this time, when I go to a hotel, I want it to be at a stage where it's useful to the hotel, and where I can collect ROI data.

> However, the inability to find early adopters could also be evidence that there isn't really a market, that you're selling a nice-to-have.

I definitely agree with that too. I talked to hotel managers, and they are mostly very excited about the idea, but until they pay me, there is no way of finding out for sure. In the end, in-room tablets might not be a thing, but hotels will need to use technology to understand their in-house guests better, personalize their experiences and automate many things that the staff do now, I have no doubt about it.

wsy
IMHO the key is to not think about scaling and economics when you initially try out stuff. You need to find one friendly hotel manager who puts one tablet in one of their rooms, and have reception staff ask the guest on checkout how they liked the tablet offering. That is enough for you to get a feedback loop going. If after a few development cycles your product is exciting enough that the friendly hotel manager considers paying for it, then you think about how you can make it work for that one hotel (from an economic perspective). Then you approach your second hotel.

Of course, it makes sense to have a plan about scaling, but it is a mistake to already put everything in place to be prepared for scaling.

(Disclaimer: working in a startup, but not a founder)

evrimfeyyaz
That's an interesting point of view, thanks a lot!
You should have customers before launch. Read the first four chapters of: https://www.amazon.com/Four-Steps-Epiphany-Steve-Blank/dp/09...
That's a lot of questions, and most of the answers are "it depends", or there's more than one right answer.

I'd suggest you consider reading The Art of the Start[1] by Guy Kawasaki, The Four Steps To The Epiphany[2] by Steve Blank, and High Tech Startup[3] by John Nesheim. Between those, they cover a big chunk of the basic stuff you need to know.

The Founder's Dilemmas: Anticipating and Avoiding the Pitfalls That Can Sink a Startup[4] also has a good reputation, but I haven't had time to read it yet, so I can't give a personal endorsement. But it sounds like it might be worthwhile.

FWIW, though, I can tell you what we did at Fogbeam[5]: The company is organized as a legal entity, but we are an LLC right now, not a Corporation. I would not necessarily recommend doing that to anybody else though... while it is possible to build a big company as an LLC, practically speaking, if the intent is to build a scalable startup, the kind that's going to seek VC money and that you ultimately hope to IPO, you need to be a corporation. VC's essentially will never invest in an LLC (there are technical reasons why) and LLC's have serious limits if you need more than a hundred or so "shareholders" (I forget the exact number, but it's a pretty small number). The reason we are an LLC is a historical coincidence, rooted in weird shit that happened back when I was planning to start a consulting company, before deciding to do a product. Fortunately the prevailing wisdom is that it's fairly straightforward to convert from an LLC to a C Corporation. When they day comes that we need to do it, we'll switch.

As far as equity distribution, we have been operating on a handshake agreement between the founders. Technically speaking, I own 100% of the company "on paper" since I'm the only Member listed in the LLC operating papers. But that is, again, only a historical legacy. I created the company and worked alone for the first year before inviting the first co-founder onboard. It would be easy enough to amend the papers to update the equity split, but we've basically taken the approach that "well do that when we convert to a C corp, or there's a specific need to" (like, if we get an acquisition offer). So, yeah, we are operating on trust at the moment. A lot of people will recommend against doing that sort of thing for various reasons (see: The Social Network for example), and I have known friends who got screwed by co-founder disputes because things weren't put into writing up-front. If I had to advise somebody, I'd probably advise you to decide on the equity splits, intellectual property assignments, etc. up-front, and formalize everything from the beginning just to be on the safe side. The downside to that is, it costs a little bit of money and time. shrug

As for YC... nothing against them, but I'd never make a decision based on "what YC wants". But I look at all accelerators / incubators / etc. as "something that might be nice to do, but we'll succeed with or without them." Being that we are an East Coast startup with constraints that would limit out ability to move to CA in order to do YC, we've never even applied and probably never will. If doing YC is super important to you, then maybe you should treat this a bit differently. It's up to you.

Design document? Meh... I mean, yeah, but no. Not exactly. You need to know something about what you're building, but as a rule, you probably won't know exactly what you really need to build to achieve "product / market fit"[6] right away. So no sense spending months on an elaborate BDUF design doc. Sketch out the high level design, and IF you wind up subcontracting any work, then you'll have to formalize a spec for the contractor. But don't spend months and months designing something nobody wants. "Get out of the building" as they say, talk to customers, and iterate the design as you learn what people want/need.

[1]: http://www.amazon.com/Art-Start-Time-Tested-Battle-Hardened-...

[2]: http://www.amazon.com/Four-Steps-Epiphany-Steve-Blank/dp/098...

[3]: http://www.amazon.com/High-Tech-Start-Revised-Updated/dp/068...

[4]: http://www.amazon.com/The-Founders-Dilemmas-Anticipating-Ent...

[5]: http://www.fogbeam.com

[6]: http://www.stanford.edu/class/ee204/ProductMarketFit.html

GrahamsNumber
Just ordered Guy's book. Thanks!
mindcrime
No prob. I enjoyed that book a lot. It covers a lot of the "nuts and bolts" stuff, especially in terms of the equity stuff, and some of the stuff around raising VC money. If you think you'll be looking for outside investment eventually, it's a very good book.

I really can't recommend @sgblank's book highly enough either. If you haven't read it, or aren't already familiar with the "Customer Development" methodology, I would definitely suggest you put that on your reading list. When I read it, my reaction was something like Keanu Reeves' in The Matrix - "Whooah". I felt like I saw the matrix. While you can never reduce something as complex as building a business down to a "paint by the numbers" process, TFSTTE is about as close to a "paint by the numbers" guide as you can find. It really lays things out in excruciating detail.

GrahamsNumber
Oh it's on my reading list. I'm just taking it one at a time. Thanks!
iamshs
I wanted to appreciate for writing this reply. Thank you.
Aug 26, 2013 · liquidcool on A Startup Reading List
I liked Guy Kawasaki's "The Art of the Start" (http://www.amazon.com/Art-Start-Time-Tested-Battle-Hardened-...) because every time I picked it up, it motivated me to put it down and get back to work.

I am kind of surprised to see Steve Blank's "The Four Steps to the Epiphany" (http://www.amazon.com/Four-Steps-Epiphany-Steve-Blank/dp/098...) omitted. Is that one that everyone mentions, but nobody reads?

simplimedia
Yeah, I liked a lot of books, I made this list based on what I was familiar with.
mindcrime
I would definitely, definitely recommend both The Four Steps To The Epiphany and The Art Of The Start to any founder. In fact, if I were making a list like this, those two would top the list.
paul_f
Steve's new book The Startup Owner's Manual being left off this list is criminal.
simplimedia
Haven't read it - but I bought it, thanks.
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