Steven Blank Kills It at Greycroft CEO Summit

Posted on Jun 8, 2010 | 49 comments


four steps to epiphany I’m typing this from the lawn of Alan Patricof’s “Greycroft” home in East Hampton – my first time in the Hamptons.  Greycroft is Alan’s venture capital firm that recently raised its second fund ($130 million) with offices in both New York and LA.  We learned this weekend that it was named after his East Hampton home.

We’re here for Greycroft’s CEO Summit – a gathering of the CEO’s of their portfolio companies with guest speakers covering topics including how to build your team, PR, customer development, etc.

My favorite two quotes of the weekend were:

  • “Never trade your cat for somebody else’s dog” (referring to selling your company for stock to another privately held company – quote was from Alan).  I’m going to save that for a future blog post
  • “Nail it before you scale it” – I missed who said this but I love this quote.  It is the key to “customer development” that Steve Blank talks about.  Get your product/market fit working before you ramp up your costs (or raise too much money).

Let me start by saying two things:

  1. Events like this are invaluable to startups because the significant value comes from building the network across portfolio companies and the discussion one can have with your peer group.  I’ve been to similar events with First Round Capital and True Ventures.  Entrepreneurs always walk away with new relationships, knowledge, deal discussions and enthusiasm.  Example: great discussions about recruiting tips, similar problems with Amazon AWS, ad agencies stretching payments, etc.
  2. Alan was a gracious host and a “detail merchant” whose focus on the quality really showed.  And it’s his mantra for successful entrepreneurs, “you need to be extremely focused on the details.” I agree.  Alan was “over the top” helpful and engaged in making sure we were all talking / meeting each other and having a great time [he literally walks people around and makes sure they’re meeting other people].  He was self-deprecating in promoting his team (Dan, Dana, Drew, Ian, Marissa, Mary, Mike) as the real valuable assets in Greycroft.  And for a guy who could teach us all about entrepreneurship [if you don’t know him read this and you’ll be impressed] he was ever the student.  He listened intently through every presentation, asked questions and did a great summary of what he felt he had learned over the two days.

My action item – I will soon announce the GRP Partners CEO Summit.  The Greycroft event was a 10 out of 10 so I’ve diligently taken notes.

So thank you, Greycroft, and especially Drew Lipsher for planning / running the event (and for the tips for improving my son’s baseball swing ;-) .  Also awesome to get to spend time with Ian Sigalow “comparing notes” (VC speak ;-) )

We obviously heard what Greycroft’s portfolio companies did and what their vision for the future was.  I really enjoyed learning more about Buddy Media and meeting Michael Lazerow.  It amazed me just what a force Facebook has become for brands who invest in building a major presence in FB and spend significant money driving traffic and engaging audiences there.

With all the external presenters, the ones I enjoyed the most were Dan Senor who wrote the book Startup Nation (an examination of the Israeli technology scene).  I also really Brooke Hammerling from Brew PR who gave tips on how to effectively manage public relations – and she should know having been Larry Ellison’s personal publicist and representing people like Zynga when they were a tiny company.  Key take aways: the CEO has got to be committed to leading PR personally or it won’t be successful.  And market your brand, not your personality.

I also got the chance to hear from and meet the founder of About.com – Scott Kurnit – who gave a lively talk that challenged much startup conventional wisdom.  Mostly he advocated being a strong leader and making decisions.  He said that ineffectual leaders seek consensus or want direction or approval from the board.  He says this is a mistake.  I enjoyed Scott’s irreverent perspective very much because it matched a lot of my personal style (even for the few issues from which we didn’t agree – mostly around board structure)

But there was one that stood out above the rest as the one that “brought the house down.”  It was Steve Blank – creator of the  “customer development” process, founder of E.piphany (a high profile CRM company in the late 90’s that IPO’d in 1999), instructor at both Stanford and Berkeley and author of a well read blog.

Key take away: GET OUT OF YOUR OFFICE! And go see customers.  And it can’t be delegated.  The CEO needs to do this him/herself.  You need to hear directly what their issues are.  And you need to close the sales yourself so that your future head of sales can never bullsh** you.

If you haven’t bought the book “4 Steps to Epiphany” (and if you’re involved in a technology  startup) do yourself a favor and buy a copy now.  If you can get 30 CEO’s sitting on the edge of their seats and 8 VC partners to not use their Blackberry’s for 90 minutes you’re really achieved something.

It was so impressive that during Steve’s actual presentation a well respected VC, Chris Fralic at First Round Capital sent out a Tweet announcing that he had bought the book in real time. What he said to me privately afterward (and I hope he doesn’t mind me quoting this) is, “man, I always knew that Eric Ries was up to something big with his Customer Development talks but I had no idea that there was Yoda behind the scenes.”  I felt the same way.  Like we were listening to the wise, understated sage.

The deck is below and I’m attaching a link to video that has a very similar presentation (he spent more time in our session on “customer development” than apparently he does in this video).  But if you haven’t seen Steve speak I highly, highly recommend watching.  You can get the best of what we saw at Greycroft without having to be part of the portfolio! ;-) Magic.

View more presentations from steve blank.

  • http://venturehacks.com Nivi

    Fuck that, market your customers!

  • Nivi

    Fuck that, market your customers!

  • cthomaschase

    i dig his insights as well. i forget the exact quote, but the one that sticks with me the most is how facts exist only outside your office; inside your physical building there exists only hypothesis (and sometimes lies.) as an engineer by trade, i often have to fight off the urge to solve problems without the customer. i guess that would be considered product development and not customer development.

  • cthomaschase

    i dig his insights as well. i forget the exact quote, but the one that sticks with me the most is how facts exist only outside your office; inside your physical building there exists only hypothesis (and sometimes lies.) as an engineer by trade, i often have to fight off the urge to solve problems without the customer. i guess that would be considered product development and not customer development.

  • http://bothsidesofthetable.com msuster

    “Fuck that” referring specifically to what?

  • http://bothsidesofthetable.com msuster

    “Fuck that” referring specifically to what?

  • http://bothsidesofthetable.com msuster

    Yes! I'm going to quickly edit my post. Thanks for reminding me! Hope you're well.

  • http://bothsidesofthetable.com msuster

    Yes! I'm going to quickly edit my post. Thanks for reminding me! Hope you're well.

  • http://venturehacks.com Nivi

    Instead of marketing the personality or the brand, market the customers and what they get out of your product. What do you think? I need to learn more about PR.

  • Nivi

    Instead of marketing the personality or the brand, market the customers and what they get out of your product. What do you think? I need to learn more about PR.

  • http://vlaskovits.com Patrick Vlaskovits

    Steve is most definitely a Force of Nature. His presentation was the ne plus ultra at the Startup Lessons Learned Conference in April, and the Four Steps is a landmark book. His thoughts on the dichotomy between Founders (Durant) and Managers (Sloan) merit another book.

    @Mark

    Me being, admittedly, lame and pedantic – but Steve's shorthand is actually “Getting out of the building.”, not “Get out of the office.”

  • http://vlaskovits.com Patrick Vlaskovits

    Steve is most definitely a Force of Nature. His presentation was the ne plus ultra at the Startup Lessons Learned Conference in April, and the Four Steps is a landmark book. His thoughts on the dichotomy between Founders (Durant) and Managers (Sloan) merit another book.

    @Mark

    Me being, admittedly, lame and pedantic – but Steve's shorthand is actually “Getting out of the building.”, not “Get out of the office.”

  • chris spanos

    Mark — fantastic post and absolutely spot on about the critical need to engage directly with customers. I'm currently leading a venture that is hybrid of a start up and a turn around. A great benefit of the turn around aspect is that I get to spend at least an hour each day calling our existing customers to better understand what went wrong and how we can better serve them in the future. Their direct and sometimes painfully candid feedback has been insanely invaluable. What's also amazing is hearing how much these same customers are rooting for us to be successful and are willing to stick with us as we transition to version “2.0.”

  • chris spanos

    Mark — fantastic post and absolutely spot on about the critical need to engage directly with customers. I'm currently leading a venture that is hybrid of a start up and a turn around. A great benefit of the turn around aspect is that I get to spend at least an hour each day calling our existing customers to better understand what went wrong and how we can better serve them in the future. Their direct and sometimes painfully candid feedback has been insanely invaluable. What's also amazing is hearing how much these same customers are rooting for us to be successful and are willing to stick with us as we transition to version “2.0.”

  • http://bothsidesofthetable.com msuster

    Ah, yes. Absolutely! I always tell that to people. First, all journalists first and foremost want validation of who is using your product and the gains they're getting. It's the first line of defense that they're not being BS'd to. All future customers (prospects) want to know “who else is using it.” And often great customers love being part of the marketing campaign. I like marketing both the company and the PERSON who implemented or led the initiative. We call that type of marketing “heroes” marketing. More on that another day. My main point was – don't make it about the personality.

  • http://bothsidesofthetable.com msuster

    Ah, yes. Absolutely! I always tell that to people. First, all journalists first and foremost want validation of who is using your product and the gains they're getting. It's the first line of defense that they're not being BS'd to. All future customers (prospects) want to know “who else is using it.” And often great customers love being part of the marketing campaign. I like marketing both the company and the PERSON who implemented or led the initiative. We call that type of marketing “heroes” marketing. More on that another day. My main point was – don't make it about the personality.

  • http://bothsidesofthetable.com msuster

    Gotcha. Thanks for the clarification. Hopefully the intent isn't lost. I may be wrong but I think he used office in our presentation so I'm sticking with it! ;-)

  • http://bothsidesofthetable.com msuster

    Gotcha. Thanks for the clarification. Hopefully the intent isn't lost. I may be wrong but I think he used office in our presentation so I'm sticking with it! ;-)

  • http://bothsidesofthetable.com msuster

    Great story, Chris. It is surprising but I have found your experience to often be the case (re: customers routing for you even when your company let them down in the past).

  • http://bothsidesofthetable.com msuster

    Great story, Chris. It is surprising but I have found your experience to often be the case (re: customers routing for you even when your company let them down in the past).

  • http://www.socialannex.com Al

    We took his advice and as I speak we are right in front of customers at our industry conference. Google is right next to our booth and yesterday was the first 3 hours of the exhibition and we got more traffic than them (and a bunch of others around us) which makes me ecstatic. But what's more important is me and my team is getting to learn from real people why they would (or would not) use our product. This sort of 1-1 feedback is priceless!

    Today is the second day starting in the next 2 hours – and a full 10 hours in front of customers – and I am sure we will walk out with a ton of feedback from real people. If we weren't there – we'd build in a vacuum.

    By the way – doesn't hurt to have Google next door – great way to pull foot traffic :) If you are at a trade show/exhibition, read Steve Blank's blog posts on how to prepare for that – the advice is golden (he's got 2 posts). Add one more to his list – get a booth next to Google next time :)

  • http://www.socialannex.com Al

    We took his advice and as I speak we are right in front of customers at our industry conference. Google is right next to our booth and yesterday was the first 3 hours of the exhibition and we got more traffic than them (and a bunch of others around us) which makes me ecstatic. But what's more important is me and my team is getting to learn from real people why they would (or would not) use our product. This sort of 1-1 feedback is priceless!

    Today is the second day starting in the next 2 hours – and a full 10 hours in front of customers – and I am sure we will walk out with a ton of feedback from real people. If we weren't there – we'd build in a vacuum.

    By the way – doesn't hurt to have Google next door – great way to pull foot traffic :) If you are at a trade show/exhibition, read Steve Blank's blog posts on how to prepare for that – the advice is golden (he's got 2 posts). Add one more to his list – get a booth next to Google next time :)

  • http://arnoldwaldstein.com awaldstein

    Good post Mark

    Hard not to be a Steve Blank fan! He inspires often.

    Your mention of Buddy Media, meeting Michael Lazerow and the power of Facebook for big brands jumped at me. If you have any links or data that point to proof points for that, I'm very interested as I work within that space with clients.

    Again…thanks.

  • http://arnoldwaldstein.com awaldstein

    Good post Mark

    Hard not to be a Steve Blank fan! He inspires often.

    Your mention of Buddy Media, meeting Michael Lazerow and the power of Facebook for big brands jumped at me. If you have any links or data that point to proof points for that, I'm very interested as I work within that space with clients.

    Again…thanks.

  • http://giffconstable.com giffc

    “Lean startup” sometimes evokes reactions of “fad” or “dogma”, neither of which have a place in startups, but if you focuses on the root messages that Steve and Eric push, there is just a lot of common sense that people forget all too often when lost in the weeds, or in the vision. Of course, it also has to be molded to each specific context. Glad Steve inspired you. He certainly has me.

  • http://giffconstable.com giffc

    “Lean startup” sometimes evokes reactions of “fad” or “dogma”, neither of which have a place in startups, but if you focuses on the root messages that Steve and Eric push, there is just a lot of common sense that people forget all too often when lost in the weeds, or in the vision. Of course, it also has to be molded to each specific context. Glad Steve inspired you. He certainly has me.

  • http://hapnin.com/users/2 theschnaz

    I saw Steve Blank talk in NYC a few months ago. Someone from the crowd asked about pivots and when to make them. Steve said something along these lines, you know it's time to pivot when you don't have any regrets. This really stuck with me.

    As you talk to customers, you learn a lot. Sooner or later you just know your plan isn't going to work as you thought. When this happens, take what you know and pivot to a new market, product, etc.

  • http://hapnin.com/users/2 theschnaz

    I saw Steve Blank talk in NYC a few months ago. Someone from the crowd asked about pivots and when to make them. Steve said something along these lines, you know it's time to pivot when you don't have any regrets. This really stuck with me.

    As you talk to customers, you learn a lot. Sooner or later you just know your plan isn't going to work as you thought. When this happens, take what you know and pivot to a new market, product, etc.

  • http://www.jasonwolfe.co.uk/ Jason Wolfe

    From an enlightened VC's perspective, do you think educated entrepreneurs are good thing for your industry? And if so, what lesson would you add to Steve Blank's points about being prepared to stand aside once you've found your model?

  • http://www.jasonwolfe.co.uk/ Jason Wolfe

    From an enlightened VC's perspective, do you think educated entrepreneurs are good thing for your industry? And if so, what lesson would you add to Steve Blank's points about being prepared to stand aside once you've found your model?

  • http://www.victusspiritus.com/ Mark Essel

    Huge fan of Steve's blog, and carry the PDF of 4 steps everywhere with me (phone + dropbox = library). Glad to see Eric's work to fit agile development with Steve's customer development mantra. Curious to see how Steve's theories hit the social web with breaking information tools and design.

    Happy to hear you had a good trip on my coast while I'm honeymooning (flying back through SF and spending a couple of days).

  • http://www.victusspiritus.com/ Mark Essel

    Huge fan of Steve's blog, and carry the PDF of 4 steps everywhere with me (phone + dropbox = library). Glad to see Eric's work to fit agile development with Steve's customer development mantra. Curious to see how Steve's theories hit the social web with breaking information tools and design.

    Happy to hear you had a good trip on my coast while I'm honeymooning (flying back through SF and spending a couple of days).

  • http://www.davidblerner.com davidblerner

    Thanks for sharing Mark. So, it was a CEO summit along with invited speakers I am guessing? 2 Questions: Did you present? More importantly, what did a Canadian/Londoner/Californian think of the Hamptons on his inaugural visit?

  • http://www.davidblerner.com davidblerner

    Thanks for sharing Mark. So, it was a CEO summit along with invited speakers I am guessing? 2 Questions: Did you present? More importantly, what did a Canadian/Londoner/Californian think of the Hamptons on his inaugural visit?

  • philsugar

    Bought the book. Just came back from a day trip to the West Coast to see a customer its that important.

    I have been convinced to trade my cat for a dog. It was a classic way to get experience…through a poor judgment.

    Love to see the post, in my mind the biggest issue was that nobody was “on top”. Anytime you try and combine two teams it needs to be very clear who is “on top”. It can differ by department but you need one person who can mandate it and have all arguments settled within 90days either by submission or omission (personnel removal). Otherwise you spend all your time fighting internal battles.

  • philsugar

    Bought the book. Just came back from a day trip to the West Coast to see a customer its that important.

    I have been convinced to trade my cat for a dog. It was a classic way to get experience…through a poor judgment.

    Love to see the post, in my mind the biggest issue was that nobody was “on top”. Anytime you try and combine two teams it needs to be very clear who is “on top”. It can differ by department but you need one person who can mandate it and have all arguments settled within 90days either by submission or omission (personnel removal). Otherwise you spend all your time fighting internal battles.

  • http://www.davidapearce.com David Pearce

    Great post Mark! Sounds like a good time and a lot of great information being spread around. I just ordered Steve's book too. I completely agree with the get out of your office part, there's nothing more valuable from the CEO perspective than seeing and interacting with your customers first hand, in person. There's nobody else who can better inform you about what your customers want than your actual customers.

  • http://www.davidapearce.com David Pearce

    Great post Mark! Sounds like a good time and a lot of great information being spread around. I just ordered Steve's book too. I completely agree with the get out of your office part, there's nothing more valuable from the CEO perspective than seeing and interacting with your customers first hand, in person. There's nobody else who can better inform you about what your customers want than your actual customers.

  • dshen

    I found this well put together summary of Steve's book here:

    http://www.custdev.com/

    it's a lot more digestible and the important stuff is there.

  • dshen

    I found this well put together summary of Steve's book here:

    http://www.custdev.com/

    it's a lot more digestible and the important stuff is there.

  • http://twitter.com/TylerBeerman Tyler Beerman

    Mark Suster your blog rocks!

  • http://twitter.com/TylerBeerman Tyler Beerman

    Mark Suster your blog rocks!

  • http://www.matthewburgess.com/ Matthew Burgess

    Yeah, I'm reading Steve Blank's book. My two “Eric Ries” types that pointed me to the Yoda were Jason Spievak and Klaus Schauser, both big fans and practitioners of Customer Development. We're putting this approach into play in our company now, and we've stumbled on substantial validation in an adjacent market, nearly by accident, simply by asking the right questions of customers and prospects. And yes, “nail it before you scale it” is key. Takes patience though.

    And your Scott Kurnit comments seem to align with your own comments a few weeks back about decision by indecision, which I've both seen and been guilty of.

    Thanks.

  • http://www.matthewburgess.com/ Matthew Burgess

    Yeah, I'm reading Steve Blank's book. My two “Eric Ries” types that pointed me to the Yoda were Jason Spievak and Klaus Schauser, both big fans and practitioners of Customer Development. We're putting this approach into play in our company now, and we've stumbled on substantial validation in an adjacent market, nearly by accident, simply by asking the right questions of customers and prospects. And yes, “nail it before you scale it” is key. Takes patience though.

    And your Scott Kurnit comments seem to align with your own comments a few weeks back about decision by indecision, which I've both seen and been guilty of.

    Thanks.

  • Uptownlunch

    Customers are important, but what's more important is who's your customer!

  • Uptownlunch

    Customers are important, but what's more important is who's your customer!

  • http://startupcfo.ca startupcfo

    Mark re: selling to a private buyer for stock, I think that's a good general rule, but there are exceptions. There are high fliers like Linkedin (yet to make an acquisition I think) and Twitter (which has made purchases for stock) where I think founders and investors would both like to own the stock – especially if its common and discounted in the same manner as employees. You're still at risk because its totally illiquid, but presumably you've traded one iliquid stock for another with much higher value potential (and where you are already 'in the money' because of the 409A valuation discount).

  • http://startupcfo.ca startupcfo

    Mark re: selling to a private buyer for stock, I think that's a good general rule, but there are exceptions. There are high fliers like Linkedin (yet to make an acquisition I think) and Twitter (which has made purchases for stock) where I think founders and investors would both like to own the stock – especially if its common and discounted in the same manner as employees. You're still at risk because its totally illiquid, but presumably you've traded one iliquid stock for another with much higher value potential (and where you are already 'in the money' because of the 409A valuation discount).

  • http://bothsidesofthetable.com msuster

    Thanks. I have a blog post going up on this topic in the next 30 days so I'll save a long POV for that. The title will be “don't trade your cat for someone else's dog” so maybe that's a hint on my POV. But obviously when it's a valuable and growing entity it can be a good idea.