Get Out of the Building

Steve Blank

We’re a few weeks into the Lean Launchpad Class, NSF Innovation Corps edition, and one phrase comes up over and over again by the instructors:  Get Out of the Building. This simple phrase directs the teams to go figure out what their customers need and want, and suggests it can’t be done by researching on the internet or talking to second hand sources. It reminds me of the old phrase, “You can’t learn to swim at the library.”

One of the privileges of being in the class is being able to watch the twenty other teams figure out who their customers are and what their value proposition is. This is part of the customer discovery process. Even though I feel as though I figured out much of this in the school of hard knocks through many startups, the class puts structure around the process which is very useful.Still, we’re finding for our team, which is working on an innovative biosensor technology, the process is not easy. It is filled with frustrations and the need to backtrack after going down blind alleys. The great value of the program, though, is that we’re doing this work without spending any money. If we can find the right opportunity space, it will be fully validated by the time we go looking for money. Not only will our chances for raising money be much higher, we will have saved a lot of burn in the process. Add me the growing list of people who are becoming disciples of this methodology.

Just a week ago I was mentoring a student who is part of the University of Illinois’ Illinois Launch program. It was clear that although he had an idea for a business, he had not done anything to test the concept among the many stakeholders that would need to buy into his vision for his company to become a success. I think in the past I would have questioned his assumptions and challenged him on why he thought the world needed his products. Instead I found myself saying to him, “You need to get out of the building” and go talk to your prospective customers. Will they want what you have to offer? Will they pay for it? How are they getting the service today? How will they justify paying for it? I didn’t have to challenge him on anything, but he was very motivated to look where my finger was pointing, and he emailed me the next day thanking me for the great advice and encouragement.

In just a few short weeks a decade of experience in customer discovery has been reduced to one simple phrase. If you are in the process of launching a new company (or even just a new product), you need to go talk to your customers by getting out of the building.

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Principle Two: Get the Manufacturing Right

Image representing Intel as depicted in CrunchBase

Image via CrunchBase

You can’t sell it if you can’t make it.

Most of the companies that I have worked with over the past 10 years have had a heavy dose of engineering content in their products. The companies made physical stuff (i.e., not software) and the reproducibilty and scalability of the production processes were of paramount concern. Time and again investors would ask, “Is your process scalable?” Time and again we would look at scalability and feel good about how to achieve it, and make strong pronouncements to our stakeholders. While scalability is VERY important, we missed the larger issue that was more important at the time.

The bigger issue is that the manufacturing process needs to come under control first. Unless you have a process that is in control (yields consistent output) at a small scale, it is not scalable. I’ve seen in many companies an inability to control the process–even at the prototype stage. In the semiconductor world, people are known for making wafers full of products (sometimes as many as 10,000 chips can be on a wafer). Instead of knowing that each die is good, instead they have to ferret out the good ones from the bad ones. And if you’ll permit me to get crass for a moment, engineers are known for finding the KGD (known good die) among thousands of bad ones, and showcasing the good ones as if to say that the product works. Clearly a KGD proves the concept is feasible (proof of concept) but it does not prove that you will have a successful business.

If there’s a way to affirmatively discern a good one from a bad one, one can probably live with this–for a while. When Intel started legend has it that their yield was on the order of 2%. But imagine if you were a machine shop, and your goal was to manufacture products by finishing them to a certain tolerance. Imagine if, prior to performing the finishing operation, you had no idea if it would work. Forget about scaling it, in this example the process is not under control.Having a random assortment of dice on a wafer representing every possible combination of unstable variables does not a product make.

Now extend this issue to the need to grow sales. Companies rightly want to be selling and shipping product. But unless you can make things under control in small batches first, you’re going to be in a world of hurt. If your process is stable and you understand it, then you have a chance to scale it successfully.

If manufacturing is part of your operation, I cannot stress enough the importance of focusing on this issue that directly hits your bottom line. Otherwise no one will buy your products (that’s obvious), but you also won’t have a chance to sell your business or license your process either.

Please comment if you have something to add for surely I’ve not done the subject justice.