Steve Blank was the star speaker among an incredibly strong cast of speakers at the Lean Startup sessions at SXSW-interactive.? The room was packed, and SXSW volunteers were keeping more people out in the halls to obey fire codes.? There would have been people sitting on stairs and on the floor if allowed.? I guess there were a few of those, but mostly just near the power outlets (people who didn't have iPads to take notes on).
Steve speaks as well (or better) than he writes.? His talk was engaging and energizing.? He started his talk (and a blog post I'll quote here, based on the same topic) discussing a quick history of the four waves of startup investing:
- The Golden Age (1970 ? 1995): Build a growing business with a consistently profitable track record (after at least 5 quarters,) and go public when it?s time.
- Dot.com Bubble (1995-2000): ?Anything goes? as public markets clamor for ideas, vague promises of future growth, and IPOs happen absent regard for history or profitability.
- Lean Startups/Back to Basics (2000-2010): No IPO?s, limited VC cash, lack of confidence and funding fuels ?lean startup? era with limited M&A and even less IPO activity.
- The New Bubble: (2011 ? 2014): Here we go again?.
Not everyone agrees that there is a bubble.? Of course, in order to disarm the "is it a bubble or is it not" discussion, he simply says "if you believe it IS a bubble, then the question is, are the rules different in a bubble than they are otherwise?? Are the rules different now, than they were for the previous ten years?"
It is hard to argue that the rules aren't different.? Or at least that some tactics that would have been counter-productive or futile before, are now quite effective and productive.
The basic argument is that from 2001 to 2010, the Lean Startup was the way to go - conserving capital, focusing on learning and iterating, and finding a business model that could scale.? As he put it:
Startups began to recognize that they weren?t merely a smaller version of a large company. Rather they understood that a startup is a temporary organization designed to search for a repeatable and scalable business model. This meant that startups needed their own tools, techniques and methodologies distinct from those used in large companies. The concepts of Minimum Viable Product and the Pivot entered the lexicon along with Customer Discovery and Validation.
So far so good.? But what has changed in 2011, and going forward toward 2014?
- Breathtaking scale.? The addressable market for startups is vastly bigger than it once was.? And so is the ability for startups to serve that scale (via Amazon web services, for example). Mark Suster commented on this in his SXSW recap.
- New Exits.? There are simply better options for startups to exit now, than there have been over the last 10 years.? IPOs are back on the table.? Acquisitions are at higher valuations.? And the companies that are IPO'ing will have real profits and revenue, and massive customer #'s.
- Better tools are available - AWS, S3, Google App Engine, Rackspace, etc.? These scaling tools weren't there 10 years ago.? Moreover, developer productivity is up with new tools like Ruby, Rails, etc.
It seems that the key change Steve is advocating for startups is visibility.? That previously, press exposure might have hurt you by locking you into the wrong path, but going forward, press would help you by expanding your user base, and increasing your visibility for potential acquirers.
But of course, all this advice only applies if you believe there is a new Internet bubble.
There were some great quotes in the talk.? My favorite:? "There are no 10 year startups. There are only 2 year startups attached to 8 year failures."
Steve pulls no punches, but he does deliver his critiques with a smile and sense of humor.
Slideshow, embedded below, also tells the story quite well:
View more presentations from steve blank
There's also a great Q&A with Steve Blank on GigaOm - in which he discusses how the total available market has exploded in size, and how he believes a great CEO with a great product could have come out of SXSW-interactive highly visible and talked about. In other words, he still sees SXSW as a place where you could launch.