Matt Abrahams: “Scary Fun” was the motto for one of the startups I worked for back in the day. Many who choose to create and build organizations can surely relate to this idea.
Hello. I’m Matt Abrahams, and I teach Strategic Communication at Stanford Graduate School of Business. Welcome to Think Fast, Talk Smart — the Podcast. I am incredibly excited and honored today to chat with Steve Blank. Steven is an adjunct professor at Stanford in the Department of Management, Science, and Engineering. He teaches courses on lean startups, innovation, and entrepreneurship. He’s credited with launching the Lean Startup movement, and he’s the author of “The Four Steps to the Epiphany — The Startup Owner’s Manual in Holding a Cat by Its Tale.”
Steve Blank: Thanks for having me, Matt.
Matt Abrahams: You’ve been an entrepreneur for over 45 years, founding or cofounding eight businesses and helping countless others. You mentioned this Lean Startup methodology. Can you summarize that approach and what it looks like? And what are some best practices included in it?
Steve Blank: Well, Matt, that’s usually a semester class, but I’ll try to do it [laughs].
Matt Abrahams: Right, we’ll take the Cliff Notes version, if you don’t mind.
Steve Blank: The Cliff Notes version basically says that — and it’s so obvious it’s like duh, but we didn’t quite process it — is that there are no facts inside your buildings, so get the heck outside.
Matt Abrahams: Right.
Steve Blank: And what I mean by that is, if you remember, what I said is startups used to believe is all they needed to do is write a plan and raise some money and now execute for the plan. Why? Because if the plan was funded and, well, VCs and God have blessed that plan of — those aren’t hypotheses, those are facts, right? People gave you money for them. So let’s go build it. The Lean Method simply says, look, you have a set of hypotheses. It’s okay. You’re [out there] — on day one, a startup is a faith-based enterprise. But we want to turn it into facts as rapidly as possible.
And no facts inside here — exist inside your building or very few. And if you’re in sales or marketing, it’s impossible to be smarter than the collective intelligence of your potential customers sitting in your building. So let’s go out and test these hypotheses. So piece one of the Lean Startup is a formal methodology called customer development. Let’s go do these things to validate who are the customers, what features do they want, competitors, et cetera.
But while we’re doing that, something else evolved in the 21st century, and that’s the way to build products using something called agile engineering, that is, let’s build products iteratively and incrementally rather than using a waterfall method, which is write the spec, build the product, get to customer ship. If you use agile instead, you can be building wireframes or tests or spreadsheets or something to put in front of customers very early on, or potential customers, and get their feedback, and then take that back and say, well, wait a minute, were assumptions correct? So, agile engineering is part two of the Lean Startup.
And then finally, what hypotheses should you be testing? I just mentioned some of them. It turns out that someone named Alexander Osterwalder had put together something called the Business Model Canvas. And that’s a pretty good roadmap of the nine things you need to worry about when you’re building a new venture, not all of them, but it gets about 80 to 90 percent. Now, in fact, Lean is those three components — customer development, agile engineering, and business model design.
Matt Abrahams: That was an amazing crash course. Thank you.
Steve Blank: You got the whole semester.
Matt Abrahams: There we go. I —
Steve Blank: No longer need to take my class.
Matt Abrahams: I was just going to say, send me the final exam. I’m ready to graduate. I like the way you packaged that up. And faith to fact I think is a really interesting way to think about it. Generating hypotheses, testing them with people who actually might want to buy your product? What a brilliant idea. And then this notion of rapid iteration and prototyping, critical as well. I have a hypothesis I’d like to run by you. So part of what you discussed as the Lean Methodology is this notion of minimally viable product design where you test for user requirements. You understand, at least have some hypotheses about the market, come up with some wireframes, and then test and iterate.
I feel that that same process can apply to our communication as well. It’s about, as you said, understanding your audience. It’s about understanding the context in which the messages need to be created and deployed. It’s about structuring those messages, much like you would build a wireframe of a product or service. And then you iterate and test. Does the concept of minimally viable communication resonate with you at all?
Steve Blank: I think that’s a key tenant of everything I teach about communications. For a startup — and I don’t mean to diss some of these folks, but hiring a PR agency too early is a sign that the CEO is treating this as someone else’s problem. For me, in a startup, the first pass, the minimum viable product of understanding audience message, media messenger, can only be done with the founders and CEO engaged. That is even if they think they know nothing about any of this stuff, I want them to actually get out of the building and figure this out. Why? Because they’ll get it wrong and whatever, but they’ll have a feel, a fingertip feel now of, oh, let’s — this is our stake in the ground. Now let’s hire professionals who can do this.
But we’ve built our own MVPs with in fact the people who best know the product and think they know the rest of these things. It makes a much better relationship with an agency and the founders who typically never get engaged in this part of the business, to actually have done it themselves. And I don’t mean six months of this, but I mean a couple of weeks of trying to figure this out. I make them draft those audience message — messengers and media drafts themselves. And then when they’re interviewing an agency, they can say, well, this is what we’ve found. Tell us what’s wrong, or how do we this better? And usually, good agencies could add huge value here, but at least they’re talking to an educated founding team who appreciates what the language means and the value.
Matt Abrahams: Excellent. So getting your hands dirty as a founder and really understanding the impact and importance of that communication can serve you well when you then go get professional help to help move things forward.
Steve Blank: And let me double-down why. Because smart CEOs treat communications as a force multiplier, a tool that dramatically increases sales or valuation, or the vehicles to get acquired line up at the door. You know, not so successful CEOs treat it as a tactic that could be handed to others. And that’s the difference for me about where marketing and marketing communications needs to sit in the early days of a company. If the founder’s never been engaged, they’re never going to get high quality communications.
And I think the canonical or the pinnacle of this was Steve Jobs. He was engaged. To him, it wasn’t some other thing that you handed to someone else. He was constantly engaged, and Apple had some of the most brilliant marketing of the 20th and 21st centuries.
Matt Abrahams: Absolutely. And it still reverberates today. I’d like to dig a little deeper into the role of communication, and how have you seen communication play, not just in marketing and selling of products and ideas, but within organizations in terms of teams, et cetera. What best practices or advice and guidance have you seen that can really make a difference with regard to communication?
Steve Blank: Boy, do we have another semester? I mean [laughs], stop me when we run out of airtime. But let me start with, even today, people tend to make the same mistakes about marketing and communications and startups as I did when I was a young entrepreneur. Number one is they often confuse communications tactics — what should my webpage look like, or should I be using Facebook or Instagram — with a strategy. You know, a communications strategy, at least for me, answers a couple of questions — why are we doing these activities, for example? And I’ll give you four examples — these happen to be my four, but we can make up some others.
Is there a communications strategy designed to create demand for our products and drive them into a channel? Or — and / or are we trying to create awareness of our company and brand for potential customers whom we try to educate and position the company? Are we trying to create awareness for fundraising, that is, gee, we’re out raising money, and we want — we’re hoping that we could get the attention of some folks? Or do we want to create awareness for potential [acquirers]?
So once you’ve figured out the why you’re creating the strategy — I just gave you a list of mine, then you need to figure out the how. Here’re just four steps. One is, understand your audience. Number two is, what’s the message for that specific audience? So we’ve got audience and we’ve got message. Three is, what’s the media you want the message to be read or seen or heard on? And then four is, who’s the messenger you want to carry your message?
Matt Abrahams: I think that’s really, really helpful to break it down into those ways. There’s a very simple model of communication that I will teach and others that looks at those elements. It’s you have a sender, and who is that sender and who’s the best sender? What’s the message? What’s the appropriate channel? And what can you do to make the likelihood that your message will resonate the most with the receiver? And I hear you talking about all of those elements, for sure.
Steve Blank: With one addition, and the one addition is — I start with is, so who’s the audience, because in a startup, there’re multiple audiences typically in your head. It’s do I want to reach the customers, or do I want to reach VCs, or do I want to reach other companies? And what’s confusing is, when you’re trying to figure this out, the way I tend to say, well, time out. Let’s go back to our strategy. Are we trying to reach customers or investors or acquirers? And they’re very different audiences with each requiring their own message, media, and messengers. And if you try to kind of put them together, you end up with a ball of twine.
And so how do you figure out which one of these is most important and in what order? It turns out, if you remember, we talked about the business model. If you drill down on it, you kind of understood that there are typically multiple customer segments, each one of them with a — who has their own pains that they want solved or are looking for a solution. VCs are looking for hot deals in this area. Corporate customers might be looking for something very specific. And so to figure out who the audience is, you need to go back, all the way to the back to what’s our strategy and what’s our business model.
The second part is, what’s the message? I tend to think the messages answer three questions: Why should the audience care? What are you authoring? And more importantly, what’s the call to action? The last one is, to me, like the most important. It’s like, okay, what do you want them to do? You want to pick up the phone or click here or do something else? Or are you just trying to kind of get into their heads that you can own a space? Now what’s nice is if you’ve been doing some of this customer development that’s getting out of the building, this is a big idea is that your customers have already told you how to craft the first part of the message, that is, why they should care.
That comes directly from the — if you’ve done customer development correctly, they’ve told you what their pains and gains are. If you haven’t done any of this getting out of the building, then you’re staring at a blank sheet of paper, going, well, I wonder what they care about.
Matt Abrahams: Many things you’ve said are absolutely critical to all types of communication. You have to know your audience. You have to understand what’s relevant to them. Then you have to craft messages that are tailored to that audience that are in service of the broader strategy. And one key point that I really want to echo for everybody to really internalize is you have to adjust and adapt the message for that audience. It is so often that people try to create one pitch deck or one message and then spread it among multiple audiences. And that’s where you dilute the message, and you can actually confuse the people you’re talking to.
So that point you made — all the points were valuable, but that one in particular I wanted to highlight.
Steve Blank: There’re a couple more things about the message that I run into all the time with this, particularly entrepreneurs coming out of a technical world, is what are you offering. And almost always, they start with a feature list. Here, here are all the bullets, and here’s why we’re doing X or Y. And I just kind of shut them down. I go wait a minute, if we’ve gotten out of the building and talked to customers, we should know what’s important to them. It’s not the feature list, but what relieves pain or creates gain for them? And again, if you’re just sitting in the building sitting at a blank sheet of paper, you’re not going to have a clue. But if you talked to them, you would have known it.
And then finally, the call to action. As I said, what do you want them to do? The other thing is context for messages. A message that’s brilliant today might be met with blank stares two years ago or two years from now. So remember that all messages operate in context that sometimes have an expiration date. And then finally, messages need to be memorable. They need to be sticky because the more memorable the message, the greater its ability to create change. The classic analogy is, consider if you were told you’re going to pay for cold, dead fish wrapped in seaweed, you might not be too hungry. But when we call is sushi, people line up and pay lots of money. So that’s my — enough about [messaging]. Matt, back to you.
Matt Abrahams: What I’m hearing you say about messages are so many valuable things. One, it has to be tailored to an audience and their specific needs. Second, it should not just be a list of features. It needs to be value and relevance. Bullets kill. Don’t kill your audience with bullet points. You must consider the context as well, and the context in which the message is delivered can change dramatically. And then finally, your last point was we need to make it memorable, so it sticks. And that has to do with not only relevance but the words you use, the framing you use, et cetera. All of that is such valuable advice. Thank you.
Steve Blank: And Matt, the last two points, if I go back, were media and messengers. You know, media today is — when I was an entrepreneur, media — we used to cut down dead trees and put ink on them, or people used to have antennas on their roofs and watch broadcast TV. Today, we just kind of think of social media. But you need to have a media mix. It’s likely that each audience reads different media. Potential customers read something different than potential investors. You need to have a media strategy, and that’s a plan that describes the mix of media and how you use it.
And by the way, the media to me also includes your website, your Facebook page, your Twitter page, et cetera. It should be the first place that you experiment finding your audience and messengers. And then the last part is messengers. And these are kind of the well-placed and highly leveraged individuals who influence your audience. And I’m not talking about your CEO. I’m talking about who’s respected in that industry that’s now — and you’ve actually given them your PowerPoint slide, and they’re using it to diagram the space, or —. Messengers are the ones who convey and amplify your message to your audience through the media you’ve chosen.
And so some types of messengers, for example, are reporters, industry experts, evangelists, connectors. And each audience has their own unique set of messengers. And some of them nowadays — social media can be bought, like influencers. So you can actually pay for some messengers as well. And depending on your industry and what you’re trying to achieve, the messengers will vary widely.
Matt Abrahams: Very useful reminders there that your communication is not just the messages that you create. It’s the media and channels through which you release them. And it’s the messengers who act on your behalf to amplify and spread them. Very, very important. So before we end, I’d like to ask you the same three questions I ask everyone who joins me. You okay with that?
Steve Blank: Sure.
Matt Abrahams: All right, here we go. If you were to capture the best communication advice you ever received as a five- to seven-word presentation slide title, what would it be?
Steve Blank: Well, it’s the one I kind of lived on, is any idiot can make a complicated thing so complicated. It takes real skill to make it sound simple.
Matt Abrahams: So it takes real skill to make something sound simple. Absolutely. We’ve spent a lot of time on this podcast with many guests talking about how to make complex information accessible to an audience. It’s not about dumbing it down. It’s about making it relevant and putting it into terms that people can understand. Let me ask you question number two. Who is a communicator that you admire, and why?
Steve Blank: The individual communicator, obviously. Again, I grew up in a world of the 20th century Steve Jobs and the 21st century Steve Jobs, probably, the best in my mind about being able to create a reality distortion field that made you want to throw out a perfectly good product every year and buy the next one. You know, Steve Jobs reinvented the 20-century automobile model change. It used to be in the ’50s and ’60s, people would stand in line to see the next year’s car model — hard to believe now — and actually buy it because it had bigger tail-fins or like flashier chrome.
Steve Jobs essentially resurrected that idea and managed to convince people that the last year’s iPhone that they loved is completely obsolete, but you should still love the company because this one has like flashier features — the phrase was planned obsolescence — and at the same time, obviously, was able to communicate the benefits of new product breakthroughs like iPod and iPhone, et cetera.
Matt Abrahams: Final question: what are the first three ingredients that go into a successful communication recipe?
Steve Blank: You know, I mentioned kind of the audience messenger, message, et cetera. But I guess I would tell you it’s something different to kind of just put a cap on it. If the CEO thinks this is a tactic, there isn’t going to be a successful communication messenger. If the CEO thinks it’s strategy and [integral] and a forceful [complier] for the company, then there’s going to be a successful communication strategy and recipe.
Matt Abrahams: Right. So it’s really the investment and focus on communication. So many entrepreneurs see communication as a necessary evil rather than as something that really needs to have some deep strategy behind it. Thank you so much. Your insights, perspectives, and passion are incredibly helpful and motivational. I’ve thoroughly enjoyed our time together, and all of us have learned a lot from your experience. Thank you.
Steve Blank: Well, thank you, Matt. I learned a lot actually when you asked the questions.
Matt Abrahams: Well, excellent. Thank you. Thanks for joining us for another episode of Think Fast, Talk Smart: the Podcast, produced by Stanford University’s Graduate School of Business. For more information and episodes, visit gsb.stanford.edu, or subscribe to our show wherever you get your podcasts.