Steve Blank

What doesn’t kill me makes me stronger.
Friedrich Nietzsche

The world is a different place than it was 90 days ago. Countries traded saving lives by shutting down most of their economy. Tens of millions who had jobs are now unemployed worrying about their future. Business owners large and small are struggling to find their footing, wondering what will be the new normal when the recovery happens. For the majority of companies, the business models of the past will not return.

Hit hardest were most small business service providers. Each day as they sheltered in place watching their bank accounts dwindle, they wondered: If I can’t perform my services, what will happen to my business? The reactions ping-ponged between uncertainty, fear, panic, anger and distress. But over the last month the reaction from a growing percentage has been resolve. Resolve to leave behind elements or services in their business that no longer work in the current environment, and determination to create new ones that do.

A company that has its finger on the pulse of tens of thousands of small businesses is Honeybook. They provide the software for freelancers and small businesses to manage clients and their business – proposals, billing, contracts, payments, project tracking, etc.

Honeybook CEO Oz Alon has had a front-row seat to how their members have pivoted, providing their services in new and creative ways, and are sharing these in a special Rising Tide feature on their website. Here are a few examples:

Pivot from In-person to Online

• Jill Johnson, owner of The Paint Mixer, used to offer painting parties and creative adventures in her Salt Lake City studio. She started offering paint-from-home kits and hosting private parties via Zoom for team building, social hours, and birthday parties. “Our clients are loving the experience and are very grateful. I receive emails and texts, as well as social media posts daily, and it is inspiring,” Jill says.
• Regina, owner of Silly Sparkles, is a children’s entertainer offering magic/puppet shows, face painting and balloon twisting at events. Since she can’t perform in person anymore, she’s switched to virtual party packages with customized entertainment for each client. “People still have birthdays, and they still want to make them special!” Regina says. “Virtual parties are a great way to serve those clients, and they’re willing to pay for it.”
• Jordan Edelson, co-founder of Chic Sketch, reimagined his events business as a virtual events business. His goal was to create a similar experience to their in-person events where guests are sketched live by their team of talented illustrators. Their team now does live sketching during virtual events over a video conferencing platform.
• Melissa Rasmussen of Catering By Chef Melissa normally offers custom catering with a farm-to-table approach, but in this current business climate, she’s pivoted to offer dinner meal kits. The menu is posted on social media and on their website; customers pay their invoice online; and the meal kits are available to be picked up at their commercial kitchen or delivered for a small fee.
• Florist Robin Smith of  Rhapsody in Blooms started offering virtual floral design classes. She either ships class supplies (including the flowers and a vessel) directly to participants or arranges no-contact pickups. All students have exactly the same products to work with and join a Zoom call to attend the class.

The Seven-Step Small Business Pivot Process
Honeybook CEO Oz Alon observed that there was a pattern to these pivots. Regardless of the type of service they were offering or the kind of businesses they had, they took the same seven steps:

1. Create an MVP, Minimal Viable Product or MVS, Minimum Viable Service—Assess your current business model. What capabilities and current services do you have? Then think about what the market needs right now and how you can adjust your services to meet those needs. What is it that people will grab out of your hands? Create an MVP or MVS to start.

Alexander Osterwalder co-creator of the business model canvas, suggests a playbook of business model moves you can make:

Shelter in place as a market opportunity
What new value propositions (products/services) can you offer to those stuck at home or to those who need to operate with new social distancing rules?

Resource pivots
How can you use/repurpose your existing resources for new offerings?

Delivery/Distribution Channel innovation
Can you move to digital/online, extending your reach and potential customers?

Opportunity to buy/acquire
Are there resources (people/physical assets) that others are abandoning that you can now get?

Jill Johnson, The Paint Mixer owner, suggests taking a look at the assets you already have. “Our pivot happened pretty quickly,” she says. “I knew as soon as our surrounding counties started to mandate closure that the business would be in trouble if I didn’t try something. After a good cry (and a glass of whiskey), I met with my team to talk ideas and short-term solutions. I looked around the studio and decided to use what we had. We offer painting parties and creative adventures. With the stock in our studios I took photos of what could be a potential ‘create-at-home kit.’”

Regina, owner of Silly Sparkles, seconds working with what you have as a starting point for a Minimum Viable Service. She says before you invest money in new equipment, it’s important to be resourceful. “When you use what you have, you’ll quickly learn what works for you and what doesn’t,” she says. “For my first virtual show, I only had magic props, green fabric for a green screen and a laptop. I didn’t need to invest a lot of money in a green screen because what I had worked just fine. I did, however, need to invest in a better mic.”

2. Customer discovery— While you might have come up with a great Minimum Viable Service, it’s just a series of guesses and assumptions. The next step is to validate the problem/need with customer discovery, by asking your existing customer base if they would be interested in your new service. You can do a poll on social media or send out an email blast to get a sense, then use video conferencing to do deep dives on real interest and intent to buy. Jill says, “We did a soft rollout with our mailing list to see if there was any interest, and there was!”

3. Rapid testing—Don’t spin your wheels trying to perfect your new service. Get it in the hands of your customers as soon as you can to test product/market fit. “Don’t spend energy building it. Create one, take a photo and try it with your current list. Then, when demand is apparent, build like crazy,” Jill says.

If you want to get started testing your idea quickly, consider giving it away for free at first. “It’s easy to get overwhelmed,” Regina says. “Instead of complicating the process, just jump in and try something! Start by offering a free, live magic show to family and friends. You’ll learn so much from this test run and it will give you momentum.”

4. Refine your offering—Another key part of rapid pivoting is a fast feedback loop. Constantly ask for feedback and act on it—improve on what’s working and tweak what’s not. Jill says, “The first 6 weeks I hand-delivered every package in the neighboring areas. I would text to let [customers] know it was outside and that I would love feedback. This touch allowed direct contact with every consumer.”

While customer feedback is great, also consider getting feedback from your peers. “Once you’ve started simple and tried a test run, it’s time to learn about how to improve your process,” Regina says. “Send out a recording of your first rough performances to other performers who have already been doing virtual parties. You’ll most likely receive insightful feedback. With some minor tweaks, you can upgrade your show significantly.”

5. Market on all your channels—Share about your new offering everywhere your audience is, whether that’s your website, email list, or on social media. Jordan Edelson of Chic Sketch shares about his new business offering on Instagram, driving customers to a specific landing page to learn more. The landing page also includes a YouTube video of an actual live event to help potential clients see how the service works.

Don’t forget to keep both your offering and your messaging simple. “Make it fun, make it accessible and make it easy for your clients to buy,” Jill advises.

6. Rely on tried-and-true tools—While some parts of your business may need to be altered, others may still work just fine, including tools, processes and frameworks that help you run and scale your business. Continue to rely on these to make pivoting business easier.

7. Share with the community—If your new service works, be sure to share this knowledge with your community, whether that’s on Facebook groups or in virtual meet-ups. In case anyone else has tried something similar, you can get feedback to refine your service. If it didn’t work, sharing with your community is still valuable as you may swap stories that may inspire you to go a different direction entirely.

What doesn’t kill me makes me stronger
Shelter in place is a mass extinction event for many industries. Not every business will survive. But what will emerge are businesses that diversified their offerings better positioned to withstand future volatility by providing complementary channels and offerings. And they’re opening up new ways service providers can scale to more customers.

“I think our Paint Mixer business is changed forever,” Jill Johnson says. “For the first time we now have a service that allows us to reach a national audience way beyond our local area. It will also allow us to create more classes that people can join virtually. I don’t think this is a short-term solution at all, but an entirely new direction that we have to take.”

Jordan Edelson of Chic Sketch observes, “There has been a paradigm shift in consumer behaviors, especially in their adoption and emotional acceptance of virtual video conferencing. The world changed overnight, and it has opened a door for our new service.”

Lessons Learned

• The Seven-Step Small Business Pivot Process
  • Create an MVP or MVS, Minimum Viable Service
  • Do Customer Discovery
  • Rapidly test your idea
  • Refine your offering
  • Market on all your channels
  • Rely on tried-and-true tools
  • Share with the community
• Carpe Diem – seize the day

We’re going to be holding a series of 5-day Hacking for the Recovery classes for businesses searching for the new normal at Stanford this summer. If you’re affiliated with Stanford, find out more or sign up at https://h4r.stanford.edu

Filed under: Covid-19/Recovery, Hacking for Recovery | 8 Comments »

We’re holding a series of 5-day online classes at Stanford where teams will learn how to develop new business models for an economy that’s getting back to work and on the road to recovery.

Sign up at http://h4r.stanford.edu

The post-pandemic world will be a very different place. The Covid-19 virus has upended traditional ways of doing business, travel, education, entertainment, healthcare, etc. How do these institutions reconfigure and reinvent themselves? What new businesses and services will emerge? Hacking 4 Recovery provides students with the tools to understand the new normal and to build innovative solutions for recovery.

Out of crisis – Opportunity
Do you have a startup idea or new technology that you’d like to learn how to bring to market in the post-pandemic economy? Or perhaps you would like to join a team creating a new business, or reinventing an existing business, and learn the lean startup techniques that will be critical to our recovery.

Stanford’s Lean LaunchPad
Hacking 4 Recovery is a 5-day version of the Lean LaunchPad / Hacking For Defense / National Science Foundation I-Corps curriculum that’s trained tens of thousands of entrepreneurs and innovators. This class offers students a unique online opportunity to build the future with the Stanford University instructors who have inspired a generation of entrepreneurs.

The first 5-day class will be aimed at “Finding New Business Models” for businesses to adapt and pivot to find new customers, new markets, new products and new services to win in the recovery. Additional 5-day-long classes will explore Health, Travel and Hospitality, Food Service, Entertainment and Education.

Course Description
This course provides real world, hands-on learning on what it’s like to actually start a company or to find a new business model for an existing one. This class is not about how to write a business plan. It’s not an exercise on how smart you are in a classroom, or how well you use the research to size markets.

This class combines theory with a ton of hands-on practice. Our goal, within the constraints of a virtual classroom and a limited amount of time, is to give you a framework to test a business model.

You will be virtually “getting your hands dirty” by talking to customers, partners and competitors as you encounter the chaos and uncertainty of how a startup (or a restart) actually works.

You’ll practice evidence-based entrepreneurship as you learn how to use a business model to brainstorm each part of a company and formulate their hypothesis. Next, you’ll use customer development to virtually get out of the classroom and talk to 10-15 customers/ partners each day to validate whether your assumptions are correct, and to see whether anyone other than you would want/use your product or service. Finally, based on the customer and market feedback you gathered, you will use agile development to build Minimal Viable Products (incremental and iterative prototypes) to show prospective customers each day to see if customers would actually buy and use. Each day will be a new adventure outside the classroom as you test each part of your business model and then share the hard earned knowledge with the rest of the class.

This class is team-based.  (We’ll help Individuals without a team find a place on one.) Working and studying will be done in teams. You will be admitted as a team. Teams must submit a proposal for entry before the class begins. Projects must be approved before the class.

The teams will self-organize and establish individual roles on their own.

Hacking 4 Recovery Instructors and Team

• Steve Blank, Tina Seelig, Steve Weinstein, Tom Bedecarré, Mar Hershenson, and Pete Newell
• Mentors, advisors and subject matter experts to support the teams

Class Dates
Five Hacking 4 Recovery 5-day online classes will be offered this summer:

• First session: Monday, June 29^th to Friday, July 3rd at 4-7pm Pacific
• Second session: Monday, July 13^th to Friday, July 17th at 4-7pm Pacific
• Third session: Monday, August 3^rd to Friday, August 7th at 4-7pm Pacific
• Fourth session: TBD
• Fifth session: TBD

Find Out More – Info Sessions
We’ll be offering a series of information sessions describing the class, expectations and the application process.

May 21  4:00 PM PDT  Information session
May 28  12:00 PM PDT  Information session

Signup at the website at http://h4r.stanford.edu

Who Can Attend?
Hacking 4 Recovery is open to Stanford undergraduate and graduate students, as well as all Stanford faculty, staff and alumni. Students visiting Stanford for the summer are also invited to apply for this free course, (if they are registered for at least one Summer Session course (3-unit minimum).

The class is team-based. Priority is given to teams of 3 to 5. We will hold team formation mixers and help you find additional team members or teams to join.

June 4  4:00 PM PDT  Team formation mixer and Q&A
June 11  12:00 PM PDT  Team formation mixer and Q&A
June 18  4:00 PM PDT  Team formation mixer and Q&A
June 25  4:00 PM PDT  Team formation mixer and Q&A

Signup at the website at http://h4r.stanford.edu

Summer Startup Accelerators
Students who take the Hacking 4 Recovery class will have an opportunity to be apply for affiliated summer startup accelerators and incubators, including Pear VC, Stanford Venture Studio, H4XLabs and others.

For More Information
For more information or to apply online, please check out our Hacking 4 Recovery website at http://h4r.stanford.edu or email us at hacking4recovery@gmail.com

Join this class and help restart our economy.

Filed under: Covid-19/Recovery, Hacking for Recovery | 3 Comments »

A version of this article appeared in TechCrunch.

With in-person classes canceled, we’re about to start our online versions of Hacking for Defense and Hacking for Oceans (and here). The classes are built on the Lean Startup methodology: Customer Discovery, Agile Engineering and the Business/Mission Model Canvas. So how do our students get out of the building to talk to customers to do Customer Discovery when they can’t get out of the building?  How do should startups do it?

—-

Reminder: What’s the Point of Talking to Customers?
Talking to customers seems like a simple idea, but most founders find it’s one of the hardest things they have to do. Founders innately believe they understand a customers problem and just need to spend their time building a solution. We now have a half a century of data to say that belief is wrong. To build products that people want and will really use, founders first need to validate the problem/need, then understand whether their solution solves that problem (i.e. finding product/market fit). Finally to have a better chance of a viable enterprise, they need to test all the other hypotheses in their business/mission model (pricing, demand creation, revenue, costs, etc.)

The key principles of customer development are:

1. There are no facts inside the building so get the heck outside
2. All you have are a series of untested hypotheses
3. You can test your hypotheses with a series of experiments with potential customers

Now with sheltering-in-place the new normal, we’ll add a fourth principle:

4. In-person interviews are not the only way to test your hypotheses

Reminder: What’s the Point of Physically Getting Out of The Building?
One of the reasons for interviewing people in person is to engage in a dialog that lets you be sure you understand the problem you are solving and measure customers’ reactions to the minimal viable products you put in front of them.

There’s a rule of thumb that says, “If you can see their pupils dilate and can tell they’re checking not their watch,” it’s a valuable interview.  The gold standard are in-person interviews where you can not only do all of that, and get to see what’s on their desks, the awards on their walls, the books on their shelves, and other ephemera that may give you clues about their interests and behavior. But today, with the Covid-19 pandemic that’s no longer possible. So the next best thing is a Video Teleconference.

Video Teleconferencing is Your Virtual Friend
Video (via Zoom, Skype, Google Hangouts, Microsoft Teams, etc.) with enough resolution to see someone’s facial expressions –  is more than an adequate substitute, and in some cases better – as it allows you to connect to more people in a shorter period of time. When we first taught the National Science Foundation Innovation Corps 11 years ago, the first 75 teams did Customer Discovery this way. (More advanced tools for remote user testing like Validately, Usertesting, Lookback, etc. are worth checking out.)

Our classes require students to talk to 100 Customers/Beneficiaries in 10 weeks. Before the pandemic, customers were found where they worked or played. Today, while some may still be at work, most will be sheltering at home, and almost all have more time on their hands than before. (You certainly do! Given you’re not traveling to customer interviews, you ought to be able to do more than 100 interviews.)

Getting a Meeting in the Midst of Chaos
Don’t assume potential interviewees are answering their work phones. And if they’re working at home, they may have a different email address. Don’t use the same opening email pitch you did before the virus. Your email should recognize and acknowledge the new normal. (i.e. Hello, my name is xx. I know this must be a crazy time for you. I’m a student/PI at xx University. All our classes have gone online. I’m investigating whether [problem x] would be valuable to solve today or when the world returns to normal. Would you be willing to speak to me?)

One upside is that you may now be able to get access to people who normally have a cloud of administrative gatekeepers around them. If you have a solution that is relevant to their business in this uncertain time, reach out to them.

Find Out How Their World Has Changed
In addition to the standard customer discovery and validation questions (how they did their job, what pains they had around current solutions, etc.) you need to understand:

• What were their needs/problem/solution/industry pre-Covid 19?
• What is it like now?
• Have there been regulatory changes? Customer behavior changes?
• What do they think it will be like when the recovery comes?
• Will their problem/solution be the same or do they think it may change?

Presenting Your Minimal Viable Product (MVP) Online
An MVP is an experiment. It’s what you can show a potential customer/ user/ beneficiary/partner that will get you the most learning at a point in time. You build MVP’s to validate the need/problem, then to validate product/market or mission/solution fit and finally the rest of the business/mission model canvas. You can use wireframes, PowerPoints slides, simulated screenshots, storyboards, mockups or demo’s. The rest of the canvas might be validated with pricelists, spreadsheets, etc. (Alex Osterwalder and David Bland’s new book, Testing Business Ideas is a great help here.)

Given that you are now presenting over video, you are going to be trying to communicate a lot of information in a small window on a computer screen. On-line MVP building and delivery will need to become an art form. Rather than doing every demo of your MVP live, consider 1) recording it 2) highlighting the key points.

• Break your MVP demo into <1 minute segments. Edit the video to illustrate each of your points, This allows customers/beneficiaries to interrupt and ask questions and allows you to jump to different parts of the demo.
• If you would normally have your potential customer hold, feel or use the product, make sure you demo someone doing that. Take the time to zoom in.
• As you show your MVP, split the screen so you can see the customer’s reaction as the demo unfolds.
• Practice, practice, practice the delivery of MVP’s. First it needs to be built and practiced, then the smaller parts for delivery need to be practiced. Anticipate questions and prepare your answers to them.
• Ask if you can record the session. If not, make sure a team member is online to take notes.
• Remember – at this point you’re testing hypotheses – not selling.

Validate the Rest of Business/Mission Model Components
A common mistake in building a startup is testing only product/market (mission/solution) fit. But other business/mission model components must be tested and validated, too. How can you test demand creation hypotheses during shelter in place for the Covid-19 virus? Important ideas you’ll want to consider:  Are potential customers beneficiaries now reachable in new ways? How can you test distribution/deployment? Are they the same now? Will they be the same after the recovery? Which changes are temporary? Which are permanent?

Your Business Model and the World Have Changed
If you’re business model still looks like your original assumptions a month ago, you’ve been living under a rock. Every part of your business model – not just product and customer – will change now. Recognize that in the post pandemic world, the map of surviving competitors will change, regulations will be changed, distribution channels may no longer be there, the reimbursement environment will be different, etc.

Ask everyone you interview, “What’s changed since the Covid-19 virus? What will the world look like after?” (Be specific. Ask questions not just about product, but about every other part of your business model.

Some Discovery Can’t Be Done Now
The reality is that some discovery and validation can’t be done right now. If you need to talk to people on the front-line of the Covid-19 fight (e.g. first responders, health care workers, delivery, network, remote work, telemedicine), ask yourself if your solution is relevant to making people healthier, safer, more effective?  If it is, then keep at it.

If not, don’t be tone deaf. In the midst of the crisis, testing ideas for businesses that are shutting down (travel, hospitality, etc.,) or from employees who are worried whether they’ll have a job will not work. Even if you have great new ideas for when recovery comes, most responses you’re going to get will be framed in the moment.

If so, consider putting your project on hold or find another problem to solve. Be conscientious about not taking people away from the important work required on the front line of this fight.

Lessons Learned

• Customer Discovery and Validation can be easily done via video teleconferencing
• Recognize that many potential interviewees are working from home
• Break your MVP demos into small pieces, leaving time for people to respond
• Adjust your questions to understand how customers’ situations have been changed by the pandemic
• Some Customer Discovery can’t be done now

Filed under: Covid-19/Recovery, Hacking for Recovery | 21 Comments »