The Startup Owner's Manual: Book Review

Building Great Companies and Great Products

Apr 26, 2022

The Startup Owner’s Manual by Steve Blank and Bob Dorf is an incredibly useful guide for anyone starting a business or building a new product.

The book is dense with information. The authors caution readers not to read it all in one sitting, or even quickly (which I did, despite the warnings). But they suggest digesting the book over time, applying the parts you need, and coming back regularly.

It is good advice, as there is no way to apply everything in this book in a matter of weeks. It really is meant to be a manual, a reference guide, or a toolkit for building products.

The authors obviously geared this book toward startups (it’s right there in the title). But it isn’t just for founders, though founders will gain a ton by using it. It’s also a useful tool for anyone working at a startup to understand the process the company is going through (exploration rather than execution). It’s also a useful book for product managers at any company, since product development is based on similar principles.

From a product management perspective, and even a startup perspective, there isn’t a ton of new information in this book, especially if you’ve been around the industry for a while (if you are new, then you’ll likely find all of this overwhelming, but hopefully in a good way). But what you will find is a guide for creating everything you need to validate ideas and create demand for what you’re building. And determine if you’re on the right track.

Overview

The book identifies key steps in the customer development model, as displayed above from the text. The first phase is Search, which consists of Customer Discovery and Customer Validation. That is the main focus of the book. The next phase is Execute, which consists of Customer Creation and Company Building.

Customer Discovery - Capturing the founders’ vision and turning it into a series of hypotheses to test
Customer Validation - Testing whether the business model (and everything associated with it) is scalable and repeatable, or if it needs to change
Customer Creation - Building customer demand and scaling the business
Company Building - Moving from a startup to a full-fledged company

The search phase is all about testing your assumptions and validating ideas and markets. And deciding whether to move forward or change—pivot or proceed. Because once you move to execution, there isn’t an option to change course. You are locked in.

We obviously can’t get into every detail of the book here, and you’ll need to read it and check out my notes post later this week for more details. But what are some of the key takeaways as product people we can focus on?

Key Takeaways

There are many important things to do and remember as we build new companies and products. These are some of the key ideas from The Startup Owner’s Manual.

Get Out of the Building

You may miss it if you’re not careful, but the first page of the book, before anything else, has the words above: “Get Out of the Building!”

This advice runs throughout the book, and is critical for founders and product people alike.

As the book says:

“ There are no facts inside your building, so get the heck outside.”

This is true at every stage of learning.

In understanding the problem, get outside the building to see what problems people have. If you are a founder or creating a new product, that means validating the problem with people in the real world. If you are at an established company, it still means getting out of the office and seeing what the actual problems are that your customers are facing.

People actually have to care about the problem in a way that will make them willing to seek out and pay for a solution. Otherwise, you don’t have a viable product or business. So you have to understand what they are doing now. Do they feel the pain of the problem you see? Are they trying to solve it poorly? Are they trying to solve it at all? Do they care, and if so, how much?

Once you’ve understood the problem, you have to get back out of the building to validate your solution.

Does your solution really fix the problem for customers or potential customers? How well does it address the problem? Is it still lacking? Does it uncover any additional areas for research? (It usually does).

This is a critical step for new companies and new products or features. It is exciting to understand a problem and create a potential solution. But before we build it and ship it, we need to know that we’ve actually solved the problem in a meaningful way.

Finally, we need to get out of the building to validate customer demand.

Once we’ve created a meaningful solution, we need to know that there is enough demand and enough customers to sustain a business. This is especially important for startups, but can be important for new products and new product lines.

If it is a startup, is the market large enough? If it is an existing business, are enough of our customers interested to justify investment? Are potential buyers enthusiastic? Going back to the solution, is it important enough that people will willingly pay to have the problem solved? Is the pricing right?

In all these steps, we have to get out of the building, both literally and metaphorically. The answers aren’t on our teams or in our companies. They are with our customers or potential customers, so we have to get out there and talk to them.

Validate - Test and Learn First

As shown in the graphic above, the purpose of everything in the initial phases of a business or product is about searching for answers.

We make a lot of hypotheses or guesses about what problems are, what solutions might work, what kind of business models might work, pricing plans, etc. But we need to validate all of this.

It may feel somewhat obvious for a startup or a new product that we need to validate, but it can be so easy to fall into the build trap—creating things without ever validating them.

The build trap for product is when we create or build products without properly questioning our hypothesis or validating if we’re making the right thing.

We’ve probably all been here before. We get an idea that sounds amazing. It may be a new feature, a new product, or a new business. So we get to work. And make it happen. Only to find out later it wasn’t the right thing. But we never stopped long enough to question that early on. Or maybe a stakeholder or executive hands over the direction or requirements and expects you to run with it. This pushes us into the build trap.

But it’s not just products that can fall into the build trap of not validating. This can happen with our business model, our pricing plans, our roadmaps, or even our sales strategy. Something may sound good on paper or in a conference room (or Zoom meeting), but doesn’t actually work.

That is why it is so critical we validate early and often. As product people and startups. Everything early in the process (discovery and validation) should be about testing assumptions and learning. It’s not the time to scale up processes or sales forces. It is time to learn and validate.

Once we’ve tested our ideas and learned, then we can scale up and execute faster and bigger. But we need to ensure we have the right problems to solve, the right solutions, and the right direction.

“Relentless execution without knowing what to execute is a crime”

This is Difficult

Getting through this book was tough. It wasn’t an easy read at all, like the authors warned.

Even more difficult than reading it is applying everything.

I’m familiar with all the concepts and have used most of them at various companies throughout my career. Though I haven’t founded a company, I’ve worked at startups and created new products from the ground up. But using all the concepts as prescribed in the book is difficult because the job is difficult.

Founders certainly have the most difficult job, as they need to build a product and company from the ground up, and you’ll get a taste for what that entails in this book. And the same principles apply for building early stage products.

None of it is easy. You will make countless mistakes. We generally celebrate mistakes in theory in books and online, but when you’re the one making them, they are literally gut-wrenching. And maybe some companies do well celebrating mistakes as they happen, but I haven’t seen that personally, because you put a lot on the line with new ideas. Even when you learn early through your research and validation, it will often make people unhappy.

I recently had this happen to me. Our executive team had an idea for a collaboration between two recently acquired companies, and wanted us to get to work. But before we would, I insisted we do in-depth research into the problem and the customers. We found that the problem didn’t really exist and the customers we intended to serve were so different across the companies that it didn’t make sense. As you might imagine, it saved us a ton of work, but did not make anyone happy (more on this story to come later).

So…

I’d highly recommend grabbing a copy of The Startup Owner’s Manual by Steve Blank and Bob Dorf. I wasn’t aware of this book until relatively recently, when our CEO recommended it to me since he uses it as the guide for our company. And it’s obvious to me that many of the principles in this book have been foundational to how our startup works.

Creating all the research and documents suggested in the book will be a ton of work for founders and product people. But the effort will create the foundation for a solid company and solid products. Doing proper discovery and validation work before executing and scaling is the right way to build. And with a manual like this, you stand a good chance at getting it right.