Book Review: The Four Steps to the Epiphany

This is actually two books masquerading as one. The first is full of great advice on how to identify a genuine customer need and validate it before creating a company around it. In my opinion, you should absolutely read this part, ideally 1-2 years before setting up shop. The second half is largely standard advice about scaling your product and marketing efforts as the mist around customer expectations starts to clear. The author Steve Blank has built many successful startups, consults for VC firms and is a passionate teacher at Stanford and Berkeley – The operating context for the book seems to be B2B companies (no specific talk about SaaS vs On Prem) doing some kind of enterprise workflows and driven by sales + marketing.

I learnt a lot from the first two “Steps”: Customer Discovery and Customer Validation. You should bounce back and forth between these steps till clarity is attained. In practice, these phases should feel substantially different from the “Product” development model where you spend most of your attention on the Product because the “Customer” part is thought to be well understood.

It takes experience and humility to acknowledge that discovering a worthwhile customer problem to solve and validating your understanding about it are easier said than done! It’s for this same reason I feel you should read this book a year or two before starting a company. Moreover, if you’re planning to launch a B2B product that also has to earn money from the get go, you better have domain expertise and a list of prospects. This book is too optimistic in assuming you can succeed without meeting either of these prerequisites.

Anyway, to list just a few of the many, many great points I took away from its first half:

  1. “The facts” live outside your building. So go out and talk to customers, make lots of calls, buy lots of lunches.

  2. The problem should be sufficiently painful that customers’ eyes will light up when you start describing your solution. If you already have a solution ready, they should have no hesitation in reaching for their wallet.

  3. Despite talking to customers, you’ll be going with the founder’s instincts on many decisions w.r.t the product. When you talk to prospects, try to sell the product you’ve built and not promise one-off changes. Don’t try to convince, because that means your value proposition was not strong enough. If you meet a prospect who’s not able to perceive the problem, or is only dimly able to comprehend the solution, move on.

  4. Search till you find “earlyvangelists”, who are people who are not only aware of the problem, but are actively looking for some kind of solution and have a budget to go with it. These are not equivalent to the “early adopters” of Crossing the Chasm (those would be people who are into novelty for its own sake).

  5. Your end goal should be to find a repeatable roadmap of how customers buy, and a path to profitability.

    At this point I should pause to point out – as the author also does repeatedly – how different this feels from a typical sales effort in larger companies. You’re not compiling long lists of features, not promising what the customer asks for. Instead you’re validating if you have a market for what you’ve built, takers for your vision. That’s not to say disregard customer feedback entirely. But only examine them in aggregate and look for patterns in it before you start “pivoting”.

  6. There are four different market contexts, with massive implications for your customer discovery and adoption process: i) New product in existing market (without segmenting) ii) New product in new market iii) Segmenting existing market at low end iv) Segmenting existing market in other ways. The book deals with these four market types in great detail.

I started to feel my interest wane in the latter two Steps: Customer Creation and Company Building. Customer Creation is akin to marketing and demand generation. Assuming you’ve kept in mind the specific insights into your customers and the type of market, you should be able to refer to any good material about marketing. Ditto with Company Building. The book has some real life stories on how the role of the executive team should change as the company evolves, but nothing earth shattering.

A word of warning about the writing style: you could miss the wood for the trees due to the sheer verbosity of this book and the seemingly endless parade of bullet points (Five Characteristics of Earlyvangelists, Four Types of Markets, Four Phases of Customer Discovery where each Phase has its own A,B,C,D,E ..etc). There are also many workbook style questions you can ask yourself at various points during the Four Steps.

But Blank’s obsession with detail begets two crucial features that are usually lacking in books of this type: i) You almost always know the Context for which a piece of advice is being given ii) You’re also given ways to Verify whether the advice is actually working.

There’s somewhat of a shortage of examples. Some chapters begin promisingly with anecdotes, but they’re soon forgotten and you find yourself wading through paragraphs of prescriptive text on how to write down hypotheses, create presentations and so on. There’s a surprisingly good Bibliography at the end, where Blank explains the origins of some of his ideas and recommends other books.

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