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THE PENNSYLVANIA STATE UNIVERSITY

Department of Industrial & Manufacturing Engineering
IE466: CONCURRENT ENGINEERING
Questions

Hand-in at start of next class

Name: Arafat Hossain

Answer the following questions while watching the 44-minute video, “Why Accountants Don’t
Run Startups”.
Who is Steve Blank? How does he establish his credentials? Is it effective?
Steve Blank is a Silicon Valley entrepreneur and academician in California. Blank has worked
almost thirty years in high technology industry. He has started or worked with eight startup
companies. Steve Blank’s parents migrated and ran a grocery store in New York City. Steve
Blank is one of the most technologically influential people today. Blank, who is recognized for
developing the Customer Development methodology, launched the Lean Startup movement. He
wrote about Lean Startup revolution in one of his famous books ‘The Four Steps to the
Epiphany’. He is also the author of Business model generation and the inventor of the generation
tool. His credentials are established by the success of his many startup companies. Though he
maintains a friendly persona, his previous experience effectively shows that he knows what he’s
speaking about.
What do the words entrepreneur and start-up mean in Silicon Valley? How does that compare to
how the words are traditionally used elsewhere in the U.S.?
A traditional definition of entrepreneur is a person who organizes and runs a business by taking
on great financial reason. Small business is startup. Serve known customers with knows
products. There are different kinds of start up such as: Scalable startup, social innovation startup,
buyable startup and so on. A startup is a temporary organization used to search for a repeatable
and scalable business model. In Silicon Valley the word entrepreneur and Start-up mean lifestyle
businesses.
What is the difference between a business plan and a business model? What is a “pivot”?
A business model describes how a company creates, delivers and captures value or how a
company makes money. Any business plan can be described in 9 building blocks such as
customer segments, customer relation, channel, revenue stream, cost structure and so on. Even
though business plan and a business model sounds the same thing. There is a difference between
them. A business plan is a plan where the business owner makes hypothesis of selling, marketing,
revenue, market size, customer and all other important information that are needed for the
business. No business plan survives first contact with the customer. However, a business model
connects all the dots of business plan.
A pivot is a fundamental insight of the lean startup. According to the Steve Bank’s blog, ‘a pivot
is a substantive change to one or more of the 9 business model canvas components’. The pivot is
the heart of customer development. Pivot iteration without crisis.

What is customer development? Why is it so important for start-ups?
Customer development helps improve the business model by asking input from actual customers
outside of the startup company. This technique allows for unbiased opinions about the business
policies in regard to pricing, product, and the potential demand from target customers. It is very
important for start-up because it helps to search for a new business model. Customer discovery
customer validation, customer creation and customer building are the four steps of customer
development. In a start-up it is important to stop selling and start listening the customers, test the
hypothesis.
What are some of the important characteristics of the leadership needed for start-ups? How do
these characteristics differ for the management needed at large companies?
Some of the important characteristics of the leadership for star-ups are the leader needs to be a
superstar in term of personal contribution. The time commitment should be 24/7. The leader
should be opportunistic and agile. He/she should know how to eliminate or hate. The leader’s
management style should be autocratic or start system. He/ she should be high focused and
passionate vision.
In a large company, a manager only knows how to contribute in managing a certain plan, goal
and process of a company. A manager’s time commitment is limited. An accountant only focuses
on only executing his goal and plan that was given to him. His focuses are repeatable in the
company. A manager’s span of control is distributed down the organization.
So why don’t accountants run start-ups? Why do start-ups need different metrics?
Accountants don’t run start-ups because an accountant is used to contribute in managing a
certain plan, goal and process of a company. An accountant’s common time commitment is 9 to
5, whereas the CEO of a start-up is expected to commit all hours of the day. Also an accountant’s
management style is most probably bureaucratic, and an accountant only focuses on only
executing his goal and plan that was given to him, rather than coming up with daring new ideas.
His span of control is distributed down through the organization.
Startups need a different set of metrics compared to large companies because the startups are still
working business models that need to be tested. There is still the main question of whether the
startup shows signs of future potential and should be scaled into a company or if the effort won’t
be worth it in the long run.

Essentially startups need to “instrument” all parts of their business model to measure how well
their hypotheses in Customer Discovery and Validation are faring in the real world.
What is your “take away” from the story of Billy Durant?
Billy Durant had excellent strategy for start-up companies, involving the technologists needed;
he was a visionary. However, he lacked the strategic prowess to sustain his companies. As his
successor was an accountant who raised General Motors to the powerhouse it is today, it can be
seen that business visionaries like Billy Durant are good for running start-ups, but accountants
are good for running the subsequent companies.
Finally, think about the recent Facebook IPO and how its stock is not performing as expected.
What do you think will happen to Mark Zuckerberg in light of what you learned in this video?
I think Mark Zuckerberg is a great visionary and very passionate for his company. However, he
also lacks the strategic prowess to sustain his companies. Unfortunately, Facebook might find
someone to replace Zuckerberg.

Reference:
Blank, Steve. "Why Accountants Don't Run Startups." Why Accountants Don't Run Startups.
N.p., n.d. Web. 05 Sept. 2015.
Blank, Steve. "Steve Blank." Steve Blank. N.p., n.d. Web. 05 Sept. 2015.