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Managing Startups: Best Blog Posts by Thomas Eisenmann

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Chapter 65. Vision Versus Hallucination—Founders and Pivots

Steve Blank

A founder’s skill is knowing how to recognize new patterns and to pivot on a dime. At times the pattern is noise, and the vision turns out to be a hallucination. Knowing how to sort between vision and hallucination can avoid chaos inside your startup.

Yuri, one of my ex-students, started a big data analytics company last year. He turned his PhD thesis into a killer product, got it funded, and now was CEO of a company of 30. It was great to watch him embrace the spirit and practice of customer development. He was constantly in front of customers, listening, selling, installing, and learning.

And that’s where the problem was.

I got to spend time inside his company while I was using its software to analyze early-stage ventures. What I saw reminded me of some of the best and worst things I’d done as a founder.

A Pivot a Week

It seemed like once a week Yuri would come back from a customer meeting brimming with new insights. “We’re building the wrong product!” he’d declare. “We’ve got to pivot now.” Tossing its agile development process and at times its entire business model in the air, the company would go into fire-drill mode and engineering would start working on whatever his latest insight was.

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Other weeks Yuri would be buffeted by the realities of his burn rate, declining bank account, and depressing comments from customers. ...

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