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A P&L for Startups?

November 10, 2012

 

Lean Startup Machine has recently launched it’s “Validation Board”  (http://leanstartupmachine.com)Image

Osterwalder’s business model canvas encodes a lot of wisdom about what needs to go into a business to make it work. (see our previous posts on how to use the canvas).  But at bottom, it’s a snapshot of a moment in time.  In practice, startups run into trouble using it to track progress.  We see canvases used in all sorts of awkward ways – one canvas animated to fade into another, hypotheses linked by arrows or crossed out or written in different colors, etcetera.

If you take seriously the idea that for a startup, information is the pertinent currency, then you can think about the business model canvas as equivalent to what real businesses use to capture a moment in time – namely a balance sheet.  So what do real businesses use when they need to capture activity rather than a state?   

Right, the Validation Board is an attempt to make an income statement for startups.

Thinking of it this way, is it a good structure for a balance sheet?  Do we needs something that better captures the equivalent of cash flow?  We’ll have more on this later, but very interested in your thoughts.

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From → Standard Blog

3 Comments
  1. Pedro Bandeira permalink

    I’m afraid metrics evangelism neglects customer insight and design thinking. To engineers is difficult to think creatively and holistically, they need numbers, 1/0 and black/white and this is harmful because people are extended ASCII, irrational numbers and grey.

  2. Suppose you’re a David Foster Wallace or Thomas Pynchon, hoping to write a book that will change how novels are perceived forever. I have no idea what goes into that novel; it’s your genius to know that. But I know that you’ll fail if it’s ten thousand pages or one page long, or if it’s written with your fingertip on air. I know you’ll probably fail if you leave out all punctuation or refuse to have characters.

    Metrics offer an opportunity to understand how the thing will fit in the world, even if it’s a thing the world has never seen. The tougher part is to find the metrics that are meaningful and don’t steer your wrong.

  3. Pedro Bandeira permalink

    I know that. I like Lean Startup. But I’m more Customer Development. Know your customer until you can predict his answer to any question and you’ll build the right product for him. Metrics are important but not more than customer discovery.

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