Lean Start-up Leader, Bob Dorf at GIBS

Author: Luleka Mtongana
Source: GIBS News

Dispensing with conformity, maverick entrepreneur Bob Dorf declared at the beginning of his presentation at the Gordon Institute of Business Science (GIBS) that business plans are outdated. "In this new world order, throw away business plans into the trash bin," this start-up and customer development expert told a full-house that came out to listen to and engage with him. Instead of obsessing with business plans – something that Dorf asserted was a "fairy tale" that belonged in the early 1900s – start-up teams should focus on client acquisition and retention to build scalable, repeatable and profitable enterprises. That was the theme of his conversation with the audience that spanned academics, entrepreneurs and captains of industry.

"Get out of the building. There are no customers in your office," the hands-on expert said, advising start-ups to get feedback by engaging with the market and prospective customers. Having resigned from a well-paying job at a tender age, Dorf's background is steeped in start-ups. He is adjunct professor of entrepreneurship at Columbia Business School and co-author, with Steve Blank, of the acclaimed The Startup Owner's Manual: The Step-by-Step Guide for Building a Great Company, a 608-page business bestseller.

During the question-and-answer session, Dorf described "over confidence" – which made it difficult for coaches to do their work of helping start-ups turn ideas to business – as the biggest weakness. Over-estimation of projects and inviting investors too early in the process also loomed large as threats, he observed.

Dorf went on to attribute high failure rates in the start-ups universe to a lack of customers rather than that of good products. The under-played irony, as the guest reflected, is that clients are key yet tend to not feature prominently for many entrepreneurs. "Most start-ups don't think who their customer is and what their prices are going to be until after they have finished (developing the product)."

Having already spent more than 40 years building or advising more than two dozen start-ups – a mix of raving success, middling results and downright flops, as six of the start-ups he was involved in went "straight to the toilet" – Dorf readily admits his fair share of poor results. Turning to failure, a learning curve, he is of the view that it is what discerns start-ups from corporations where "a solution to failure is firing someone". To get the business going without suffering unnecessary failures though, Dorf advises that start-ups should ideally have a "hacker" to figure the coding or product development and "a hustler" whose job is to gather market intelligence by interacting with, and cajoling, potential customers.

"Start-ups begin their life in a search mode... searching for the right feature sets, searching for the right product design, searching for the right target client," said Dorf, warning against involving friends and family during research phases because their opinions are most likely to flatter regardless of how poor or not viable the concept is.

While large firms execute from a set of facts, start-ups have neither history nor facts to speak of. Established companies can discuss how they lost or won some accounts or how they hope to grow market share but start-ups operate from a clean slate. "On the day the start-up is born it has no customers, no product, no competition, and no market." This is why thorough homework and market research is critical, Dorf emphasised.

"I will submit you can test virtually every element of almost every start-up. Some of the exceptions are biotech, for an example, where it can take years to know the efficacy (of a drug before it can be taken to consumers)," he asserted, egging entrepreneurs to cut down on over-selling, by way of forecasts since they are "fiction", and turn up the volume on research to determine whether there is sufficient demand and right pricing for the product under development long before it launches. Low pricing cannot be a lone factor because rivals, especially larger ones, can always turn around and undercut newcomers until pressure forces them to bow out. Examples abound.

Anecdotes also made their way to Dorf's engaging conversation. They made light of the taxing and lonely entrepreneurial path and repeatedly highlighted the fact that failure was a part of "writing the code".

Throwing back to his introduction to entrepreneurship, Dorf told the audience how, as a 22-year-old, he walked away well-paying job to build his first start-up almost out of the blue. His working-class parents were stunned. "My father offered to sponsor me to go for therapy...  (to visit) a psychiatrist if I could stay at my job," he said, to loud laughter from the venue.

The beginning was anything but great, Dorf recalled as he looked back to the start of his career whose enormous growth has turned it to a multi-million dollar empire and made him an authority in start-ups matters. The many hurdles didn't deter him for he was armed with faith and a desire to succeed coupled – as he learned from his failures – with extensive research when it became clear that understanding customers' needs and wants is what determines every successful start-up from a wannabe.


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