Steve Blank, the serial entrepreneur and lauded creator of the "lean startup" movement, has a sobering message for founders:

"Most of you are hallucinating," he said to an eager audience of young executives at the Collision Conference in New Orleans on Tuesday. "The passion of an entrepreneur creates its own reality distortion field. You have to be the first true believer, and sometimes that blinds you to the fact that...there's no data."

Blank spoke in conversation with Sean Ellis, the founder and CEO of GrowthHackers, and Eric Schurenberg, President and Editor-in-Chief of Inc. During the conversation, he outlined the tenets of the lean startup--a "scientific method" of sorts for creating companies that last. 

"We're trying to create evidence-based entrepreneurship," Blank explained. His assertion is that if founders actually test their business models (by getting out of the building, gathering data, and communicating with customers), they can guarantee the success of the company over time.

Specifically, founders should be in touch with "at minimum" 10 customers per week. And for those trying to launch an app, Blank says: "If you don't have data points from a couple thousand customers, don't bother to call it lean."

When pitching to investors, consider baking past failures into the pitch itself. Some questions he hopes that executives can address: "What did you think four months ago? What did you learn over the last four months on your nickel?" If they're unable to answer any of these, Blank said he refuses to "be the first dumb investor."

While the lean method applies to the full life cycle of the business, growth hacking (essentially a more effective form of marketing for startups,) only applies to companies that have made it past the first and more critical stage.

"Growth hacking is irrelevant until you have product-market fit," said Ellis, the movement's co-founder and architect.

The "lean" approach isn't only relevant for building companies; Blank contends that it can help political leaders to confront international security threats.

"We're facing threats for security and safety that are happening at a speed that normal governments don't have in their planning cycles," he continued, nodding to ISIS, in particular. One of his courses, called "hacking for defense," is now being offered to the U.S. Department of Defense as a way to approach these threats through evidence-based testing.

"Our adversaries are using lean, so we just need to catch up with them," said Blank.

Published on: Apr 26, 2016