Broback's Blog

Had a chance to sit in on Steve Blank’s Lean Launchpad class last week at the Haas School of Business. Came away very impressed with the real-world/pragmatic aspects to his curriculum, and the enthusiasm of everyone in the room.

Prior to attending the class I decided to read through Steve’s blog, and came across a post he wrote stressing the importance in all dealings of having a reality-based grasp of the price/value relationship. In this case Steve presents a scenario where a set of investors discounted the value of a new advisory board member and offered a price in stock that was too low, which caused them to lose a great opportunity.

It reminded me of how Bill Gates was able to capture overwhelming market share for Internet Explorer and almost entirely displace all competitors, significantly because he was able to see that the “correct” price for a browser was zero.

Here’s a textbook example of the scenario in reverse. My dad knew a test pilot who was offered a job testing a new exotic plane. He reviewed the situation, and determined at the risk level being offered, $100,000 was an appropriate market price, and put that price forth.

Regrettably for him, another pilot understood the market better and determined zero was the proper price. That other pilot’s name was Chuck Yeager, and the plane was the X-15.

I can’t remember the name of the pilot who asked for $100,000, and I guess that helps me make my point…