The Government Starts an Incubator: The National Science Foundation Innovation Corps

Over the last two months the U.S. government has been running one of the most audacious experiments in entrepreneurship since World War II.

They launched an incubator for the top scientists and engineers in the U.S.

This week we saw the results.

63 scientists and engineers in 21 teams made 2,000 customer calls in 8 weeks, turning laboratory ideas into formidable startups. 19 of the 21 teams are moving forward in commercializing their technology.

It was an extraordinary effort.

Your Country Needs You
In July I got a call from Errol Arkilic, a program manager at the National Science Foundation (NSF), the $6.8-billion U.S. government agency that supports research in all the non-medical fields of science and engineering.  “We’ve been reading your blog about your Lean Launchpad class.”  Wow, that’s nice, I thought, a call from a fan. No, the conversation was about to get more interesting.

“Our country needs you.” Say what? “Part of the NSF charter is to commercialize the best of the science and engineering research we fund. We want to make a bet that your Lean Launchpad class can apply the scientific method to market-opportunity identification. We think your class can train scientists to start companies better than how we’re doing it now.”  Uh oh, where’s this heading?  “We want to select the best of our researchers, pay them $50,000 to take your class and see if we can change the outcome of their careers and their research.”

“That’s great, maybe I can set up a class for you next year,” I replied.  The answer shot back, “We want the class to start in 90 days,”

I remember thinking, “Wow, whoever’s on the other end of phone sounds just like an entrepreneur, they were asking for the impossible.”  Just as I was computing whether this was possible, he added, “And we want to bring 25 new teams every quarter.”

So of course, I said yes.

While they’ll never admit it, the National Science Foundation was starting an incubatorthe Innovation Corps – to take the most promising research projects in American university laboratories and turn them into startups.

The Innovation Corps – Using the Lean LaunchPad as an Incubator for Scientists and Engineers

The Innovation Corps Startup Team
These weren’t 22-year olds who wanted to build a social shopping web site. Each of the teams selected by the NSF had a Principal Investigator – a research scientist who was a University professor; an Entrepreneurial Lead – a graduate student working in the Investigator’s lab; and a mentor from their local area who had business and/or domain expertise. And they were hard at work at some real science.

The I-Corps Incubator Program
Unlike other incubators, our Lean LaunchPad Class had a specific curriculum. We taught them the business model / customer development / agile development solution stack. This methodology forces rapid hypothesis testing and Customer Development by getting out of the building while building the product. (The mentors in our program are there to support the methodology, but aren’t there to tell stories.)

The gamble was that we could train Professors doing hard-core science, who had never been near a startup or Silicon Valley, to get out of the building and talk to customers and Pivot as easily as someone at a web startup.

The Scientists, the NSF and the teaching team were all going to go where no one had before.

Given that Silicon Valley had started with scientists and engineers not MBA’s, I thought this was a bet worth making.

The Curriculum
Since the teams were in Universities scattered across the U.S., we couldn’t keep them in Silicon Valley for all 8 weeks, so we tried an experiment in teaching remotely.

First, we brought all 21 teams to Stanford for 3-days of 10 hour-a-day classes in business model design and customer development. After returning to their schools, they got out of their labs while they built their products. Once a week, via Webex,they presented their Customer Development progress on line to the teaching team and the other teams. Then it was our turn, and we lectured all the teams remotely. After 7 weeks they returned to Silicon Valley for their final presentations.

(The class syllabus is here. The class textbooks were “The Four Steps to the Epiphany and Business Model Generation.”)

Assembling the Teaching Team
We recruited two veteran Venture Capital partners to be part of the 10-week teaching team: Jon Feiber, at Mohr Davidow and John Burke of True Ventures. Alexander Osterwalder joined us for the opening day, and Oren Jacob, ex-CTO of Pixar joined us for a finale.

The First Class
As the first class settled into their seats at Stanford I wondered if we were going to be able to get them to act like startups. Most of the Principal Investigators were professors. Some had their own labs managing large groups of researchers. Their average age was in the mid-40’s. Their mentors were at least that old. Only the Entrepreneurial Leads (the PI’s assistants) were in their mid to late 20’s.

Looking at them  I wondered if: 1) hard-core science and engineering projects could rapidly pivot, 2) if the Principal Investigators would simply “assign” the work to their graduate students. I thought about the common wisdom that only 20-year olds doing Internet startups could be agile. Some incubators would have labeled this group too old to be entrepreneurs. I smiled as I realized that I was older than most (but not all) of them.

The Stanford Lectures
Our first lecture was about 1) how to organize their thinking of what it takes to build a startup – the business model canvas and 2) how to test their hypotheses – the Customer Development Process.

Since the first part of the lecture was about Alexander Osterwalder’s Business Model Canvas, Osterwalder flew in from Switzerland to teach slides 20-76. And since the rest of the slides were about Customer Development, I taught those.

If you can’t see the slide deck above, click here.

The homework for the 21 teams in the next 24-hours? Come up with a business model canvas for their startup. And tell us how they will test each of their business model hypotheses.

As day one ended, I wondered what those canvases would look like.

Stay tuned for Part 2.
Listen to the post here: Download the Podcast here

28 Responses

  1. I have been following this with great interest, just as I did with your course last spring at Stanford…looking forward to seeing how this unfolds…and more importantly how to replicate this in our area (mental and physical). Keep up these great posts…Stan mandel

  2. Steve:
    This is THE most exciting development for our future. I’m on edge to read the next section.

    The LeanStartUp movement is a legitamate game changer. It will be able to set in motion a wave of disruptive developments that can alter the trajectory of our current systems, and break us out of our self-distructive patterns.

    This is so hopeful…….
    What a holiday GIFT for us all!!!

    Thank you Steve.

  3. Congratulations! This is a very exciting and smart concept to help stimulate innovation in this country. I’m surprised the media hasn’t given it more attention.

    My hope is that we could do something in the Arts and Humanities areas as well. Any chance you might open a Lean Launch Pad class up for some of us?

    Our vision is to preserve music, musicianship, audio recordings for future generations at the highest quality possible. My team would love to take your class!

    • I’m hoping for something similar in the near future too — the music industry has been needing a kick start for a while now.

      I’ll be posting soon about my experiences of using “Lean Startup” methodologies to guide music-making processes — hopefully some people might find it interesting.

      • Yes, Ryan, I agree. Please keep me updated on what you’re doing. I can be reached at cookie@bluecoastrecords.com

        There is a rumble of excitement happening in the world of high resolution audio. Our DSD downloads (30x the size of mp3) are now outselling all our formats. Granted a small niche (for now), but growing exponentially. We love our customers.

        We are adapting Lean Startup techniques, agile management for our project development and “The Canvas” for indie artists and small labels to help strategize their growth.

        I would very much like to hear what kind of processes your using and how well it’s working for you!

        • It’s just starting out, and I’m mostly applying them to my personal projects at this point. Right now I’m looking at it from a compositional process and how the ideas might be able to help me (and others) get better at self-promotion.

          If things work out, then I’ll be applying them to my band later on. I’ll let you know when the article is done!

  4. It’s great to see the government investing in innovation. It is clear that you have stumbled upon an excellent formula for increasing the probability of success and it is remarkable that the NSF had the foresight to reach out to you for your guidance. People all over the world have recognized the strength that is Silicon Valley but nobody has been able to replicate it yet. By spreading these teachings throughout the country and continuing to invest in science and the commercialization of research, we can continue to lead the world in innovation.

    Thank you for your excellent contributions!

  5. Let’s not praise to quickly! The success of this experiment is the viability/profitability of the 21 ideas. Then. and only then, will this be considered a success.

    • Jim,
      Measuring the success of the Innovation Corps by Y-Combinator standards would be a tragic. The goal is to have a much bigger and longer lasting impact.

      The goal wasn’t to create a cohort of web-based VC fundable companies that can be flipped in a few years. It was something we thought more important – to permanently bridge the gap between research – development – and deployment.

      Therefore, the success of the NSF Innovation Corps should be measured by:
      1) did the class change the career trajectories of any of the entrepreneurial leads?
      2) did the class change the way the Principal Investigators think of how to apply their research?
      3) are any of the team members going to use/evangelize this methodology in their departments? their universities? their careers?
      4) did any of the teams decide to pursue their projects out of the laboratory – licensing? startup?

      Here’s a model on how to think of the continuum from research in a university lab all the way to a company:
      Pure Research (R1) many little projects, modest $

      Applied Research (R2)

      Exploratory Development (D1)

      Advanced Development (D2)

      Development (D3) might include pilot plants, beta tests, etc.

      Deployment & scaleup, cost reductions, etc. (D4)
      Adoption (A1) wide-scale usage (i.e consumer adoption, technology diffusion)

      The government (NSF, DOE, ARPA, NIH, etc.) do a good job of funding Research.

      The goal of the class was to was to bring the gap between pure/applied research which the NSF funds (~$5 billion), and exploratory/advanced development, which almost no one (other than the NSF with its SBIR / STTR programs) supports. And the NSF SBIR an STTR programs just offer cash, not training on how to commercialize research.

      Private capital (i.e. Venture Capital) is happy to fund deployment and scale-up, but runs away from research and exploratory/advanced development.

      The reality that every entrepreneur learns (and that few researchers do,) is that commercialization of your research is not only how smart you are or how advanced your technologies are. Successful ventures need to take into account customers, channel, demand creation, revenue models, etc.

      We did a pretty good of instrumenting of the participants before and after responses. I’ll share the data in the last post.

      steve

      • I studied electrical engineering at USC which has a very strong emphasis on business. While there were a lot of professors that were stuck in their labs (doing good work), I also saw many that were starting companies. My digital audio professor, Chris Kyriakakis, founded Audyssey along with Tomlinson Holman (the TH in THX). They make chips that are used in a lot of stereo receivers today.

        It’s evident that not all universities are this business-savvy. A lot of government grants are only given to pure research or applied research projects and so professors don’t learn how to translate their work into commercially viable products. If each university in this country sprouted several viable startups every year that could take advanced scientific research and create products that solved real customer problems, other countries could take all the manufacturing jobs and become experts at math and science but our companies would own the markets!

      • Steve,

        Your remark on commercialization of research is also supported by the research study “Look before you Leap: Market opportunity Identification in emerging Technology Firms” of Gruber, MacMillan & Thompson 2008.

        One of the conclusions of this study is that entrepreneurs who identify a “choice set” of market opportunities prior to first entry derive performance benefits by doing so.

        Looking at the ability to identify market opportunities there is something like the “irony of expertise”. In case of no prior entrepreneurial experience: the more technological and engineering experience a researcher has the less additional market opportunities he/she can identify for his/her technology.

        Mariel

  6. Why is the average age in italics? Its pretty obvious that this would be the demographic. Do people get stupid @ 30?

    It is not like these people face risk in this program. Young entrepreneurs are common because it is the time to take risk in your life.

  7. I am from India and i agree with the spirit of the NSF appeal to US citizens. All major countries in the world needs to have such an organisation that encourages innovation, transferand commercialisation through entrepreneurship efforts. In India a website has started working called ‘ FRIENDS OF INDIAN INNOVATORS ‘ . It is hoped that it takes a cue and works out a scheme that works under conditions prevailing in the country.It has been sponsored under LinkedIn.com..
    Narendra Nath

  8. I look forward to seeing the before and after data, but what plans are there for long-term followup to address the four questions you list?

    I guess in a way what I am asking is: how will you know if the I-Corps program is successful? Almost more importantly, how will you show it? (How do you know/show it for Lean LaunchPad?)

  9. Steve,
    As a leading commercial real estate advisor for startups as well as established global companies, I would be more than honored to help analyze the possible real estate needs for any of these 21 teams. As I truly do love where this is headed, I would consult with these teams for no fee. I simply enjoy working with groups like this and helping them anyway I can. Thanks for doing what you are doing for them! Great Blog! Jason S. Lewis

  10. [...] Интересный рассказ от steveblank как в Штатах запускали проект инкубатора для коммерциализации разработок ведущих ученых и инженеров. С российским Сколково даже сравнивать не хочется … Share this:TwitterFacebookLike this:LikeBe the first to like this post. Tagged Enterpreneur, Research, Startup [...]

  11. Steve,

    How is the intellectual property of the innovative technologies guarantied in the process of talking to customers in an early stage of development?

    • Mariel,
      Great question and one often asked by engineers founding a company. The short answer is that your goal in getting out of the building is not to do the “talking” it’s to do the listening.

      Your initial meetings aren’t about you “selling” anything. And they aren’t about you disclosing your IP.

      The long and detailed answer is found here.

      steve

  12. I wish Brazil government could have the same approach of getting such excellent methods to help companies+students+researchers to create a business that succeed in a forma and structured plan.

    Steve, I as said at Wharton SF (lecture with Alex back on begin of October, the weekend before the NSF started), congratulations on all the knowledge sharing, I am great fan of your work (and Alex too) and trying to use the methodology on my startup (physical product is bit harder then just web tough), combination of a mobile and a device that makes strong authentication to eliminate online frauds.

  13. That’s very interesting, but how we know who is the best investigator?

    In my experience the “best” investigator(for politicians) is the brightest in the Academia world, he who has excellent grades, is brilliant learning stuff made by others, repeating it , acing the academic rules(status quo) and making exams. Then he writes “papers” and study his Doctoral thesis without discovering the “real world”.

    This is the Anthitesis not only of Steve Jobs but people like Einstein, or Feynman, or Wright Brothers.

    Do you have some way of changing or selecting the “best” investigators election.

    One of the great things about startups is that it is open to all, and surprises happen.

  14. Steve – excellent work and word of mouth on what lean can bring to the scientific and innovation table. Myself a passionate lean thinker for some decades, always cross-connecting diverse fields to bring the best of lean to the collaborative work – stitching arts, science, and technology together to get the best :)
    Steve – What do newcomers associate with “lean” at first day?

  15. [...] Corps is a new model of teaching startup entrepreneurship. This post is part two. Part one is here. [...]

  16. As a mentor for one of the teams, I can say that the program was definitely a great experience for the teams and the instructors were spot on. Although it is vital for academics contemplating a startup to recognize the importance of “getting out of the lab”, it is equally valuable for a current entrepreneur to hear this advice and have it re-instilled into their thinking.

    To a previous poster, the focus was not on getting the “best 21 Principal Investigators” that the country has to offer (although everyone was excellent) but to get teams of 3 people who had the potential to excel in a startup-like atmosphere. As Steve commented, the hope is that it fundamentally changes the way that the PIs think about commercialization of research. For our team, it was a resounding success!

  17. [...] Corps is a new model of teaching startup entrepreneurship. This post is part two. Part one is here. Syllabus here…read full [...]

  18. [...] Blank consistently writes one of the best blogs.  His installment (at least 2 parts) on the National Science Foundation Innovation Corps is no [...]

  19. [...] Steve Blank has recently been recruited by the NSF to start a new venture. It’s not a startup, though; calling it an incubator isn’t quite correct, either.  We have some of the smartest people in the world working in academia, and the NSF has found a new way to encourage those folks to use their smarts to make things.  It’s one thing to research a new way to detect explosives, it’s another thing entirely to make a product to put that research to use. By combining the startup acumen of someone like Steve Blank with the far-reaching vision of the NSF, we are seeing the next great wave of businesses started. [...]

  20. […] Curriculum (currently taught in the Lean LaunchPad classes and NSF Innovation Corps accelerator). In it we emphasize that a) the data needed exists outside the building, b) teams use […]

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