I’m on the Air – On Sirius XM Channel 111

Starting this Monday, March 9th 4-6pm Pacific Time I’ll be on the radio hosting the Bay Area Ventures program on Sirius XM radio Channel 111 – the Wharton Business Radio Channel.Untitled

Over this program I’ll be talking to entrepreneurs, financial experts and academic leaders in the tech and biotech industries. And if the past is prologue I guarantee you that this will be radio worth listening to.

On our first show, Monday March 9th 4-6pm Pacific Time join me, as I chat with Alexander Osterwalder – inventor of the Business Model Canvas, and Oren Jacob, ex-CTO of Pixar and now CEO of ToyTalk on Sirius XM Radio Channel 111.

Oren Jacob - CEO ToyTalk

Oren Jacob – CEO ToyTalk

Alex Osterwalder - Business Models

Alex Osterwalder – Business Models

On Monday’s show we’ll be talking about a range of entrepreneurship topics: what’s a Business Model Canvas, how to build startups efficiently, the 9 deadly sins of a startup, the life of a startup CEO, how large companies can innovate at startup speeds. But it won’t just be us talking; we’ll be taking your questions live and on the air by phone, email or Twitter.

On April 27th, on my next program, my guest will be Eric Ries the author of the Lean Startup. Future guests include Marc Pincus, founder of Zynga, and other interesting founders and investors.

Is there anyone you’d like to hear on the air on future shows? Any specific topics you’d like discussed? Leave me a comment.

Mark your calendar for 4-6pm Pacific Time on Sirius XM Radio Channel 111:

  • March 9th
  • April 27th
  • May 11th
  • June 29th
  • July 13th
  • Aug 24th in NY

Blowing up the Business Plan at U.C. Berkeley Haas Business School

During the Cold War with the Soviet Union, science and engineering at both Stanford and U.C. Berkeley were heavily funded to develop Cold War weapon systems. Stanford’s focus was Electronic Intelligence and those advanced microwave components and systems were useful in a variety of weapons systems. Starting in the 1950’s, Stanford’s engineering department became “outward facing” and developed a culture of spinouts and active faculty support and participation in the first wave of Silicon Valley startups.

At the same time Berkeley was also developing Cold War weapons systems. However its focus was nuclear weapons – not something you wanted to be spinning out. nuclearSo Berkeley started a half century history of “inward facing innovation” focused on the Lawrence Livermore nuclear weapons lab. (See the presentation here.)

Given its inward focus, Berkeley has always been the neglected sibling in Silicon Valley entrepreneurship. That has changed in the last few years.

Today the U.C. Berkeley Haas Business School is a leader in entrepreneurship education. It has replaced how to write a business plan with hands-on Lean Startup methods. It’s teaching the LaunchPad® and the I-Corps for the National Science Foundation and National Institutes of Health, as well as corporate entrepreneurship courses.haas logo

Here’s the story from Andre Marquis, Executive Director of Berkeley’s Lester Center for Entrepreneurship.

—–

When I came to U.C. Berkeley in 2010 to run the Lester Center for Entrepreneurship in the Haas School of Business we were teaching entrepreneurship the same way as when I was a student back in 1995. Our core MBA class used the seminal textbook New Venture Creation by Jeffrey Timmons of Babson College that was first published in 1977. The final deliverable for that class was a 30-page business plan. We had multiple business plan competitions. As I looked around at other schools, I saw pretty much the same landscape – business plan classes, business plan competitions and loosely coupled accelerators that focused primarily on mentoring.

Over my career as a serial entrepreneur I observed that since the late 1990s, no early-stage Silicon Valley investor had used business plans to screen investments. Even those who asked for them never read them. Traction and evidence from customers were what investors were looking for – even in “slow” sectors like healthcare and energy. There had been tectonic shifts in the startup world, but our business school curriculum had barely moved.

There was a big gap in our educational paradigm. To create great entrepreneurs, we had to give our students the experience of navigating the chaos and uncertainty of running a lean startup while providing the same kind of rigorous framework the business plan did in its day. The advantage of following New Venture Creation is that it had a deep pedagogical infrastructure that students took away after they left school. The disadvantage is that its methodology was based on the old waterfall model of product development and not the agile and lean methods that startups use today.

As I began my search to increase the relevance of our entrepreneurship curriculum with the same rigor as Timmons and New Venture Creation, I found the answer right here at Berkeley, in Steve Blank’s Lean LaunchPad class.

(Our founding Executive Director Jerry Engel, recently retired to become dean of faculty for the National Science Foundation I-Corps, had a tradition of incorporating leading practioners, like Steve. These ‘pracademics’ proved to be some of the biggest innovators in entrepreneurship education.)

Seeing Is Believing
The Lean LaunchPad class was completely different from a traditional entrepreneurship class. It taught lean theory (business model design, customer development and agile engineering) and practice.

Every week, each student team stood in front of the class and presented their business model hypotheses, what they had learned from talking to customers, demo’d their minimal viable products and had to explain what they were going to do next. Steve and the venture capitalists at the back of the room relentlessly peppered them with questions and pushed them to get out of the building and call on the real decision-makers instead of talking to people they already knew. Some teams stepped down from the podium proud that they had made real progress that week while others were chastised because they stuck to their comfort zone, were not doing the tough work required by entrepreneurs and on the road to failure.

I realized this class was teaching students exactly what it felt like to be an entrepreneur! Great entrepreneurs are on a search for the truth, no matter how wrong their initial conception is. Being an entrepreneur is about starting out with no idea whether you are working on the next big thing or something no one wants and certainly no one will pay for. It’s struggling to find the right path forward through chaos and uncertainty. Killing bad ideas quickly and moving on. Staring at the phone while mentally wrestling to pick it up to make that next cold call. It’s having investors tell you that you’re dead wrong and, perhaps with enough customer traction, showing them the path to a new future neither of you could see at the time.

And there it was. The Lean LaunchPad was unlike any class I’d ever seen.

As a Silicon Valley entrepreneur I had lived the lean approach, yet I had never seen it taught. Done informally as part of an accelerator, yes, but not with a framework based on a clear process and clear pedagogy. The Lean LaunchPad was teaching students concepts and a process that they took away from the class and could use again for their next startup. I realized I was looking at a paradigm shift in entrepreneurial education – away from the business plan-focused model to a Lean Startup model. (The irony is that once you’ve gone through the lean cycle, you have all the information that goes in a business plan: customers, sales strategy, product features, and financial metrics. It’s just that they are validated instead of made up.)

The Business Plan is Dead
Now, 4 years after I arrived at BerkeleyHaas, we don’t teach business plan writing in any of our entrepreneurship classes or in any of our dozens of programs and competitions. We use Customer Development and the Lean LaunchPad to train and accelerate teams U.C. Berkeley-wide.

We’ve gone global as well. In the past year alone, we’ve taught over 250 teams, over 1,000 entrepreneurs and their mentors in dozens of countries how to create scalable startups in domains from software and hardware to healthcare and energy.

Haas global footprint

Haas global footprint

The international teams watch the lectures online, get out of the building, present to us each week via WebEx and get the same brand of relentless and direct feedback their U.C. Berkeley peers got in Steve’s class. For example, our Intel Technology To Market Accelerator took 22 teams from 11 countries across 15 time zones, from northern Russia to southern Chile and from Saudi Arabia to the U.S. (Chicago) through the Lean LaunchPad process. Clearly, lean works globally.

And we’ve been part of the U.S. effort to use the Lean LaunchPad to accelerate commercialization for the country’s best research spinouts from the National Science Foundation and National Institutes of Health. We do this by running classes for the NSF Innovation Corps and The I-Corps at the NIH. And the same lean techniques work just as well in the corporate innovation programs we run such as the Intel Make It Wearable Challenge.

An important distinction is that these programs are accelerators. The teams in them start with an idea or product, meet with customers, build prototypes and search for a scalable business model. All declare their startup a “go” or “no go” at the end. They learn it’s all about building to scale, pivoting or declaring failure, and moving on using a hypothesis-driven search for the truth.

Even our venerable 15-year old business plan competition, once dubbed “bplan,” has transformed into LAUNCH, a multi-month accelerator with a rigorous process combining the Lean LaunchPad, agile product development and a focus on measurable Lean Analytics. Ironically, LAUNCH has turned out to be much more rigorous than the prior business plan competition because we immerse every entrepreneur and their mentors in conquering the chaos and uncertainty that is normal for startups. We expect them to come out with specific knowledge of their markets and business ecosystem, verified metrics, a product and a plan for moving forward based on interacting with their actual customers – not honing the teams for a beauty pageant-like pitch fest or making them produce a business plan that’s fundamentally speculative. As educators, we are having a deep impact on these entrepreneurs and their startups.

Lean LaunchPad Works Across Industries
I often hear the concern that the Lean LaunchPad only works for software. After 700 teams in robotics, materials, hardware, therapeutics, diagnostics, medical devices, and enterprise software, it’s clear that Lean Startup methods work across all industries. We’ve taught versions of the Lean LaunchPad for life sciences at UCSF and as part of the National Institutes of Health, for hardware-focused startups making wearable devices as part of the Intel Make It Wearable Challenge, for teams working on nanotechnology and in education (STEMKids and Build and Imagine). Two of our BerkeleyHaas Faculty, Jorge Calderon and Will Rosenzweig, created a Social Lean LaunchPad class that embraces the mission and stakeholders central to social ventures.

Whether it’s making iPhone apps or medical devices, every startup is looking for a repeatable and scalable business model. Focusing on finding customer needs, figuring out how they buy and how to scale up product delivery are universal.

Where We Are Going From Here
At U.C. Berkeley we’ve undergone a complete transformation in just four years. But the longer journey is to continue to build new lean-tools and classes separate from the 40 year-old, business plan-based tradition.

We continue to ask ourselves, “What can we do to get our students out of the classroom, in cross-functional teams, building for specific customers and having the experience of making hard decisions under conditions of uncertainty? What can we do to expand and deepen the rigor of the Lean Startup methodologies and fully elaborate our curriculum?”

At BerkeleyHaas we are sharing what we are learning (see below). By embracing lean, you can be assured you will be giving your students essential innovation skills they will use for the rest of their lives. You will see great startups focused on solving real customer problems emerge as well. This is an exciting journey and we are all right at the start.

Some resources for shifting the paradigm in your organization:

Lessons Learned

  • Early-stage investors don’t read business plans
  • We are in the middle of a shift in entrepreneurship education from teaching the waterfall model of startup development (enshrined in business plans) to teaching the lean startup model
  • The Lean LaunchPad process works across a wide range of domains – from science and engineering to healthcare, energy, government, the social sector and for corporate innovation
  • Customer Development works outside Silicon Valley. In fact, it works globally
  • The Lean LaunchPad is a business process that teaches entrepreneurs and innovators to make business-focused, evidence-based decisions under conditions of chaos and uncertainty. It’s a big idea

Life Science Startups Rising in the UK

Stephen Chambers spent 22 years in some of the most innovative companies in life science as the director of gene expression and then as a co-founder of his own company. Today he runs SynbiCITE, the UK’s synthetic biology consortium of 56 industrial partners and 19 Academic institutions located at Imperial College in London.

Stephen and SynbiCITE, just launched the world’s first Lean LaunchPad for Synthetic Biology program. Here’s his story.

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Why did you come back?
This is the question I most often hear, having now returned to the UK after leaving 24 years ago to work in the US. The answer is simple. The reason I came back is the same reason I left – to be where life science startups are happening.abbey road

Hard to imagine now, but in the late ’80s the life sciences startup landscape in the UK was almost non-existent. One or two companies existed which at the time were described as startups, but in reality were government-backed small companies attempting, and ultimately failing, to execute business plans.

At that time for any life-scientist wanting to work in the commercial sector there were few, if any, jobs in the UK. Along with the rest of British industry, the pharmaceutical sector was under going massive re-organization and mergers creating much of today’s big pharma in the process. These where the Thatcher years: when we were told to  ‘get on your bike’ and many of us did.

I left the UK joining a newly formed startup, Vertex Pharmaceuticals in Cambridge, Massachusetts, as one of the founding scientists. There were few alternatives then, if you wanted to work in a startup you had to go to the US. Fortunately, Vertex became one of the most successful US pharma companies in recent history. But even if it hadn’t, in the rich life-science ecosystem around Cambridge and Boston, there are plenty of other opportunities. Or you could start your own company, which I did after Vertex.

So what has changed in the UK?
Probably the biggest change was the UK government’s recognition of the importance of synthetic biology. (Synthetic biology engineers biologically based chemicals, drugs and materials.) The government designated the field as one of the UK’s Eight Great Technologies (along with advanced materials, agri-science, big data, energy storage, regenerative medicine, robotics, and satellites) that the country would focus on. The UK invested ~ £150 million in synthetic biology research and training through the Research Councils and Innovate UK.

To focus the national synthetic biology effort the UK created SynbiCITE, as the public-private partnership responsible for taking synthetic biology from the lab bench into commercial products in the UK.

And this is what has drawn me back. Looking at the UK, I saw a hotbed of startup activity, especially among companies looking to exploit the latest developments in synthetic biology.

I jumped at the opportunity to be the CEO of SynbiCITE, where I can pursue my passion of working with scientists and entrepreneurs who want to create and build something spectacular in the UK.

The Foundry
SynbiCITE provides financial aid for Proof of Concept and collaborative research, and logistical support in the form of access to a state-of-the-art ‘Foundry’ for DNA synthesis, assembly and verification.

Often the limiting step in synthetic biology innovation is the generation of the prototype, the model or the data: the Foundry seeks to bridge the critical gap between ideation and physical product in synthetic biology. Think of it as a “maker-space” specifically designed to support the commercialization of synthetic biology allowing startups to prototype new biologically based chemicals, drugs and materials.

The Foundry accelerates the translation of synthetic biology research into the marketplace. Small and medium-sized companies, startups or virtual companies can use the Foundry as a remote laboratory. We provide automated end-to-end design, construction and validation of synthetic biologic components. It is the generation of these parts, devices and systems, and the diversity of products they can produce and the range of functions they perform, which is creating the enormous excitement around this technology.

Another change in the UK, is the growing acceptance that startups are the true engines of not only economic and job growth but also the medium by which innovation most efficiently takes place. While there are still universities in the UK that would rather not have to deal with messy, cash-strapped entrepreneurs and startups most are beginning to realize that licensing doesn’t create jobs, startups do.

Lean LaunchPad to Accelerate Commercialization
The goal of our Synthetic Biology consortium is to turn our world-class scientific research into commercial products. This is why we’re excited about offering the Lean LaunchPad at SynbiCITE. Our goal is to help would-be scientist/entrepreneurs translate their ideas and research in synthetic biology into the marketplace. We want to teach them how successful startups really get built – and do it with urgency.

If you can’t see the video click here

The goal is to provide them a route from coming up with an idea for a product, through generation of business model canvas via the Lean LaunchPad program and in parallel, harness the Foundry for the production of prototypes, models and data all the while providing evidence of commercial potential.

The program gives those involved direct hands-on experience of identifying a product that the customer really needs and is prepared to buy. I want the participants in the program to have the excitement of finding their first customer, shipping that first product and in doing so learn about all the other aspects of building a successful business.  The Lean LaunchPad does that it in 12 weeks.

Going forward this initial Lean LaunchPad cohort at SynbiCITE will be the first of many. The course is the most important of all the innovation programs we are providing.

This will be the first time in the UK, scientists in the field of synthetic biology have being given the unique opportunity to learn how to become would-be entrepreneurs, by getting out of the lab, talking to potential customers and partners, and identifying what’s needed to turn science into commercial products.

Lessons Learned

  • The UK has established a national effort in Synthetic Biology
  • The Lean LaunchPad is being used to rapidly turn science into commercial products

When Krave Jerky Showed up in Class with a $435,000 Check

I remind my students that I’m teaching them a methodology they can use the rest of their careers, not running an incubator.krave logo

Every once in awhile a team ignores my advice and builds a company worth hundreds of millions of dollars.

Hershey just bought Krave Jerky, a team in our 2011 Berkeley Lean LaunchPad class, for >$200 million.

—–

Jon Sebastiani and his team came into the 2011 Berkeley Lean LaunchPad class with several key observations:

  • Snack foods were a large ~$35 billion but the moribund food category was starving for innovation and modernization
  • Meat snacks were a $2.5 billion subcategory of snacks. So there was plenty of data that proved that Americans loved to snack and loved meat snacks.
  • There was an opportunity for a new company “Jerky 2.0.” in the snack food market
  • Jon believed his competition was the conventional “Meat Guys” (the existing beef jerky companies.)

Jon’s big vision was to build a company that disrupted the meat snacks business. He believed that he could use the “go-to-market” strategies of other food/beverage disrupters– companies like Pete’s Brewing Company, Boston Beer and Kettle Chips. These new entrants disrupted their food categories by offering high quality proprietary recipes, outsourcing their manufacturing, and using their cash and resources on sales and marketing to build distribution and a differentiated brand. And Krave Jerky was going to be packaged, priced and positioned to be an everyday high quality snack experience – a “Mass Premium” positioning.

Jerky 2.0

Get Out of the Building
Jon and the team came in with all the assurance of a startup that thought they knew what they were doing. Unlike most of the other teams in the class, Krave was already up and running. In fact, by the start of class they had ~$750K in revenue for 2011 – not quite Facebook but a nice small business. But Jon had much bigger ambitions.

(For the teaching team this was our first opportunity to see if the Lean Startup process and this Lean LaunchPad class would work not just for new startups, but also for existing businesses, a test we would face years later teaching established Life Science companies rather than startups for the National Institutes of Health. The question was: Could we get these companies to pivot and learn when they already thought they had an existing business model?)

Their sales had given them some real data on three potential distribution channels: direct to consumer, brick and mortar retail, retailers. But they had minimal understanding of their target customer segment(s), and in the relentlessly direct nature of the class, we let them know it.

Rising to the occasion Jon and the team got out of the building and went to the Sonoma County Fair and Wine and other food festivals, and spoke to 50 customers. They ran 10 in-store demos, which got them talking to 100s of more customers.

Each week the team presented their findings to the class and teaching team. Take a look through the slides below and see how their business model evolved with feedback from customers, channels and partners.

If you can’t see the slides click here

They refined their branding, got a better handle on who their customers were, and in a real-time example for the rest of the class – had a full blown crisis. Krave’s original outsourced manufacturing partner decided to raise their price – to a point that Krave’s business model was no longer viable. The team demonstrated awesome agility and resilience as they scrambled to get a new manufacturing partner while continuing to do customer discovery and validation – and run their company.

What Do You Mean You Only Spoke to 1 Customer?
One of the rules of the Lean LaunchPad class is: 10 customer interviews each week (in-person or video Skype) or you get told, “Sit down, you don’t get to present – presentations are only for the teams that did the work.”

In week 9 of the class, the Krave team stood up, looked the teaching team right in the eyes and said, “We only talked to 1 customer this week and we only have 1 slide to present. Let us just put up this one slide and then we’ll sit down.” It was a pretty gutsy request – so sure, put up your slide.

I was completely blown away with what was on the screen.Kraves Check

It was a check for $435,635 from a customer. And not just any customer; it was from one of the largest supermarket chains in the U.S. It was Krave’s first national stocking order.

Krave generated ~$35 million in net sales over the last 12 months.

Hershey plans to operate Krave as a standalone business within its Hershey North America division. Jon Sebastiani will continue to lead the business as President of Krave.

Congratulations to Jon Sebastiani for ignoring the rules!

Lessons Learned

  • The Lean LaunchPad class works for existing businesses as well as new startups
  • The only criteria is a willingness to accept that you may have to pivot – from the founders and investors

Getting out of the building…by staying in the building!

The landscape for how to turn life science and health care technologies into viable companies has changed more in the last 3 years than in the last 30. New approaches to translational medicine have emerged. Our Lean Launchpad® for Life Sciences is one of them. But a new class of life science/healthcare co-working and collaboration space is another.

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The National Institutes of Health recognizes that Life Science/Health Care commercialization has two components: the science/technology, and the business model. The Lean Launchpad® for Life Sciences (the I-Corps @ NIH) uses the Lean Startup Model to discover and validate the business model.

two parts to commericializationThe class provides Life Science/Health Care entrepreneurs with real world, hands-on learning on how to rapidly:

  • define clinical utility before spending millions of dollars
  • understand who their core and tertiary customers are, and the sales and marketing process required for initial clinical sales and downstream commercialization
  • assess intellectual property and regulatory risk before they design and build
  • know what data will be required by future partnerships/collaboration/purchases before doing the science
  • identify financing vehicles before you need them

This user/customer-centered approach is a huge step in the right direction in the life science/health care commercialization. However, one of the bottlenecks in actually doing Customer Discovery for medical devices/health care is testing how minimal viable products work in-context. Testing hypotheses with doctors, patients, payers, providers, purchasing departments, strategic partners is hard. It can involve traveling hundreds of miles and can consume months of time and loads of money. Scheduling time to look over a surgeon’s shoulder in an operating room is tough. Getting time to brainstorm with payers or experts in clinical trials is hard.

It would be great if there were a way to first test these hypotheses and minimal viable products in a realistic setting locally. Then after a first pass of validation, take them on the road and see if others agree.

A new life science/healthcare co-working and collaboration space
It looks like someone is actually pulling this together in a life science/healthcare co-working and collaboration space in Chicago called MATTER.

Co-working spaces seem to be evolving into the startup garages of the future. It’s a shared work environment (typically a floor of a building) where individuals (or small teams) rent space and work around other people but independently. Yet they share values and hopefully some synergy around topics of mutual interest (same customers, or technologies). Incubators are designed for teams with an idea. They add mentors and additional services and some offer free space in exchange for equity. Accelerators take teams with fairly focused ideas and offer a formal 3-4 month program of tutoring/mentoring with seed funding in exchange for equity.

The MATTER co-working space will have five unique things specifically for life science/healthcare companies:

  1. It’s focused exclusively on life science/health care (therapeutics, medical devices, diagnostics, digital health, health care IT, etc.)
  2. Key stakeholders in the broader healthcare ecosystem will be co-located under one roof: entrepreneurs, universities, established companies and strategic partners, providers, payers, hospitals, service providers, associations, advocacy groups, government and more.
  3. It will have a simulated procedure space that can be configured as an Operating Room, Emergency Room, Intensive Care Unit and other clinical/procedural settings. The space will include authentic lighting, equipment and other features that very closely resemble the look, sound and feel of these environments in the “real world”.
  4. It will have a clinician and patient studio configurable as a doctor’s office or a home care setting to simulate clinician and patient interactions. It will serve as a test bed for software, services and other technologies to improve the clinician/patient dynamic as well as improving workflows in the clinic.
  5. It will have a fabrication space where device startups can build minimum viable products and iterate on their designs while in the facility.

By building a co-working space that includes all of these stakeholders, MATTER allows startups (and companies) to get in front of customers and other members of the value chain first, before they leave the building.

The team at MATTER also realizes that facilities alone will not do the trick. In order to get the healthcare community to collaborate with each other to bring new ideas to market they will need some help to catalyze  the “co” part of co-working.

“The life sciences community is still warming-up to the value of customer development in the early stages of building new ventures”, says David Schonthal, MATTER Co-founder and Clinical Assistant Professor of entrepreneurship & innovation at the Kellogg School of Management. “Many of them aren’t yet clear on who their customer actually is – and as a result – what value they should be focused on creating. Essentially, through programming and content, we will need to teach many of our members the importance of understanding the needs of stakeholders and customers – we just aim to make it easier by bringing these people into the building.”

The procedure space and clinician and patient studio allow startups to test and demo medical devices, diagnostics, software and other technologies, with real clinicians, to validate hypotheses, their technologies, and discover the “unknown unknowns” that they wouldn’t learn until the product was used in a real clinical setting (meaning: after years of development and regulatory clearances).

But the real benefit for a Lean Startup is that unlike a traditional OR/ER, technologies/devices used in these spaces can be minimum viable products. They can be crude, non-sterile prototypes tested at any phase of their development (from sketch to machined parts), to answer any number of important questions that innovators might have about how, when, why and by whom a technology is used.

(Think of a startup building a diagnostic display designed for an operating room that discovered it was virtually unreadable and inaudible in the bright lights and loud sounds of a real operating room. Finding this out late in the development process can burn cash and time in a med tech company.)

MATTER is funded and supported by a broad range of private sector partners including established companies, providers, payers, service providers and others; as well as public sector support from the State of Illinois and the City of Chicago.

It Takes a Village
“This has been nearly a 4-year journey,” said Schonthal who prior to moving back to Chicago in 2011 had been working in healthcare venture capital in San Diego.

“One of the noticeable things about the San Diego health tech community is that it feels like a community. It has density,” he said. “People bump into each other, seek each other’s advice, make connections and collaborate on projects. In Chicago, despite having a lot of talent, companies and great research, we are a big, spread-out city. As a result we needed to design some of that density inside of MATTER so that serendipity can occur”.

Schonthal found that others in Chicago saw the vision. He enlisted the help of serial medical device entrepreneur Andrew Cittadine, biotech startup veteran Jeffery Aronin and Patrick Flavin and Steve Collens who was a major force behind the development of 1871 – Chicago’s digital co-working space. Together they recruited the support of the city, state and private industry who all agreed that frequent and early community collaboration to support young companies would be key to Chicago’s future in healthcare entrepreneurship.

Others Are Doing this As Well
MATTER is one of many organizations supporting life science/healthcare entrepreneurship across the country. In New York there’s Blueprint Health and Startup Health, in Denver there’s Stride and Princeton has Tiger Labs. Other incubators and accelerators in the health tech space include Health WildCatters in Dallas, RockHealth in Silicon Valley, Iron Yard in North Carolina, HealthBox Accelerator, Athena Health MDP in Boston and others. And probably the most important will be the Lean LaunchPad @ Life Science Angels class for early stage life science companies. Each of these has their own approach to supporting the creation of new ventures – but all are working to help young startups solve big problems.

Lessons Learned

  • Our knowledge of how to efficiently turn life science/health care technology into companies is rapidly increasing
  • Lean Methods are one such tool
  • Healthcare co-working and collaboration space is another

I-Corps at the NIH: Evidence-based Translational Medicine

If you’ve received this post in an email the embedded videos and powerpoint are best viewed on www.steveblank.com

We have learned a remarkable process that allow us to be highly focused, and we have learned a tool of trade we can now repeat. This has been of tremendous value to us.

Andrew Norris, Principal Investigator BCN Biosciences

Over the last three years the National Science Foundation I-Corps has taught over 700 teams of scientists how to commercialize their technology and how to fail less, increasing their odds for commercial success.

To see if this same curriculum would work for therapeutics, diagnostics, medical devices and digital health, we taught 26 teams at UCSF a life science version of the NSF curriculum. 110 researchers and clinicians, and Principal Investigators got out of the lab and hospital, and talked to 2,355 customers. (Details here)

For the last 10 weeks 19 teams in therapeutics, diagnostics and medical devices from the National Institutes of Health (from four of the largest institutes; NCINHBLI, NINDS, and NCATS) have gone through the I-Corps at NIH.

87 researchers and clinicians spoke to 2,120 customers, tested 695 hypotheses and pivoted 215 times. Every team spoke to over 100 customers.

Three Big Questions
The NIH teams weren’t just teams with ideas, they were fully formed companies with CEO’s and Principal Investigators who already had received a $150,000 grant from the NIH. With that SBIR-Phase 1 funding the teams were trying to establish the technical merit, feasibility, and commercial potential of their technology. Many will apply for a Phase II grant of up to $1 million to continue their R&D efforts.

Going into the class we had three questions:

  1. Could companies who were already pursuing a business model be convinced to revisit their key commercialization hypotheses – and iterate and pivot if needed?
  2. Was getting the Principal Investigators and CEO out of the building more effective than the traditional NIH model of bringing in outside consultants to do commercialization planning?
  3. Would our style of being relentlessly direct with senior scientists, who hadn’t had their work questioned in this fashion since their PhD orals, work with the NIH teams?

Evidence-based Translational Medicine
We’ve learned that information from 100 customers is just at the edge of having sufficient data to validate/invalidate a company’s business model hypotheses. As for whether you can/should push scientists past their comfort zone, the evidence is clear – there is no other program that gets teams anywhere close to talking to 100 customers. The reason? For entrepreneurs to get out of the building at this speed and scale is an unnatural act. It’s hard, there are lots of other demands on their time, etc. But we push and cajole hard, (our phrase is we’re relentlessly direct,) knowing that while they might find it uncomfortable the first three days of the class, they come out thanking us.

The experience is demanding but time and again we have seen I-Corps teams transform their business assumptions. This direct interaction with potential users and customers is essential to commercialize science (whether to license the technology or launch a startup.) This process can’t be outsourced. These teams saved years and millions of dollars for themselves, the NIH and the U.S. taxpayer. Evidence is now in-hand that with I-Corps@NIH the NIH has the most effective program for commercializing science.

Lessons Learned Day
Every week of this 10 week class, teams present a summary of what they learned from their customers interviews. For the final presentation each team created a two minute video about their 10-week journey and a 8-minute PowerPoint presentation to tell us where they started, what they learned, how they learned it, and where they’re going. This “Lessons Learned” presentation is much different than a traditional demo day. It gives us a sense of the learning, velocity and trajectory of the teams, rather than a demo day showing us how smart they are at a single point in time.

BCN Biosciences
This video from team BCN Biosciences describes what the intensity, urgency, velocity and trajectory of an I-Corps team felt like. Like a startup it’s relentless.

BCN is developing a drug that increases anti-cancer effect of radiation in lung cancer (and/or reduces normal tissue damage by at least 40%). They were certain their customers were Radiation Oncologists, that MOA data was needed, that they needed to have Phase 1 trial data to license their product, and needed >$5 million and 6 years. After 10 weeks and 100 interviews, they learned that these hypotheses were wrong.

If you can’t see the BCN Biosciences video click here

The I-Corps experience helped the BCN Bioscience team develop an entirely new set set of business model hypotheses – this time validated by customers and partners. The “money slides” for BCN Biosciences are slides 22 and 23.

If you can’t see the BCN Biosciences presentation click here

You Can’t Outsource Customer Discovery
What we hear time and again from the Principal Investigators is “I never would have known this” or “I wouldn’t have understood it if I hadn’t heard it myself.” Up until now the NIH model of commercialization treated a Principal Investigator as someone who can’t be bothered to get out of the building (let alone insist that it’s part of their job in commercialization.) In the 21st century using proxies to get out of the building is like using barbers as surgeons.

Clinacuity
While the Clinacuity video sounds like an ad for customer discovery, listen to what they said then look at their slides. This team really learned outside the building.


If you can’t see the Clinacuity video click here

Clinacuity’s technology automatically extracts data in real-time from clinical notes, (the narrative text documents in a Electronic Health Record,) and provides a summary in real time. Their diagrams of the healthcare customer segment in slides 15-18 were outstanding.

If you can’t see the Clinacuity presentation click here

GigaGen
The GigaGen team – making recombinant gamma globulin – holds the record for customer discovery – 163 customer interviews on multiple continents.

If you can’t see the GigaGen video click here

GigaGen’s learning on customer value proposition and who were the real stakeholders was a revelation. Their next-to-last slide on Activities, Resouces and Partners put the pieces together.

If you can’t see the GigaGen presentation click here

Affinity Therapeutics
Affinity came into class with a drug coated Arterial Venous Graft – graft narrowing is a big problem.

One of things we tell all the teams is that we’re not going to critique their clinical or biological hypotheses. Yet we know that by getting out of the building their interaction with customers might do just that. That’s what happened to Affinity.

If you can’t see the Affinity video click here

Affinity was a great example of a team that pivoted their MVP. They realized they might have a completely new product – Vascular wraps that can reduce graft infection.  See slides 17-23.

If you can’t see the Affinity presentation click here

Haro
Haro is making a drug for the treatment of high risk neuroblastoma, the most common extracranial cancer in infancy and childhood. On day 1 of the class I told the team, “Your presentation is different from the others – and not in a good way.”  That’s not how I described them in the final presentation.

If you can’t see the Haro video click here

After 120 interviews the Haro found that there are oncology organizations (NCI-funded clinical development partners) that will take Haro’s compound and develop it at their own expense and take it all the way into the clinic. This will save Haro tens of millions of dollars in development cost.  See slides 12 and 13.

If you can’t see the Haro presentation click here

Cardiax
Caridax is developing a neural stimulator to treat atrial fibrillation. Their video points out some of the common pitfalls in customer discovery. Great summary from Mark Bates, the Principal Investigator: “You don’t know what you don’t know. Scientific discovery is different than innovation. You as a prospective entrepreneur need this type of systematic vetting and analysis to know the difference.”

If you can’t see the Cardiax video click here

After 80 interviews they realized they were jumping to conclusions and imparting their bias into the process. Take a look at slides 8-11 and see their course correction.

If you can’t see the Cardiax presentation click here

The other 15 presentations were equally impressive. Each and every team stood up and delivered. And in ways that surprised themselves.

The Lean Startup approach (hypotheses testing outside the building,) was the first time clinicians and researchers understood that talking to customers didn’t require sales, marketing or an MBA – that they themselves could do a pretty good first pass. I-Corps at NIH just gave us more evidence that’s true.

The team videos and slides are on SlideShare here.

A Team Effort
This blog post may make it sound like there was no one else in the room but me and the teams. But nothing could be farther from the truth. The I-Corps@NIH teaching team was led by Edmund Pendleton. Allan May/Jonathan Fay taught medical devices, John Blaho/Bob Storey taught diagnostics and Karl Handelsman/Keith McGreggor taught therapeutics. Andre Marquis, Frank Rimalovski and Dean Chang provided additional expertise. Brandy Nagel was our tireless teaching assistant. Jerry Engel is the NSF I-Corps faculty director.

Special thanks to Paul Yock of Stanford Biodesign and Alexander Osterwalder for flying across the country/world to be part of the teaching team.

I created the I-Corps/Lean LaunchPad® syllabus/curriculum, and with guidance from Allan May, Karl Handelsman Abhas Gupta and Todd Morrill adapted it for Life Sciences/Health Care/Digital Health. The team from VentureWell provided the logistical support. The I-Corps program is run by the National Science Foundation (Babu Dasgupta, Don Millard and Anita LaSalle.) And of course none of this would be possible without the tremendous and enthusiastic support and encouragement of Michael Weingarten the director of the NIH/NCI SBIR program and his team.

Lessons Learned

  • The I-Corps/Lean LaunchPad curriculum works for therapeutics, diagnostics and device teams
  • Talking to 100 customers not only affected teams’ commercial hypotheses but also their biological and clinical assumptions
  • These teams saved years and millions of dollars for themselves, the NIH and the U.S. taxpayer
  • Evidence is now in-hand that the NIH has the most effective program for commercializing science
  • In the 21st century using proxies to get out of the building is like using barbers as surgeons

The Big Bang. The Lean LaunchPad explodes at University of Maryland

The University of Maryland is now integrating the Lean LaunchPad® into standard innovation and entrepreneurship courses across all 12 colleges within the University. Over 44 classes have embedded the business model canvas and/or Customer Discovery including a year-long course taken by every single one of its bioengineering majors.big bang 2

It’s made a big bang.

Here’s the story from Dean Chang, UMD’s Associate Vice President for Innovation and Entrepreneurship.

———————————————–

Two decades ago, Steve Blank completely changed the course and fortunes of a Stanford spinout startup called Immersion. I was lucky to be one of the very early people at Immersion and met Steve when he came on as one of our first board members. It was Steve who first brought Will Harvey to visit Immersion, which led to a strategic investment in There.com, Will’s stealth-mode but sure-fire, can’t-miss startup.

Present at the Creation
We didn’t know it at the time, but with that investment we had paid for front-row VIP seats to witness the origins of Customer Development and the Lean Startup. There.com is where Will first met and hired Eric Ries and had the painful and formative experiences that directly led to them starting over and co-founding IMVU while auditing Steve’s Lean LaunchPad course. With Eric Ries as the first practioner of Customer Development, Steve wrote Four Steps to the Epiphany, Eric wrote Lean Startup, and – BANG – Customer Development and Lean Startup were born!

Twenty years and 100,000’s of copies of those books later, my life has fortuitously intersected with Steve Blank once again now that we’ve both become educators. In my second go-around with Steve Blank, he’s still changing the course and fortunes of startups everywhere, but perhaps more profoundly, he’s now also changing the course of universities and students everywhere as a result of a program he developed with the National Science Foundation (NSF).

It’s a Capitol Idea
The DC, Maryland, and Virginia (DMV) region represents the most fertile science and technology region in the country with about $30 billion in federally-funded R&D. However, the region has historically underperformed in translating its enormous R&D output into impact.

When Steve and NSF created the I-Corps™ program in 2011, I approached Edmund Pendleton from University of Maryland, Jim Chung from George Washington University and Jack Lesko from Virginia Tech with the idea that together we could leverage the respective strengths of our institutions, and catalyze the region through I-Corps. In 2012, we applied for and then were awarded a grant from NSF to do just that. We created the DC I-Corps Regional Node to teach the Lean LaunchPad curriculum to top scientists, innovators, and students from around the country and from our region. Since 2013, DC I-Corps has trained over 150 teams with the kind of impact NSF and Steve envisioned when they launched the program. That impact is now accelerating with the DC I-Corps node’s addition of the #1 research university in the country (Johns Hopkins) in 2014.

UMD LLP Ecosystem

Teaching the Big Bang to Undergraduates
University of Maryland’s President Wallace Loh’s commitment to engage every student in all 12 colleges in innovation and entrepreneurship resulted in UMD aggressively leveraging its I-Corps and Lean LaunchPad experience inside undergraduate classrooms.

Our FedTech class pairs students with some of the most promising technologies from NASA, DOD and several other of the 87 federal labs located in the DMV region. Federal labs like DOE literally have tens of thousands of inventions that they’d like to have vetted for commercial potential, so FedTech students search for a repeatable and scalable business model for those fed lab technologies using the Lean LaunchPad framework. Students get course credit, a fantastic learning experience, and in some cases, even a job offer or career opportunity with the federal lab or with an industry contact made during interviews.

Elements of the business model canvas and/or discovery-based interviews of stakeholders have already been incorporated into 44 other classes at UMD. But the biggest impact of 2014 has been from incorporating the Lean LaunchPad curriculum into our signature, year-long senior capstone course in bioengineering. This means that every single University of Maryland student in the Fischell Department of Bioengineering is now required to not only design a real biomedical device but also take that design through rigorous, evidence-based Customer Development in order to graduate. 

Truth be told, we took a page out of Frank Rimalovski’s playbook at NYU and paid for Yang Tao to attend the Lean LaunchPad Educators Program.  He’s the professor who teaches the bioengineering capstone course, and he returned from Steve’s ranch inspired and determined to weave the Lean LaunchPad into the fabric of the capstone course. So what’s happened so far?

Impact of the Big Bang on University of Maryland Bioengineering
In this capstone course students visit the University of Maryland medical school and shadow doctors, nurses, and other hospital workers to learn about problems and needs, which is an ideal set up for customer interviews and discovery. They spend the year working with the doctors and the life sciences venture community to design devices and other solutions to those problems and needs.

Before Lean LaunchPad was added to the bioengineering capstone class, some beautiful devices were designed and manufactured with many students never knowing whether the value proposition for what they made was beneficial enough to all the right people to warrant adoption or if the customer segment they targeted was the right one and made financial sense.

Now the students spend time in customer discovery and learn why validating the business model for their device is so important. As they target the different parts of the canvas, they begin to understand how things like improved healthcare, purchasing, reimbursement, and regulatory must fit into a successful business model.

Some students will find that their device is an engineering marvel but would never fly in the market for reasons they weren’t even aware of until they did their “outside of the classroom” customer interviews. Co-instructor Martha Connolly thinks that’s a perfectly good outcome because they’ve still learned the process of designing and making a biomedical device but they’ve also learned equally valuable lessons from the Lean LaunchPad process that will be applicable in any future endeavors, whatever they may be.

The real proof of Lean LaunchPad’s impact is that the students are clamoring for it.

Can I Have More?
In fact, two UMD bioengineering students, Shawn Greenspan and Stephanie Cohen, went through the capstone course last year before Lean LaunchPad was integrated. They were so upset that they missed out on the Lean LaunchPad version of the course that they teamed up with Dr. Ron Samet, a very entrepreneurial professor of anesthesiology from the medical school, to take the class through this fall’s National Science Foundation I-Corps regional program taught in the D.C. area.

UMDAccording to Shawn and Stephanie, I-Corps taught them what they didn’t get from the traditional capstone course without Lean LaunchPad:

“I-Corps finally put us on the road to real customer discovery. Our initial business plan started with an incorrectly identified buyer, value propositions that were wrong, and guesses everywhere else. Fortunately after 67 interviews we now have a fully developed customer segment identifying each customer type, the key value propositions, and a developing revenue model.

We still have lots of work to do. The left side of our canvas has more questions than answers. Five weeks ago, that was scary to admit, but now we know where our answers lie: outside the building.”

This kind of feedback from students is particularly gratifying. Not only did the experience have the kind of impact we had hoped for, but it’s also turned into a potential career opportunity for Shawn and Stephanie as they’re completing their master’s programs.

What’s Next?
Four more Lean LaunchPad initiatives are either on tap or about to be scaled up:

Being a node instructor in the I-Corps @ NIH program has allowed me to work with some terrific experts in life sciences and healthcare ventures and spread that expertise to DC I-Corps and UMD programs. Next month, I’ll be a node instructor in NSF’s upcoming I-Corps for Learning program where we aim to teach STEM educators how to scale their teaching innovations to a wider audience. That experience should again result in great learnings to bring back and apply at UMD.

When I witnessed the Big Bang origins of Customer Development and Lean Startup 20 years ago during my first encounter with Steve Blank, I could not have guessed how fast it would impact the startup world, and now universities and students. If the past is prologue, the future is going to be fantastic!

Lessons Learned

  • University of Maryland has gone “all in” with the National Science Foundation Innovation Corps and discovery-based learning from stakeholders
  • I-Corps has been a great investment for the country. Regardless if they take startup path, students gain invaluable skills
  • Elective courses are great, but the big win comes from embedding Lean LaunchPad in existing required courses
  • Students can create job and career opportunities through their customer discovery interactions
  • The impact on life sciences and healthcare is evident in the UMD bioengineering program and in the NIH program
  • The Lean LaunchPad process is equally well-suited to areas like STEM education and government (e.g., fed labs, HHS)
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