In 24 hours we’ll announce something revolutionary.
Moving entrepreneurship forward.
Filed under: Business Model versus Business Plan, Customer Development, Lean LaunchPad, Teaching | 30 Comments »
Startup Communities – Building Regional Clusters
Posted on October 8, 2012 by steveblank
How to build regional entrepreneurial communities has just gotten it’s first “here’s how to do it” book. Brad Feld’s new book Startup Communities joins the two other “must reads,” (Regional Advantage and Startup Nation) and one “must view” (The Secret History of Silicon Valley) for anyone trying to understand the components of a regional cluster.
There’s probably no one more qualified to write this book then Brad Feld (startup founder, co founder of two VC firms – Mobius and Foundry, and founder of TechStars.)
Leaders and Feeders
Feld’s thesis is that unlike the common wisdom, it is entrepreneurs that lead a startup community while everyone else feeds the community.
Feld describes the characteristics of those who want to be regional Entrepreneurial Leaders; they need to be committed to their region for the long term (20+ years), the community and its leaders must be inclusive, play a non-zero sum game, be mentorship-driven and be comfortable experimenting and failing fast.
Feeders include the government, universities, investors, mentors, service providers and large companies. He points out that some of these, government, universities and investors think of themselves as the leaders and Feld’s thesis is that we’ve gotten it wrong for decades.
This is a huge insight, a big idea and a fresh way to view and build a regional ecosystem in the 21st century. It may even be right.
Activities and Events
One of the most surprising (to me) was the observation that a regional community must have continual activities and events to engage all participants. Using Boulder Colorado as an example, (Feld’s home town) this small entrepreneurial community runs office hours, Boulder Denver Tech Meetup, Boulder Open Coffee Club, Ignite Boulder, Boulder Beta, Boulder Startup Digest, Startup Weekend events, CU New Venture Challenge, Boulder Startup Week, Young Entrepreneurs Organization and the Entrepreneurs Foundation of Colorado. For a city of 100,000 (in a metro area of just 300,000 people) the list of activities/events in Boulder takes your breath away. They are not run by the government or any single organization. These are all grassroots efforts by entrepreneurial leaders. These events are a good proxy for the health and depth of a startup community.
Incubators and Accelerators
One of the best definitions in the book is when Feld articulates the difference between an incubator and an accelerator. An incubator provides year-round physical space, infrastructure and advice in exchange for a fee (often in equity.) They are typically non-profit, attached to a university (or in some locations a local government.) For some incubators, entrepreneurs can stay as long as they want. There is no guaranteed funding. In contrast, an accelerator has cohorts going through a program of a set length, with funding typically provided at the end.
Feld describes TechStars (founded in 2006 with David Cohen) as an example of how to build a regional accelerator. In contrast to other accelerators TechStars is mentor-driven, with a profound belief that entrepreneurs learn best from other entrepreneurs. It’s a 90-day program with a clear beginning and end for each cohort. TechStars selection criteria is to first focus on picking the right team then the market. They invest $118,000 ($18k seed funding + $100K convertible note) in 10 teams per region.
Role of Universities
To the entrepreneurial community Stanford and MIT are held up as models for “outward-facing” research universities. They act as community catalysts, as a magnet for great entrepreneurial talent for the region, and as teachers and then a pipeline for talent back into the region. In addition their research offers a continual stream of new technologies to be commercialized.
Feld’s observation is that that these schools are exceptions that are hard to duplicate. In most universities entrepreneurial engagement is not rewarded, there’s a lack of resources for entrepreneurial programs and cross-campus collaboration is not in the DNA of most universities.
Rather than thinking of the local university as the leader, Feld posits a more effective approach is to use the local college or university as a resource and a feeder of entrepreneurial students to the local entrepreneurial community. He uses Colorado University’ Boulder as an example of of a regional university being as inclusive as possible with courses, programs and activities.
Finally, he suggests engaging alumni for something other than fundraising – bringing back to the campus, having them mentor top students and celebrating their successes.
Role of Government
Feld is not a big fan of top-down government driven clusters. He contrasts the disconnect between entrepreneurs and government. Entrepreneurs are painfully self-aware but governments are chronically not self-aware. This makes government leaders out of touch on how the dynamics of startups really work. Governments have a top-down command and control hierarchy, while entrepreneurs work in a bottoms-up networked world. Governments tend to focus on macro metrics of economic development policy while entrepreneurs talk about lean, startups, people and product. Entrepreneurs talk about immediate action while government conversations about policy do not have urgency. Startups aim for immediate impact, while governments want to control. Startup communities are networked and don’t lend themselves to a command and control system.
Community Culture
Feld believes that the Community Culture, how individuals interact and behave to each other, is a key part of defining and entrepreneurial community. His list of cultural attributes is an integral part of Silicon Valley. Give before you get, (in the valley we call this the “pay it forward” culture.) Everyone is a mentor, so share your knowledge and give back. Embrace weirdness, describes a community culture that accepts differences. (Starting post World War II the San Francisco bay area became a magnet for those wanting to embrace alternate lifestyles. For personal lifestyles people headed to San Francisco. For alternate business lifestyles they went 35 miles south to Silicon Valley.)
I was surprised to note that the biggest cultural meme of Silicon Valley didn’t make his Community Culture chapter - failure equals experience.
Broadening the Startup Community
Feld closes by highlighting some of the issues faced by a startup community in Boulder. The one he calls Parallel Universes notes that there may be industry specific (biotech, clean tech etc.) startup communities sitting side-by-side and not interacting with each other.
He then busts the myths clusters tell themselves; “lets be like Silicon Valley” and the “there’s not enough capital here.”
Quibbles
There’s data that that seems to indicate a few of Feld’s claims about about the limited role of venture, universities and governments might be overly broad (but doesn’t diminish his observation that they’re feeders not leaders.) In addition, while Silicon Valley was a series of happy accidents, other national clusters have extracted its lessons and successfully engineered on top of those heuristics. And while I might have misread Feld’s premise about local venture capital, but it seems to be, “if there isn’t a robust venture capital in your region it’s because there isn’t a vibrant entrepreneurial community with great startups. As venture capital exists to service startup when great startups are built investors will show up.” Wow.
Finally, local government top-down initiatives are not the only way governments can incentivize entrepreneurial efforts. Some like the National Science Foundation Innovation Corps have had a big bang for little bucks.
Summary
Entrepreneurship is rising in almost every major city and region around the world. I host at least one region a week at the ranch and each of these regions are looking for a roadmap. Startup Communities is it. It’s a strategic, groundbreaking book and a major addition to what was missing in the discussion of how to build a regional cluster. I’m going to be quoting from it liberally, stealing from it often, and handing it out to my visitors.
Lessons Learned
- Entrepreneurs lead a startup community while everyone else feeds the community
- Feeders include the government, universities, investors, mentors, service providers and large companies
- Continual activities and events are essential to engage all participants
- Top-down government-driven clusters are an oxymoron
- Building a regional entrepreneurial culture is critical
Filed under: Big Companies versus Startups: Durant versus Sloan, Secret History of Silicon Valley, Teaching, Venture Capital | 15 Comments »
The Lean LaunchPad Online
Posted on September 6, 2012 by steveblank
You may have read my previous posts about the Lean LaunchPad class taught at Stanford, Berkeley, Columbia, Caltech and for the National Science Foundation.
Now you too can take this course.
I’ve worked with the Udacity, the best online digital university on a mission to democratize education, to produce the course. They’ve done an awesome job.
The course includes lecture videos, quizzes and homework assignments. Multiple short video modules make up each 20-30 minute Lecture. Each module is roughly three minutes or less, giving you the chance to learn piece by piece and re-watch short lesson portions with ease. Quizzes are embedded within the lectures and are meant to let you check-in with how completely you are digesting the course information. Once you take a quiz, which could be a multiple-choice quiz or a fill in the blank quiz, you will receive immediate feedback.
Sign up here
——–
Why This Class?
Ten years ago I started thinking about why startups are different from existing companies. I wondered if business plans and 5-year forecasts were the right way to plan a startup. I asked, “Is execution all there is to starting a company?”
Experienced entrepreneurs kept finding that no business plan survived first contact with customers. It dawned on me that the plans were a symptom of a larger problem: we were executing business plans when we should first be searching for business models. We were putting the plan before the planning.
So what would a search process for a business model look like? I read a ton of existing literature and came up with a formal methodology for search I called Customer Development.
That resulted in a new process for Search: Customer Development + traditional product management/Waterfall Engineering. It looked like this:
This meant that the Search for a business model as a process now could come before execution. So I wrote a book about this called the Four Steps to the Epiphany.
And in 2003 the Haas Business School at U.C. Berkeley asked me to teach a class in Customer Development. With Rob Majteles as a co-instructor, I started a tradition of teaching all my classes with venture capitalists as co-instructors.
In 2004 I funded IMVU, a startup by Will Harvey and Eric Ries. As a condition of my investment I insisted Will and Eric take my Customer Development class at Berkeley. Having Eric in the class was the best investment I ever made. Eric’s insight was that traditional product management and Waterfall development should be replaced by Agile Development. He called it the “Lean Startup.”
Meanwhile, I had said startups were “Searching” for a business model, I had been purposefully a bit vague about what exactly a business model looked like. For the last two decades there was no standard definition. That is until Alexander Osterwalder wrote Business Model Generation.
This book was a real breakthrough. Now we understood that the strategy for startups was to first search for a business model and then after you found it, put together an operating plan.
Now we had a definition of what it was startups were searching for. So business model design + customer and agile development is the process that startups use to search for a business model.
And the organization to implement all this was not through traditional sales, marketing and business development groups on day one. Instead the founders need to lead a customer development team.
And then to get things organized Bob Dorf and I wrote a book, The Startup Owners Manual that put all these pieces together.
But then I realized rather than just writing about it, or lecturing on Customer Development, we should have a hands-on experiential class. So my book and Berkeley class turned into the Lean LaunchPad class in the Stanford Engineering school, co-taught with two VC’s – Jon Feiber and Ann Miura-Ko. And we provided dedicated mentors for each team.
Then in the fall of 2011, the National Science Foundation read my blog posts on the Stanford version of the Lean LaunchPad class. They said scientists had already made a career out of hypotheses testing, and the Lean LaunchPad was simply a scientific method for entrepreneurship. They asked if I could adapt the class to teach scientists who want to commercialize their basic research. I modified the class and recruited another great group of VC’s and entrepreneurs – Jim Hornthal, John Burke, Jerry Engel,Bhavik Joshi and Oren Jacob – to teach with me.
We taught the first two classes of 25 teams each, and then in March of 2012 trained faculty from Georgia Tech and the University of Michigan how to teach the class at their universities. Georgia Tech and the University of Michigan faculty then taught 54 teams each in July of this year and will teach another 54 teams in October.
We then added four more schools – Columbia, Caltech, Princeton and Hosei – where our team taught the Lean LaunchPad. We also developed a 5-day version of the class to complement the full semester and quarter versions.
Then last month we partnered with NCIIA and taught 62 college and university educators in our first Lean LaunchPad Educators Program.
And now we’ve spent weeks in the Udacity studio putting the lecture portion of the Lean LaunchPad class online.
Sign up and find out how to start a company!
Filed under: Business Model versus Business Plan, Customer Development, Lean LaunchPad, Teaching | 53 Comments »
The Lean LaunchPad Class Online
Posted on August 24, 2012 by steveblank
Filed under: Customer Development, Lean LaunchPad, Teaching | 24 Comments »
Making a Dent in the Universe – Results from the NSF I-Corps
Posted on June 11, 2012 by steveblank
Our goal teaching for the National Science Foundation was to make a dent in the universe. 
Could we actually teach tenured faculty how to turn an idea into a company? And if we did, could it change their lives?
We can now answer these questions.
Hell yes.
———–
The Lean LaunchPad class for the National Science Foundation (NSF)
Over the last 6 months, we’ve been teaching a version of the Lean LaunchPad class for the National Science Foundation Innovation Corps. We’ve taught two cohorts: 21 teams ending in December 2011, and 24 teams ending in May 2012. In July 2012 we’ll teach 50 more teams, and another 50 in October. Each 3-person team consists of a Principal Investigator, an Entrepreneurial Lead and a Mentor.
The Principal Investigator (average age of ~45) is a tenured faculty running their own research lab who has had an active NSF grant within the last 5 years. The Principal Investigator forms the team by selecting one of his graduate students to be the Entrepreneurial Lead.
The Entrepreneurial Lead is a graduate student or post doc (average age ~ 28) who works within the Principal Investigator’s lab. If a commercial venture comes out of the I-Corps, it’s more than likely that the Entrepreneurial Lead will take an active role in the new company. (Typically Principal Investigators stay in their academic role and continue as an advisor to the new venture.)
Mentors (average age ~50) are an experienced entrepreneur located near the academic institution and has experience in transiting technology out of academic labs. Mentors are recommended by the Principal Investigator (who has worked with them in the past) or they may be a member of the NSF I-Corps Mentor network. Some mentors may become an active participant in a startup that comes out of the class.
The NSF I-Corps: Class Goals
The NSF I-Corps Lean LaunchPad class has different goals then the same class taught in a university or incubator. In a university, the Lean LaunchPad class teaches a methodology the students can use for the rest of their careers. In an incubator, the Lean LaunchPad develops angel or venture-funded startups.
Unlike an incubator or university class, the goal of the NSF I-Corps is to teach researchers how to move their technology from an academic lab into the commercial world. A successful outcome is a startup or a patent or technology license to a U.S. company.
(While many government agencies use Technology Readiness Levels to measure a projects technical maturity, there are no standards around Business Maturity Levels. The output of the NSF I-Corps class provides a proxy.)
The NSF I-Corps doesn’t pick winners or losers. It doesn’t replace private capital with government funds. Its goal is to get research the country has already paid for educated to the point where they can attract private capital. (It’s why we teach the class with experienced Venture Capitalists.)
Teaching Objectives
Few of the Principal Investigators or Entrepreneurial Leads had startup experience, and few of the mentors were familiar with Business Model design or Customer Development.
Therefore, the teaching objectives of the I-Corps class are:
1) Help each team understand that a successful company was more than just their technology/invention by introducing all the parts of a business model (customers, channel, get/keep/grow, revenue models, partners, resources, activities and costs.)
2) Get the teams out of the building to test their hypotheses with prospective customers. The teams in the first cohort averaged 80 customer meetings per team; the second cohort spoke to an average of 100.
3) Motivate the teams to pursue commercialization of their idea. The best indicators of their future success were whether they a) found a scalable business model, b) had an interest in starting a company, and c) would pursue additional funding.
Methodology
The National Science Foundation worked with NCIIA to establish a baseline of what the students knew before the class and followed it up with a questionaire after the class.
While my experience in teaching students at Stanford, Berkeley and Columbia told me that this class was an effective way to teach all the parts that make up a startup, would the same approach work with academic researchers?
Here’s what they found.
Results
Teams came into the class knowing little about what parts made up a company business model (customers, channel, get/keep/grow, revenue models, partners, resources, activities and costs.) They left with very deep knowledge.
I-Corps teams spent the class refining their business model and minimum viable product. By the end of the class:
- Over 95% believed that they found a scalable business model.
- 98% felt that they had found “product/market fit”.
The class increased everyones interest in starting a company. 92% said they were going to go out and raise money – either from the NSF or with private capital. (This was a bit astonishing. Given that most of them didn’t know what a startup was coming in. These are new jobs being created.)
One of the unexpected consequences of the class was its effect on the Principal Investigators, (almost all tenured professors.) A surprising number said the ideas for the class will impact their research, and 98% of all of the attendees said it was going to be used in their careers.
Another unexpected result was the impact the class had on the professors own thinking about how they would teach their science and engineering students. We got numerous comments about “I’m going to get my department to teach this.”
What’s Next
The NSF and NCIIA understand that the analysis doesn’t end by just studying the results of each cohort. We need to measure what happens to the teams and each of the team members (Principal Investigator, Entrepreneurial Lead and Mentor) over time. It’s only after a longitudinal study that will take years, can we see how deep of a dent we made in the universe.
But I think we’ve made a start.
Acknowledgements
Thanks to the team at NCIIA that provided the questionaire and analytical data (Angela Shartrand) and the logistical support (Anne Hendrixson) to run these NSF classes.
The National Science Foundation (Errol Arkilic, Babu DasGupta) took a chance at changing the status quo.
Members of Congress on both sides of the aisle who’ve realized cracking the code on how to teach starting companies means a brighter day for the future of all jobs in the United States – not just tech startups.
And thanks to the venture capitalists and entrepreneurs who volunteer their time for their country; Jon Feiber from MDV, John Burke from True Ventures, Jim Hornthal from CMEA, Jerry Engel from Monitor Ventures (and the U.C. Berkeley Haas Business School,) Oren Jacob from ToyTalk and Lisa Forssell of Pixar.
And to our new teaching teams at University of Michigan and Georgia Tech – It’s your turn.
Lessons Learned
- The Lean LaunchPad class (Business Model design+Customer Development+ extreme hands-on) works
- They leave knowing:
- how to search for a business model (customers, channel, get/keep/grow, revenue models, partners, resources, activities and costs,)
- how to find product/market fit, and a scalable business model
- It has the potential to change careers, lives and our country
Filed under: Customer Development, Lean LaunchPad, Teaching | 20 Comments »
Entrepreneurship for the 99%
Posted on June 4, 2012 by steveblank
This is a guest post from Jerry Engel, the Faculty Director of the National Science Foundation Innovation Corps (and the Founding Faculty Director of the Lester Center for Entrepreneurship at UC Berkeley.)
———–
The 99%
As the morning fog burns off the California coast, I am working with Steve Blank, preparing for the Lean LaunchPad Faculty Development Program we are running this August at U.C. Berkeley. This is a 3-day program for entrepreneurship faculty from around the world how to teach entrepreneurship via the Lean LaunchPad approach (business model canvas + customer development) and bring their entrepreneurship curriculums into the 21st century. Over the past couple of years this Lean LaunchPad model has proven immensely effective at Berkeley, Stanford, Columbia and, of course, the National Science Foundations Innovation-Corps program. The data from the classes seem to indicate that we’ve found have a method how to make scalable startups fail less.
While we’re excited by the results, we’ve realized that we’ve been solving the problem for the 1% of new ventures that are technology startups. The reality is that the United States is still a nation of small businesses. 99.7% of the ~6 million companies in the U.S. have less than 500 people and they employ 50% of the 121 million workers getting a paycheck. They accounted for 65 percent (or 9.8 million) of the 15 million net new jobs created between 1993 and 2009. And while they increasingly use technology as a platform and/or a way of reaching and managing customers, most are in non-tech businesses (construction, retail, health care, lodging, food services, etc.)
While we were figuring out how to be incredibly more efficient in building new technology startups, three out out of 10 new small businesses will fail in 2 years, half fail within 5 years. The tools and techniques available to small businesses on Main Street are the same ones that were being used for the last 75 years.
Therefore, our remaining challenges are how to make them fail less – and how can we make the Lean LaunchPad approach relevant to the rest of the 99% of startups.
Serendipity
A serendipitous answer came to us around noon. His name is Alex Lawrence. Alex, vice provost for Innovation & Economic Development at Weber State University in Utah and completing his first year of teaching entrepreneurship. Alex is a successful serial entrepreneur –with the same drive and energy of many we have known here in Silicon Valley, but different. His nine startups have ranged from franchised fruit juice shops to Lendio a financial services company for small businesses. Alex had been recruited back by his Alma Matter to create an entrepreneurship program. In fact he had just been charged with creating an entrepreneurship minor – five or six courses for students of any major at the University that would help prepare them for the challenge of starting their own businesses.
Alex’s first insight was that the traditional “how to write a business plan” was as obsolete for Main Street as it is for Silicon Valley. So he had adopted Steve’s Lean LaunchPad class and was using The Startup Owner’s Manual as his core text. He had contacted us seeking advice on developing his curriculum, and it just seemed natural to invite him out to the ranch for a deeper dive.
As we dug into learning about Alex’s teaching experience we naturally asked him about the ventures his own students were creating. It was clear Alex was a bit apologetic; photo studios, online retail subscriptions to commodity household and personal hygiene products, etc. Alex explained that in his community building a successful venture that generated nice cash flows – not IPO’s – were the big win. To his students these were not “small businesses”, but ‘their businesses’, their livelihoods and their opportunities to create wealth and independence for themselves and their families.
Mismatch for Main Street
As we walked out to the pond, Alex explained that while he found the teachings of the Lean LaunchPad directly applicable and effective, there was a mismatch for his students in the size of the end goal (a great living versus a billion dollar IPO) and the details of the implementation of the business model (franchise and multilevel marketing versus direct sales, profit sharing versus equity for all, family and SBA loans versus venture capital, etc.)
Sitting by the pond we had a second epiphany: we could easily adjust the Lean LaunchPad class to bring 21st century entrepreneurship techniques to ‘Main Street’. To do this we needed to do is change the end goals and implementation details to match the aspirations and realities that these new small businesses face.
We called this Mainstream Entrepreneurship.
Mainstream Entrepreneurship
Mainstream Entrepreneurship recognizes that with the Lean LaunchPad class we now have a methodology of making small businesses fail less. That accelerating business model search and discovery and using guided customer engagement as a learning process, we could help founders of mainstream businesses just like those starting technology ventures.
For the rest of the afternoon, Steve and I brainstormed with Alex about how he could take his 20 years of entrepreneurial small business experience and use the Business Model Canvas and Customer Development to create a university entrepreneurship curriculum and vocabulary for the mainstream of American Business.
We think we got it figured out.
Alex Lawrence will be one of the presenters at the Lean LaunchPad Educators Program August 22-24th in Berkeley.
Lessons Learned
- Small businesses make up 99.7% of U.S. companies
- “How to write a business plan” is as obsolete for Main Street as it is for Silicon Valley
- Using the Lean LaunchPad (the business model canvas and Customer Development) are the right tools
- Small businesses have different end goals and implementation details
- We can adapt/modify the Lean LaunchPad approach to embrace these goals/details
Filed under: Customer Development, Lean LaunchPad, Teaching | 39 Comments »
Why Innovation Dies
Posted on May 1, 2012 by steveblank
Faced with disruptive innovation, you can be sure any possibility for innovation dies when a company forms a committee for an “overarching strategy.”
—–
I was reminded how innovation dies when the email below arrived in my inbox. It was well written, thoughtful and had a clearly articulated sense of purpose. You may have seen one like it in your school or company.
Skim it and take a guess why I first thought it was a parody. It’s a classic mistake large organizations make in dealing with disruption.
The Strategy Committee
Faculty and Staff:
We believe online education will become increasingly important at all levels of the educational experience. If our school is to retain its current standards in terms of access and excellence we think it is of paramount importance that we develop an overarching campus strategy that enables and supports online innovation.
We believe our Departments play an essential leadership role in the design and implementation of online offerings. However, we also want to provide guidance and support and ensure that campus goals are met, specifically ensuring that our online education efforts align with our mission, values and operational requirements.
To this end, we are convening a Strategy Committee that is charged with overseeing our efforts and accelerating implementation. The responsibilities of the group will be to provide overall direction to campus, make decisions concerning strategic priorities and allocate additional resources to help realize these priorities. Because we anticipate that most of the innovation in this area will occur at the school/unit level we underscore that the purpose of the Strategy Committee is to provide campus-level guidance and coordination, and to enable innovation. The Strategy Committee will also be responsible for reaching out to and receiving input from the Presidents Staff and the Faculty Senate.
The Strategy Committee will be comprised of Mark Time, Nick Danger, Ralph Spoilsport, Ray Hamberger, Audrey Farber, Rocky Rococo, George Papoon, Fred Flamm, Susan Farber, and Clark Cable.
A Policy Team, which is charged with coordinating with the schools/unit to develop detailed implementation plans for specific projects, will report to the Strategy Committee. The role of the Policy Team will be to develop a detailed strategic framework for the campus, oversee the development of shared resources, disseminate best practices, create an administrative infrastructure that provides consistent financial and legal expertise, and consult with relevant campus groups: and the the Budget Office. The Policy Team will be led by two senior campus leaders, one from the academic side and one from the administration side.
We are extremely pleased that Dean TIrebiter has accepted the administrative lead role of the Policy Team. Dean Tirebiter brings to this position a deep knowledge of the online environment. He will be helping to identify a member of our Faculty to serve as the academic lead of the Policy Team.
The Strategy Committee will be meeting for a half-day retreat at Morse Science Hall in the coming weeks to begin work. We will be sending out an update to faculty and following this retreat, so stay tuned for further updates.
Sincerely,
President Peter Bergman
We Can Figure it Out in A Meeting
The memo sounds thoughtful and helpful. It’s an attempt to get all the “right” stakeholders in the room and think through the problem.
One useful purpose a university committee could have had was figuring out what the goal of going online was. It could have said “the world expects us to lead so lets get together and figure out how we deal with online education.” Our goal(s) could be:
- Looking good
- Doing good for all [or at least citizens of California]
- Doing well by our enrolled students
- Fixing our business model to fix our budget crisis
- Having a good football team – or at least filling the stadium
- Attracting donations
- Attracting faculty
- Oh and yes – building an efficient, high quality education machine
But the minute the memo started talking about a Policy Team developing detailed implementation plans, it was all over.
The problem is that the path to implementing online education is not known. In fact, it’s not a solvable problem by committee, regardless of how many smart people in the room. It is a “NP complete” problem – it is so complex that figuring out the one possible path to a correct solution is computationally incalculable. (See the diagram below.)
If you can’t see the diagram above click here.
Innovation Dies in Conference Rooms
The “lets put together a committee” strategy fails for four reasons:
- Online education is not an existing market. There just isn’t enough data to pick what is the correct “overarching strategy”.
- Making a single bet on a single strategy, plan or company in a new market is a sure way to fail. After 50-years even the smartest VC firms haven’t figured out how to pick one company as the winner. That’s why they invest in a portfolio.
- Committees protect the status quo. Everyone who has a reason to say “No” is represented.
- Dealing with disruption is not solved by committee. New market problems call for visionary founders, not consensus committee members.
My bet is that there will be more people involved in this schools Strategy Committee then in the startups that find the solution.
In a perfect world, the right solution would be a one page memo encouraging maximum experimentation with the bare minimum of rules (protecting the schools brand and the applicable laws.)
Lessons Learned
- Innovation in New Markets do not come from “overarching strategies”
- It comes out of opportunity, chaos and rapid experimentation
- Solutions are found by betting on a portfolio of low-cost experiments
- With a minimum number of constraints
- The road for innovation does not go through committee
Filed under: Big Companies versus Startups: Durant versus Sloan, Customer Development, Teaching | 45 Comments »
Five Days to Change the World – The Columbia Lean LaunchPad Class
Posted on April 28, 2012 by steveblank
We’ve taught our Lean LaunchPad entrepreneurship class at Stanford, Berkeley, Columbia and the National Science Foundation in 8 week, 10 week and 12 week versions. We decided to find out what was the Minimum Viable Product for our Lean LaunchPad class.
Could students get value out of a 5-day version of the class?
The Setup
At the invitation of Murray Low at the Entrepreneurship Center in the Columbia Business School, we went to New York to find out. We were going to teach the Lean LaunchPad class in 5-days. I was joined by my Startup Owners Manual co-author Bob Dorf, Alexander Osterwalder (author of Business Model Generation) and Fred Wilson of Union Square Ventures.
As we’ve done in previous classes, the students form teams and come up with an idea before the class.
Potential students watched an on-line video of Osterwalder explaining the Business Model Canvas and then applied for admission to the class with a fully completed business model canvas. Here are two examples:
If you can’t see the presentation above, click here.
If you can’t see the presentation above, click here.
The Class
We had 69 students in 13 teams. Instead of going around the room introducing themselves, each group hit the ground running by presenting their canvas.
The class organization was pretty simple:
- textbooks were The Startup Owners Manual and Business Model Generation
- team presentations 9-12:30 (with continual instructor critiques)
- working lunch 12:30-1:30 (with office hours)
- lecture 1:30-3:00
- get out of the building 3:00-on
- repeat for 5-days
Resources
The 5-day syllabus is here.
All 13 teams Day 1 presentations are here.
Day 2 presentations here.
Day 3 presentations here.
Day 4 presentations here.
Day 5 presentations here.
The Outcome
After 5 days the teams collectively had ~1,200 face-to-face customer interviews, with another 1,000+ potential customers surveyed on-line.
Take a look at the same two teams presentations (compare it to their slides above):
If you can’t see the presentation above, click here.
If you can’t see the presentation above, click here.
Lessons Learned:
- A five day Lean Launchpad Class is definitely worth doing.
- The Business Model Canvas + Customer Development works even in this short amount of time
- However we were in NYC where customer density was high.
- As we’ve already found, this class needs to be taught as a joint engineering/mba class
- Next time we teach we will complete the transition to a flipped classroom:
- Have no lectures during class. We’ll offer video lectures, and use the time for class labs built around detailed analysis of 2 or 3 canvas pivots
- Make teams use Salesforce, or some similar package, to track all contacts/customer calls
Filed under: Business Model versus Business Plan, Customer Development, Lean LaunchPad, Teaching | 17 Comments »
The National Science Foundation Innovation Corps – What America Does Best
Posted on March 26, 2012 by steveblank
We ran the first National Science Foundation Innovation Corps class October to December 2011.
63 scientists and engineers in 21 teams made ~2,000 customer calls in 10 weeks, turning laboratory ideas into formidable startups. 19 of the 21 teams are moving forward in commercializing their technology.
Watching the final presentations it was clear that the results were way past our initial expectations (comments from mentors as well as pre- and post-class survey data suggested that most of the teams learned more in two months than others had in two years.) So much so that the NSF decided to scale the Innovation Corps program.
In 2012 the NSF will put 150 teams of the best scientists in the U.S. through the Lean Launchpad class. And to help teach these many teams, the NSF will recruit other universities that have engineering entrepreneurship programs to become part of the Innovation Corps network.
Congress Gets It
In-between the 2011 pilot class and the first NSF class of 2012, I got a call from Congressman Dan Lipinski. He sits on the House committee that oversees the NSF - the Science, Space and Technology committee (a place where his engineering degree and PhD comes in handy.) He had read my blog posts about the NSF Innovation Corps and was interested in how the first class went. He wanted to fly out to Stanford and sit in the Lean LaunchPad class about to start in the engineering school.
While I’ve had visitors in my classes before, having a congressman was a first. He showed up with no press in-tow, no entourage, just a genuine search for understanding of whether this program was a waste of taxpayer money or good for the country.
He asked tough questions about why the government not private capital should be doing this. I explained that the goal of the Innovation Corps was to bridge what the NSF calls the “ditch of death” – the gap between when NSF research funding runs out and when a team is credible enough (with enough customer and market knowledge) to raise private capital or license/partner with existing companies. The goal was not to replace private capital but to help attract it. The amount of money spent on the Innovation Corps would be about 1/4 of one percent of the $7.373 billion NSF budget, but it would leverage the tens of billions basic research dollars already invested. It’s payoff would be disproportionately large for the country. It’s one of the best investments this country can make for keeping the U.S. competitive and creating jobs.
After class the Congressman joined the teaching team at our favorite pizza place for our weekly post-class debrief.
If you like science, technology or entrepreneurship, this guy is the real deal. He gets it.
“Innovation, jobs and entrepreneurship” have become popular buzzwords in an election year. But it was pretty amazing to see a congressman jump on a plane to actually find out if he can help the country do so. He issued this press release asking Congress to fully fund the Innovation Corps when he came back to Washington.
The National Science Foundation Innovation Corps combines the best of what the U.S. government, American researchers in academia and risk capital can do together. If we’re correct, we can compress the time for commercializing scientific breakthroughs and reduce the early stage risks of these new ventures. This means more jobs, new industries and a permanent edge for innovation in the United States.
———
The 3-person teams consisted of Principal Investigators (PI’s), mostly tenured professors (average age of 45,) whose NSF research the project was based on. The PI’s in turn selected one of their graduate students (average age of 30,) as the entrepreneurial lead. The PI and Entrepreneurial Lead were supported by a mentor (average age of 50,) with industry/startup experience.
This was most definitely not the hoodie and flip-flop crowd.
Part one of the posts on the NSF Innovation Corps is here, part two here. Syllabus for the class is here. Textbook is here.
Here are some of the final Lessons Learned presentations and team videos:
Akara Solutions: Flexible, Low Cost Cooling Technology for LED Lighting
Principal Investigator: Satish Kandlikar Rochester Institute of Technology
If you can’t see the video above, click here.
If you can’t see the presentation above, click here.
Semiconductor-Based Hydrogen and Hydrocarbon Sensors
Principal Investigator: Lisa Porter Carnegie-Mellon University
If you can’t see the video above, click here.
If you can’t see the presentation above, click here.
Pilot Production Of Large Area Uniform Single-Crystal Graphene Films
Principal Investigator: Alan Johnson University of Pennsylvania
If you can’t see the video above, click here.
If you can’t see the presentation above, click here.
Radiotracer Synthesis Commercialization
Principal Investigator: Stephen DiMagno University of Nebraska-Lincoln
If you can’t see the video above click here.
If you can’t see the presentation above, click here.
Commercialization of an Engineered Pyrolysis Blanket for the Conversion of Forestry Residues to Soil Amendments and Energy Products
Principal Investigator: Daniel Schwartz University of Washington
If you can’t see the video above, click here
If you can’t see the presentation above, click here.
Photocatalysts for water remediation
Principal Investigator: Pelagia Gouma SUNY at Stony Brook
If you can’t see the video above, click here.
If you can’t see the presentation above, click here.
The other teams were equally interesting. Here are links to their Lessons Learned presentations.
IDecideFast – A web-based application for effective decision making for the layperson
Principal Investigator: Ali Abbas University of Illinois at Urbana-Champaign
Silicon Terahertz Electronics
Principal Investigator: Michael Shur Rensselaer Polytechnic Institute
Standoff detection of explosives using novel signal-amplifying nanocomposite and hand-held UV light
Principal Investigator: Yu Lei University of Connecticut
MEMS-based drug infusion pumps
Principal Investigator: Ellis Meng University of Southern California
TexCone – Laser-Generated Surface Textures for Anti-Icing and Sun-Light-Trapping Applications
Principal Investigator: Mool Gupta University of Virginia
Concentric Technology
Principal Investigator: Walter Besio University of Rhode Island
Hand-Held Tonometer for Transpalpebral Intraocular Pressure Measurement
Principal Investigator: Eniko Enikov University of Arizona
Artificial Membrane-based Ion Channel Screening
Principal Investigator: Jacob Schmidt University of California-Los Angeles
Privacy-Preserving Location Based Services
Principal Investigator: Nan Zhang George Washington University
MySkinTone: A breakthrough technology and product for skin melanin evaluation
Principal Investigator: Michael Silevitch Northeastern University
Mobidemics: Using Mobile Gaming for Healthcare
Principal Investigator: Nilanjan Banerjee University of Arkansas
SmartMenu
Principal Investigator: Elizabeth Mynatt (mynatt@cc.gatech.edu); Georgia Tech Research Corporation
Sweet Sensors – Portable sensors using widely available personal glucose monitor
Principal Investigator: Yi Lu University of Illinois at Urbana-Champaign
SwiftVax – A Green Manufacturing Platform for Faster, Cheaper, and Scalable Vaccine Manufacturing
Principal Investigator: Karen McDonald University of California-Davis
Lessons Learned
- Yes, entrepreneurship can be taught
- No, there’s no age limit
- We now know how to reduce customer and market risk for new ventures
- The combination of government, researchers in academia and risk capital make a powerful accelerator for technology commercialization
- There’s at least one congressman who understands it
Filed under: Customer Development, Lean LaunchPad, Teaching, Technology | 13 Comments »
Stanford 2012 Lean LaunchPad Presentations – part 2 of 2
Posted on March 14, 2012 by steveblank
Today, the second half of the Stanford Engineering Lean LaunchPad Class gave their final presentations. Here are the final four (the first five are here.)
Team ParkPoint Capital
This team spoke face-to-face with 326 customers. As often happens, this team came into class convinced that their market research proved that their business was providing credit to underbanked customers. 8 weeks later they ended up as a financial service provider for immigrants. Lots of learning and pivots on the way.
If you can’t see the slide presentation above, click here.
The ParkPoint Capital customer discovery narrative blog is here.
We thought the team summarized their lessons learned well:
If you can’t see the image above, click here.
Team DentalOptics
Team DentalOptics spoke face-to-face with 72 customers. Their journey was from a lighting solution for dentists to an automated way to test for periodontal disease. How they got to their destination was truly amazing.
If you can’t see the slide presentation above, click here.
The DentalOptics customer discovery narrative blog is here.
Team MiCasa
They spoke to 105 customers and surveyed 98 more.
You can watch as this team pivots through Customer Segments by clicking through their business model canvases at the end of presentation. It is the first film-strip of entrepreneurship in action.
If you can’t see the slide presentation above, click here.
The MiCasa customer discovery narrative blog is here
Team ZiiLion
Interviewed 154 customers in China plus surveyed another 48.
This team was trying to do something extremely difficult. Create an app for Renren (a Chinese version of Facebook) for event planning. And do it while in school in the U.S. Lots of learning and Pivots here.
If you can’t see the slide presentation above, click here.
The Ziilion customer discovery narrative blog is here.
———
Congratulations to all the teams. They taught us a lot.
Stanford e245 2012 class photo
Next week the Lean LaunchPad class will be taught to 25 teams for the National Science Foundation Innovation Corps. And later in the week we’ll be sharing what we learned with other entrepreneurial educators it at the NCIIA conference. Then in April we’ll be teaching Corporate Entrepreneurship at Columbia University.
Lessons Learned
- Class is a mix of engineering students and MBA’s
- Students apply as preformed teams
- Application to the class is the teams business model canvas
- Curriculum = business model canvas + customer development
- Minimal lecture, maximum experiential immersion
- Relentless customer visits (10-20 a week)
- On-line journal to document their customer discovery narrative
- One mentor (VC or experienced entrepreneur) per team
- Mandatory office hours
- Weekly in-class presentations for all teams
- Weekly critiques of team customer discovery progress
- Workshop on how to present a story-arc and narrative
- Lean LaunchPad teaching guide
Filed under: Business Model versus Business Plan, Customer Development, Lean LaunchPad, Teaching | 2 Comments »
Stanford 2012 Lean LaunchPad Presentations – part 1 of 2
Posted on March 7, 2012 by steveblank
Today, the first half of the Stanford Engineering Lean LaunchPad Class gave their final presentations. Here are the first five. (Part two is here.)
It Feels Like 20 Years Ago Today
It’s hard to believe it’s only been a year since we taught the first 10 teams in the Stanford Lean LaunchPad class. To share what we learned, we blogged each of those class sessions, (all the slides can be found here.) Since then we’ve taught an additional 50 Lean LaunchPad teams: 21 teams for the National Science Foundation (NSF) Innovation Corps, 11 teams for a joint Berkeley/Columbia MBA class, another 9 for a Berkeley MBA/Engineering class, and now 9 more teams in this Stanford Engineering Lean LaunchPad Class class.
Later this month, the next 25 National Science Foundation Innovation Corps teams will show up – but this time with reinforcements. The NSF has selected the best entrepreneurship teaching teams from two major universities and they will be joining the class. The goal is for them is to observe this class, then host and teach the next round of 50 NSF Innovation Corps scientist/engineer teams in July. The process will repeat itself, quarter by quarter – new students, new University entrepreneurship teaching teams.
We’ll teach over 175 NSF Innovation Corps teams in the Lean LaunchPad course in 2012. While at the same time spreading the Lean LaunchPad entrepreneurship curriculum to campuses across the United States.
The 2012 Stanford Lean LaunchPad Presentations
The class is intensely and deliberately experiential to develop the mindset, reflexes, agility and resilience an entrepreneur needs to search for certainty in a chaotic world. Students were going to get a hands-on experience in how to start a new company. The premise of the class is that startups, are not about executing a plan where the product, customers, channel are known. Startups are in fact only temporary organizations, organized to search–not execute–for a scalable and repeatable business model.
Yet this isn’t an incubator. We trying to teach students a methodology that combines customer development, agile development, business models and pivots. (The slides and syllabus here describe the details of the class.) Our goal is to teach them the art, science and strategy of entrepreneurship that will forever change how they view early stage ventures.
And do it in 8 weeks.
Team EngineKites
A kite-boarding startup? Only in California! This team spoke face-to-face with 50+ end users, 3 manufacturers, 25 potential partners, 22 domain experts and surveyed an additional 115 customers. And they got to the beach a lot. Don’t miss their video of the product below.
If you can’t see the slide presentation above, click here.
If you can’t see the video above, click here
The EngineKites customer discovery narrative blog is here.
Team Sync
Team Sync spoke face-to-face with 74 customers, 10 experts and surveyed another 103 customers.
If you can’t see the slide presentation above, click here.
The Sync customer discovery narrative blog is here.
Team Nudge/Dynamo
This team won the award for the most pivots in the class. They had face-to-face interviews with 252 customers + 10 partner interviews + 76 surveyed.
Loved the “evolution” slide.
If you can’t see the slide presentation above, click here.
The Nudge/Dyanmo customer discovery narrative blog is here
Team GameSpeed
These guys hold the record for the number of customers touched 4,000! 147 face-to-face or phone interviews.
If you can’t see the slide presentation above, click here.
The GameSpeed customer discovery narrative blog is here.
Team ColorWheels
This team was trying to solve a hard problem – getting girls engaged in science and engineering. They spoke to 294 people: 69 parents, 110 kids, 6 high school girls 32 experts, 6 manufacturers, and surveyed an addtional 68 parents.
If you can’t see the presentation above, click here.
The ColorWheels customer discovery narrative blog is here.
We Got Smarter Too
One of the great things about the class is that the curriculum is evolving as fast as the teams are learning. As a teaching team we’ve learned a ton of how to best select teams, so we now insist that they come in as preformed teams. We hold mixers a month or two in advance to help facilitate the process. It has made a dramatic difference in team efficiency and cohesion.
We have the students formally apply for the class by filling out a business model canvas. And at the first class they introduce themselves and their teams by presenting the canvas. This moved the learning up by one entire class session since we can now hit the ground running.
Given how important the students work in customer discovery outside the building was, we made each team keep an online journal on each step of their progress. Since the teaching team read each of their narrative before class and office hours, it made their in-class presentations short and efficient.
We realized that students needed help turning all that they were learning from customers into a coherent and crisp presentation. So we offered a special evening workshop on how to present a story-arc and narrative.
We’ve been experimenting in other ways – trying to figure out how to “bubble-up” some of the customer discovery data onto the canvas with red/yellow/green dots you see on some of the business model canvas slides. We suggested that teams talk about their hypothesis tests, draw diagrams of product flows through the channel and let us know who the customer segment is with a “customer archetype” slide.
We’re about to move our class text to The Startup Owners Manual and put together a draft of a standard Lean LaunchPad teaching guide.
Finally, we’ve been paring the lectures back to the absolute minimum to impart the information necessary for the teams to move forward, but leaving more time for us to provide feedback and critique of their weekly presentations. We’re actively considering running an experiment of making the lectures an on-line homework requirement (with on-line quizzes to make sure they view the material.)
None of this would be possible without the two VC’s who volunteer their time to teach this Stanford class with me: Jon Feiber of Mohr Davidow Ventures and Ann Miura-ko of Floodgate,
And we had the help of Lisa Forssell, director of technical artists from Pixar, who taught the “how to present class” and Thomas Haymore our indefatigable Teaching Assistant and our team of mentors.
And hats off to Kathy Eisenhardt and Tom Byers of the Stanford Technology Ventures Program who gave us the freedom to invent and teach the class.
—–
The rest of the teams present next week. We’ll post their slides in part 2.
Filed under: Business Model versus Business Plan, Customer Development, Lean LaunchPad, Teaching | 10 Comments »
Search versus Execute
Posted on March 5, 2012 by steveblank
One of the confusing things to entrepreneurs, investors and educators is the relationship between customer development and business model design and business planning and execution.
When does a new venture focus on customer development and business models? And when do business planning and execution come into play?
Here’s an attempt to put this all in context.
Don’t Throw the Tomatoes
I was in Washington D.C. last week presenting at the ARPA-E conference. I spent the next day working with the National Science Foundation on the Innovation Corps, and talking to congressional staffs about how entrepreneurial educational programs can reshape our economy. (And I even found time to go to the Spy Museum.)
One of the issues that came up is whether the new lexicon of entrepreneurial ideas – Customer Development, Business Model Design, Lean, Lean LaunchPad class, etc. – replace all the tools and classes that are currently being taught in entrepreneurship curriculums and business schools. I was a bit surprised since most of what I’ve been advocating is complementary to existing courses. However, I realize I’ve primarily written about business model design and customer development. Given that I’m speaking this month in front of entrepreneurship educators at the NCIIA conference, I thought I should put it in context before they throw tomatoes at me.
Search Versus Execution
One of the things startups have lacked is a definition of who they were. For years we’ve treated startups like they are just smaller versions of a large company. However, we now know that a startup is a temporary organization designed to search for a repeatable and scalable business model. Within this definition, a startup can be a new venture or it can be a new division or business unit in an existing company.
If your business model is unknown – that is just a set of untested hypotheses- you are a startup searching for a repeatable business model. Once your business model (market, customers, features, channels, pricing, Get/Keep/Grow strategy, etc.) is known, you will be executing it. Search versus execution is what differentiates a new venture from an existing business unit.
Strategy
The primary objective of a startup is to validate its business model hypotheses (and iterate and pivot until it does.) Then it moves into execution mode. It’s at this point the business needs an operating plan, financial forecasts and other well-understood management tools.
Process
The processes used to organize and implement the search for the business model are Customer Development and Agile Development. A search for a business model can be in any new business – in a brand new startup new or in a new division of an existing company.
In search, you want a process designed to be dynamic, so you work with a rough business model description knowing it will change. The model changes because startups use customer development to run experiments to test the hypotheses that make up the model. And most of the time these experiments fail. Search embraces failure as a natural part of the startup process. Unlike existing companies that fire executives when they fail to match a plan, we keep the founders and change the model.
Once a company has found a business model (it knows its market, customers, product/service, channel, pricing, etc.), the organization moves from search to execution.
The product execution process – managing the lifecycle of existing products and the launch of follow-on products – is the job of the product management and engineering organizations. It results in a linear process where you make a plan and refine it into detail. The more granularity you add to a plan, the better people can execute it: a Business Requirement document (BRD) leads to a Market Requirements Document (MRD) and then gets handed off to engineering as a Functional Specifications Document (FSD) implemented via Agile or Waterfall development.
Organization
Searching for a business model requires a different organization than the one used to execute a plan. Searching requires the company to be organized around a customer development team led by the founders. In contrast, execution, (which follows search) requires the company to be organized by function (product management, sales, marketing, business development, etc.)
Companies in execution suffer from a “fear of failure culture“, (quite understandable since they were hired to execute a known job spec.) Startups with Customer Development Teams have a “learning and discovery” culture for search. The fear of making a move before the last detail is nailed down is one of the biggest problems existing companies have when they need to learn how to search.
The idea of not having a functional organization until the organization has found a proven business model is one of the hardest things for new startups to grasp. There are no sales, marketing or business development departments when you are searching for a business model. If you’ve organized your startup with those departments, you are not really doing customer development. (It’s like trying to implement a startup using Waterfall engineering.)
Education
Entrepreneurship curriculums are only a few decades old. First taught as electives and now part of core business school curriculums, the field is still struggling to escape from the bounds of the business plan-centric view that startups are “smaller versions of a large company.” VC’s who’ve watched as no startup business plan survived first contact with customers continue to insist that startups write business plans as the price of entry to venture funding. Even as many of the best VCs understand that the business ‘planning’ and not the ‘plan’ itself, are what is important.
The trouble is that over time – this key message has gotten lost. As business school professors, many of whom lack venture experience, studied how VCs made decisions, they observed the apparently central role of the business plan and proceeded to make the plan [not the planning], the central framework for teaching entrepreneurship. As new generations of VCs with MBA’s came into the business, they compounded the problem (“that’s how we always done it” or “that’s what I learned (or the senior partners learned) in business school.”)
Entrepreneurship educators have realized that plan-centric curriculum may get by for teaching incremental innovation but they’re not turning out students prepared for the realities of building new ventures. Educators are now beginning to build their own E-School curriculum with a new class of management tools built around “search and discovery.” Business Model Design, Product/Service Development, Customer Development, Startup Team-Building, Entrepreneurial Finance, Marketing, Founder Transition, etc. all provide the startup equivalent of the management tools MBAs learn for execution.
Instructional Strategy
Entrepreneurial education is also changing the focus of the class experience from case method to hands-on experience. Invented at Harvard, the case method approach assumes that knowledge is gained when students actively participate in a discussion of a situation that may be faced by decision makers.
The search for a repeatable business model for a new product or service is not a predictable pattern. An entrepreneur must start with the belief that all her assumptions are simply hypotheses that will undoubtedly be challenged by what she learns from customers. Analyzing a case in the classroom removed from the realities of chaos and conflicting customer responses adds little to an entrepreneur’s knowledge. Cases can’t be replicated because the world of a startup too chaotic and complicated. The case method is the antithesis of how entrepreneurs build startups – it teaches pattern recognition tools for the wrong patterns – and therefore has limited value as an entrepreneurship teaching tool.
The replacement for cases are not better cases written for startups. Instead, it would be business model design – using the business model canvas as a way to 1) capture and visualize the evolution of business learning in a company, and 2) see what patterns match real world iterations and pivots. It is a tool that better matches the real-world search for the business model.
An entrepreneurial curriculum obviously will have some core classes based on theory, lecture and mentorship. There’s embarrassing little research on entrepreneurship education and outcomes, but we do know that students learn best when they can connect with the material in a hands-on way – personally making the mistakes and learning from them directly.
As much as possible the emphasis ought to be on experiential, learner-centric and inquiry-based classes that help to develop the mindset, reflexes, agility and resilience an entrepreneur needs to search for certainty in a chaotic world.
Lessons Learned
- The search for the business model is the front end of the startup process
- This is true in the smallest startup or largest company
- The goal is to find a repeatable/scalable model, and then execute
- Execution requires operating plans and financial forecasts
- Customer and Agile Development are the processes to search and build the model
- Product management is the process for executing the model
- Entrepreneurial education needs to develop its own management stack
- Starting with how to design and search for a business model
- Adding all the other skills startups needs
- The case-method is the antitheses of an entrepreneurial teaching method
Filed under: Big Companies versus Startups: Durant versus Sloan, Business Model versus Business Plan, Customer Development, Lean LaunchPad, Teaching | 26 Comments »
Two Giant Steps Forward For Entrepreneurs
Posted on February 9, 2012 by steveblank
While entrepreneurship is in the news fairly regularly, I seldom make news myself. Today, however there are two important updates for entrepreneurs everywhere. Let me be brief…
The “Startup Owner’s Manual” goes On Press Tuesday 2/14
Two years in the making and literally ten years in development, I’m proud to announce that my new book, The Startup Owners Manual, goes onto the printing press next Tuesday. This 608-page work is, as its subtitle says, “the step-by-step guide for building a great company.” It’s the result of a decade of me learning from 1,000′s of entrepreneurs, corporate partners, students and scientists the best practices of what wins in startups. I’ve spent the last two years cramming knowledge into this new book.
In brief, the The Startup Owners Manual is far more detailed and more readable than Four Steps to the Epiphany, (most of the sentences are even finished!). In fact, you could say that all that remains from my last book are the four steps of Customer Development. Briefly, the new book:
- Integrates Alexander Osterwalders “Business Model Canvas” as the front-end and “scorecard” for the customer discovery process.
- Provides separate paths and advice for web/mobile products versus physical products
- Offers a ton of detail and great tips on how to get, keep, and grow customers, recognizing that this happens very differently between web and physical channels.
- and finally it teaches a “new math” for startups: “metrics that matter.”
While MBA’s have had a stack of texts to help them “execute” a business model, this book joins the growing library of books for practitioners for the “search” for the business model.
The Lean LaunchPad Online Class
My online Lean LaunchPad class has created a lot of buzz this week. As you may have heard, I was deep into the production of the lectures when I realized I was producing the wrong class. The online class was originally based on my book The Four Steps to the Epiphany.
Only when I held the draft of my latest book, The Startup Owners Manual, in my hands, did it dawn on me that my online students deserved all the latest best practices of entrepreneurship and Customer Development. Not the stuff I taught a decade ago, but all that I’ve learned teaching the Lean LaunchPad in front of students at Stanford, Berkeley, Columbia and the National Science Foundation in the last year. And I particularly wanted to incorporate everything I’ve spent two years integrating into The Startup Owners Manual into the class.
So apologies to all of you who were expecting the class this month. I hope to get the updated version online in the next 60 days. I’ll keep you updated on this blog as we record our lectures.
In the meantime, if you want to prepare for the class…or get a jump on your startup competition, you can start reading the “recommended text” for the online class right now by ordering my new book. It is recommended—not required—reading for the free online course, and I believe it will be immensely helpful to the startup community at large.
Lessons Learned
- Startups search for business models, exisitng companies execute them
- There are tons of texts about execution, but a paucity of practical ones for founders on how to search
- The Startup Owners Manual is the definitive reference book for founders, investors and everyone interested in startups
- The Lean Launchpad on-line class will be based on the new book
Filed under: Big Companies versus Startups: Durant versus Sloan, Business Model versus Business Plan, Customer Development, Lean LaunchPad, Teaching | 88 Comments »
The National Science Foundation Innovation Corps – Class 2: The Business Model Canvas
Posted on December 22, 2011 by steveblank
The Lean LaunchPad class for the National Science Foundation Innovation Corps is a new model of teaching startup entrepreneurship. This post is part two. Part one is here. Syllabus here.
The 21 NSF teams had been out of the classroom for just 15 hours as they filed back in with their business model canvas presentations. Their assignment appeared (to them) to be deceptively simple:
- Write down their initial hypotheses for the 9 components of their company’s business model (who are the customers? what’s the product? what distribution channel? etc.)
- Come up with ways to test each of the 9 business model canvas hypotheses
- Decide what constitutes a pass/fail signal for the test. At what point would you say that your hypotheses wasn’t even close to correct?
- Consider if their business worth pursuing? (Give us an estimate of market size)
- Start their team’s blog/wiki/journal to record their progress during for the class
Teaching logistics
Each week every team presented a 5-minute summary of what they had done and what they learned that week. As each team presented, the teaching team would ask questions and give suggestions (at times direct, blunt and pointed) for things the students missed or might want to consider next week.
While the last sentence is short, it’s one of the key elements that made the class effective. Between the three of us on the teaching team there was 75 years of entrepreneurial experience. (The 2 VC’s between them probably have seen 1000′s of presentations.) While there’s no guarantee our comments were correct or we had any unique insight, we did have enough data for pattern recognition.
The instructors sat in the back of the room and used a shared Google spreadsheet for grading. We graded the teams on a scale of 1-10 and each of us left detailed comments the other teaching team members could share and comment on. Week after week it gave us a pretty detailed record of the progress and trajectory of each team.
(As great as the presentations may be, sitting through 21 of them in a row were exhausting. After this first cohort, the NSF will be putting 25 teams at a time in a class. We intend to break the group into three parallel presentation sections.)
All teams kept a blog – almost like a diary – to record everything they did outside the building. This let the teaching team keep tabs on their progress and offer advice in-between class sessions.
Getting the teams to blog required constant “encouragement,” but it was invaluable. First, as we had a window into each teams engagement with customers, it eliminated most of the surprises when they came into class to present. Second, the blog helped us see if they were gaining insight from their customer discovery. Insight is what enables entrepreneurs to iterate and pivot their business model. The goal wasn’t just to talk to lots of people – the goal was to learn from them. Finally, their blogs gave us and them a permanent record of who they talked to. Over time this contextual contact list will be turned into a shared contact database for all future NSF teams.
The 21 Teams Present
The first team up was Arka Lighting. We liked these guys, but for a while no one on the teaching team could figure out what their core technology was. We knew they wanted to make LED lights that had better performance because they would dissipate less heat. Finally when we understood that their core technology was heat pipes, it wasn’t clear why that made them a better LED supplier. Were they selling to end users? OEMs? Manufacturers? We suggested that perhaps they had jumped to too many assumptions.
If you can’t see the slide deck above, click here
Next up was SenSevere – solid-state hydrogen and hydrocarbon sensors for use in severe environments. They were going to start with the $81M Chlorine market where they already had a partner. It seemed like a tiny business. Did they just want to become a licenser of technology? Were their other severe environments that their sensors fit into? Did customers just want the sensors or a more complete sensing solution?
If you can’t see the slide deck above, click here
Graphene Frontiers was next. Graphene is incredibly cool. It’s touted as the new “wonder material” and its inventors won the 2010 Nobel Prize in Physics. The team wanted to make wafer-scale Graphene films. And do it at ambient pressure. But their proposed products seemed like research lab selling other research labs low volume products. It seemed liked technology in search of a business. Reading the Graphene Frontiers blog for the first week, we realized that in a burst of enthusiasm they set up a Google AdWords campaign to drive traffic to their site!
If you can’t see the slide deck above, click here
Ground Flour Pharma was going to take Fluorine-18 and make a new generation of fluorodeoxyglucose (FDG) radiotracers for Positron emission tomography scanners. But it wasn’t clear who benefits enough to make this a business. If they need FDA trials is it worth the money needed for approval? Is this just a technology license or is it a company?
If you can’t see the slide deck above, click here
C6 Systems had a great set of photos with things on fire in the woods. It seemed like they were going to burn downed trees to do what? Make charcoal? It looked like fun but is this a hobby or a scalable business? Is their any patentable Intellectual Property? What was their Value Chain? Their blog showed a good head-start on talking to customers.
If you can’t see the slide deck above, click here
Photocatalyst made nanogrids that became miniaturized self-supported mats, similar to fishing nets, that float on water and rapidly decompose crude oil using sunlight. The result is that pollutants are turned into water, carbon dioxide and other biodegradable organics for environmental remediation. Their slides sounded like a technical presentation of nanocatalyst features but their blog showed that they had been actively talking to customers in the last two days.
If you can’t see the slide deck above, click here
After the teams presented it was the turn of the teaching team. We presented our second lecture, this time on “Value Proposition.”
If you can’t see the slide deck above, click here
For tomorrow, the teams had 15-hours to get out of the building and talk to 10-15 customers and test their Value Proposition.
While most of the teams got on the phone or into their cars, a couple of others complained, “You didn’t tell us we were supposed to use our spare time to talk to customers. We thought this was just spare time.”
At first, I thought they were joking. Spare time? I don’t think you understand the key principle in a startup – there is no such thing as spare time. The clock is running and you’re burning cash.
Go!
Filed under: Lean LaunchPad, Teaching | 15 Comments »
The Government Starts an Incubator: The National Science Foundation Innovation Corps
Posted on December 20, 2011 by steveblank
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 incubator – the 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.
Filed under: Lean LaunchPad, Teaching | 27 Comments »
Get the Podcasts for Free
