Steve Blank Innovation and Entrepreneurship April 2016

Entrepreneurs are Everywhere Show No. 29: Ajay Kshatriya and Steven Cohn

Posted on April 28, 2016 by steve blank

Entrepreneurs see opportunity where others see obstacles and why hubris is an entrepreneur’s worst enemy, were two topics of discussion on my SiriusXM radio show, Entrepreneurs are Everywhere.

The show airs on SiriusXM Channel 111 (weekly Thursdays at 1 pm Pacific, 4 pm Eastern). It follows the journeys of innovators sharing what it takes to build a startup – from restaurants to rocket scientists, to online gifts to online groceries and more. The program examines the DNA of entrepreneurs: what makes them tick, how they came up with their ideas; and explores the habits that make them successful, and the highs and lows that pushed them forward.

Ajay Kshatriya

Joining me in the Stanford University studio were

Ajay Kshatriya, co-founder and CEO of Biota Technology, which applies DNA sequencing technology to the energy industry
Steven Cohn, founder and CEO of Validately, which helps user researchers, product managers and others validate demand or usability for prototypes and live sites.

Steven Cohn

Listen to the full interviews with Ajay and Steven by downloading them from SoundCloud here and here.

(And download any of the past shows here.)

Clips from their interview are below.

Ajay Kshatriya has 15 years of experience in biotechnology in energy, healthcare, and software. Before co-founding Biota Technology, he was an investor and entrepreneur-in-residence at Seed Capital, a investing in science-based innovation. Prior, he was a senior manager at Genentech in operations and project management.

Switching from venture capital to startup founder required a different mindset, Ajay said:

All day in a VC firm, you’re saying ‘no’. That’s how your brain’s oriented. You’re constantly critically analyze the gaps in someone’s business plan.

When you’re an entrepreneur, yeah, there’s 100 gaps. But you go figure out how to solve them. It’s kind of a brain switch that you have to make in order to be successful as an entrepreneur.

You really have to take that optimistic lens and say, “This can work, and here’s how we can do it.”

If you can’t hear the clip, click here.

Before becoming a founder at Validately Steven Cohn was an executive at Quantcast and DoubleClick and had started and sold two companies. The first, Buy Your Friend a Drink, was a success and Steven was eager to start up again.

However, his second venture, Irrive, quickly failed. Here’s why:

Steven: We did everything wrong. We built before testing. We over-designed the product, overbuilt the product, and we built something really beautiful that no one wanted. …

Steve: Was it that you didn’t know what you got right the first time?

Steven: Nope, hubris. … Once I had a success in my first company with my second I raised $2 million of seed capital with just a PowerPoint presentation. I didn’t even have a team or anything. People were like, “Wow, you just hit a home run with your exit to LivingSocial. … “You must be a genius. It must be you.”

I’d drunk my own Kool-Aid, I believed it, and so I did everything wrong from a product perspective. …

If you can’t hear the clip, click here.

—

Biota, Ajay explained, is using DNA sequencing of microbes found underground to help oil companies optimize production when hydraulic fracturing.

Here’s how his team validated whether there was a need to increase efficiency in the energy market and how he found Biota’s target market:

Ajay: We had done some customer discovery to validate that there was a need in the American energy market to become dramatically more efficient with hydraulic fracturing. They’re wasting a million dollars an oil well, and they’d like to lower that direct cost. Oh, and by the way, if they could, there’s a huge environmental benefit, too. There’s a double bottom line, so we knew that was the case.

Steve: What’s the environmental benefit?

Ajay: If you know where to fracture, you also know where not to fracture, so you could save 3 million gallons of fresh water a well. There’s 125,000 wells, so that’s billions of gallons of water that you can save.

We started by doing customer discovery – talking to 75 people in the oil industry over the first four months which was extremely helpful. I mean, what does a guy who’s been in biotech for 15 years applying DNA and software know about the oil industry that’s been around for about 120 years?

Steve: Hopefully after 75 people, you know a bit more. Right?

Ajay: (Nods.) I have the world’s biggest hammer looking for a nail. So how do I articulate that value proposition in a way that the customer gets? That was one of the biggest challenges that we had. They hear exactly what you heard. ‘DNA sequencing in the oil?”, what the hell does that mean?

Steve: You needed to translate that to a real customer problem? It took you a while to understand the problem.

Ajay: You got it.

If you can’t hear the clip, click here.

Business comes down to relationships and building trust, said Ajay, who is the son of Indian immigrants and grew up in Texas. His early life taught him how to make personal connections:

Ajay: One day you’re eating ribs, the next day you’re eating chicken curry, and you know, you kind of wear two different hats. You have two faces: inside the home, and outside the home. You learn that pretty quickly. That was probably one of the most formative parts of growing up in a place like that, with that background.

Steve: How do you think that affected you?

Ajay: To relate you have to find commonalities between people. If I’m hanging out with a bunch of guys in Texas, how can I connect and relate to them? Then if I go hang out with all my dad’s friends who grew up in India, how do I connect and relate to them? It kind of creates a chameleon-like personality you develop in connecting with people in different ways.

Learning how to connect helped me a lot as an entrepreneur When you’re a founder you got to sell all the time – to a wide variety of people. You got to convince people that you’re crazy idea can work, you got to hire people, you got to get investors to write you checks, customers to give you money to do what you say you can do. The most important part of sales is building trust, and you can’t build trust if you you’re not able to connect with people.

If you can’t hear the clip, click here.

Ajay also shared his recipe for success:

The three rules of a career that have helped me and I continue to follow:

find mentors who are 10, 20, 30 years your senior that you aspire to be when you get to that age. Ask them for advice and do what they tell you to do. …
surround yourself with people way smarter than you. It’s not a sign that you’re dumb; it’s a sign that you have perspective and maturity.
most importantly, out-work everybody. Look to the person to your left, look to the person to your right. The only way to guarantee your success is just to work harder than they do.

If you can’t hear the clip, click here.

—

Despite having a Harvard Business School education, Steven learned some of his biggest business lessons outside the classroom:

Steven: I went to business school at Harvard but when I graduated I said, “There’s a couple of things I want to learn before I start my own business.” I think I was hesitant because of the experience my father had where he tried a bunch of businesses that were unsuccessful.

So my first job out of business school I wanted to learn finance and I went to Merrill Lynch in investment banking. There I learned about how to raise capital. I also learned how to sell a company — the process, the steps to sell a company. Both of those skills – raising capital and selling companies have helped me throughout my career because I’ve sold two companies of my own prior to starting my current company.

Working at Merrill Lynch I realized I’m not a big company guy. Even today when I’m interviewing people I say, “You know what? You’re great, and our company is great, but it’s just not a fit.” Sometimes when I interview people I think they’re very talented, I just don’t think they’re going to fit within our company culture, what we need to do. That’s just as important as their skills. I think there are some people who are builders, there are some people who are creators, and there are some people who are managers, they like to manage big organizations. I think those are very different skill sets.

If you can’t hear the clip, click here.

In starting his first company, Steven found himself talking to customers in an unlikely place:

Steven: I went into bars and I said, “My name is Steve Cohn, I’m thinking about starting a company called ‘Buy Your Friend a Drink,’ and the way my product would work is, people would walk in here with a gift certificate that’s pre-bought for a drink.”

I remember the first bar I went into — I didn’t have a website, I didn’t have anything … The bar manager said, “That sounds great. I’ll sign up. Where’s your contract?” I said, “Uh, contract? I’ll be back in two weeks!”

I found that the first thing I did — the bars and restaurants, and supply-side of the market — was very easy to do.

Steve: That’s a big win, right? To figure that out –

Steven: Yeah, a big win. … The first day … I just literally walked around. … I had nothing behind me besides me and what I could say to people.

I didn’t have business cards, I didn’t have anything (and) I was able to sign up a half-dozen bars in one day.

Steven also discussed one of the darkest times he encountered while building Buy Your Friend a Drink:

I can’t tell you how painful it was (during the financial crisis) in January of 2009, in December of 2008, when you see everything that you had built crumbling because of macro-factors you have no control of.

My wife was pregnant at the time, we were running out of cash. I hadn’t taken a salary in two years just from when I started the company and we were low on capital, our personal wealth. I was getting a tremendous amount of pressure.

Shareholders were yelling at me because I was running out of cash. I’m like, “Do you realize what’s going on in the world? CitiBank is trading at $2 a share. If we knew that, I would have put the cash in and shorted CitiBank, right?”

No one knew what was going on but I persevered through and it turned out to be a very good outcome

If you can’t hear the clip, click here.

Listen to my full interviews with Ajay and Steven by downloading them from SoundCloud here and here. (And download any of the past shows here.)

Next on Entrepreneurs are Everywhere: Guido Kovalskys, co-founder and CEO of Nearpod; and Doris Korda, associate head of school and director of entrepreneurial studies at the Hawken School.

Tune in Thursday at 1 pm PT, 4 pm ET on Sirius XM Channel 111.

Want to be a guest on the show? Entrepreneurship stretches from Main Street to Silicon Valley, from startups to big companies. Send an email to terri@kandsranch.com describing your entrepreneurial journey.

Filed under: Customer Development, SiriusXM Radio Show | Leave a comment »

Hacking for Defense @ Stanford – Week 4

Posted on April 25, 2016 by steve blank

We just held our fourth week of the Hacking for Defense class. This week the teams turned the corner on understanding beneficiaries and finding product/market fit. The 8 teams spoke to 115 beneficiaries (users, program managers, etc.); we sent each team a critique of their mission model canvas; we started streaming the class live to DOD/IC sponsors and other educators; our advanced lecture explained how to go from concept to deployment in the DOD/IC; and we watched as the students got closer to understanding the actual problems their customers have.

(This post is a continuation of the series. See all the H4D posts here. Because of the embedded presentations this post is best viewed on the website.)

Beneficiaries equals all the stakeholders
In-between class sessions, we reviewed each team’s mission model canvas and sent them a detailed critique of each of the boxes on the right side of their canvas. The critiques seemed to make a difference in this week’s presentations with a noticeable improvement in teams’ beneficiaries/stakeholder understanding. The teams are beginning to understand that beneficiaries mean “Not the name of an organization but all the stakeholders in an organization (users, program managers, saboteurs, legal, finance, etc.)” and that they can’t really understand customer problems until they can diagram the relationships among all the beneficiaries. Then, and only then, can they move on to developing a detailed value proposition canvas for each of the beneficiaries.

Some of the sponsors commented that the teams had a better grasp of the problem space and a deeper understanding of the beneficiaries and their relationships to each other, than they did.

Team Presentations: Week 4
Great technical teams like often want to use the class as a product incubator when we want them to spend an equal amount of time learning about the rest of the Mission Model canvas.

What we’re trying to prevent is to have teams give the DOD/IC yet another great technology demo. They have plenty of those. What teams need to do is deeply understand all the stakeholders in their sponsor organization (analysts, seniors, finance, legal, etc.) so they can get a great product that solves real problems and can be widely deployed quickly.

Narrative Mind had an amazing week. The sponsor’s brief to the team is to figure out how to understand, disrupt, and counter adversaries’ use of social media. After 46 interviews the team could see that there were conflicting definitions of what problems needed to be solved. They realized that different beneficiaries were each describing a different part of a much bigger picture. Take a look at slide 3, as the team synthesized and then summarized the sum of the hypotheses the beneficiaries have of the problem. This was a big learning moment. Slide 4 was another insight as they mapped out who actually owned the problem across multiple DOD and Intelligence organizations. Finally, their beneficiaries on slide 6 were focused and clear. This team is learning a lot.

If you can’t see the presentation click here

Right of Boom had an insightful week with 19 customer discovery interviews this week across a broad range of beneficiaries. (See slide 2.) These interviews led them to conclude that their initial hypotheses (slides 3-5) were wrong. In slide 6 they were able to map out the entire IED (Improvised Explosive Device) reporting information flow.

And in slide 7 the team really narrows down their beneficiaries and value proposition. They came to an interesting conclusion about how to measure success in their Mission Achievement box.

If you can’t see the presentation click here

Sentinel initially started by trying to use low-cost sensors to monitor surface ships in a A2/AD environment. The team has found that their mission value is really to enable more efficient and informed strategic decisions by filling in intelligence gap about surface ships.

The team started by diagraming the relationships among their beneficiaries (slide 2). They realized that this is just a start. Now they need to overlay the surface ships’ intelligence information flow shown in slides 16 & 19 on top of this org chart. Slides 3-6 are a good narrative of hypotheses validated, invalidated and refined during the week. Slides 8-11 are an excellent example of a deep understanding of the beneficiaries. Their Minimum Viable Product in slides 12-14 this week shows much more problem insight compared to the prior week (slides 18-21.)

If you can’t see the presentation click here

aquaLink started the week believing they were working to give Navy divers a system of wearable devices that records data critical to diver health and safety, and makes the data actionable through real-time alerts and post-dive analytics.

This was a great but painful week for the team as they experienced a bit of an existential crisis while working to drill down into who their customer truly is. The original problem statement from their sponsor asked for a wearable sensor that would monitor the physiological status of divers. As they proceeded with customer discovery, the team found that the majority of the operators who would wear these sensors were ambivalent about the introduction of a vitals monitoring platform, but were much more excited about solving geolocation problems. On the other hand, the medical professionals and some commanders were more interested in monitoring physiological metrics in order to understand chronic long-term health issues facing divers and optimize short-term performance. Slides 2-6 illustrate aquaLink’s evolving understanding of the range of customer archetypes.

Their key take-away was that they would have to decide which beneficiary to focus on. They decided to focus on the operators and divers within SEAL Delivery Vehicle Team One, along with their immediate chains of command in SDVT-1 and Naval Special Warfare Group 3. These were the beneficiaries who viewed aquaLink’s focus on geolocation as the most valuable. See slides 7, 11 and 12. The team recognized that it was time for a pivot and aquaLink will spend the rest of the class focusing exclusively on geolocation.

If you can’t see the presentation click here

Skynet is using drones to to provide ground troops with situational awareness – helping prevent battlefield fatalities by pinpointing friendly and enemy positions.

The team made progress understanding the Special Operations Command (SOCOM) acquisitions process in slides 3-5 and mocked-up an MVP. However, they still list organizations as beneficiaries. We asked that they dive deeper into the each of the stakeholders and create a diagram of how the beneficiaries actually interact.

If you can’t see the presentation click here

Capella Space is launching a constellation of synthetic aperture radar satellites into space to provide real-time radar imaging.

The team made progress understanding that some beneficiaries want raw SAR imagery and some want analytics. They are starting to understand the beneficiaries in the Coast Guard; however, they are stymied in trying to find the right people to talk to about commercial data acquisition at the National Geospatial Agency. We asked that they dive deeper into each of the stakeholders and diagram how the beneficiaries actually interact.

If you can’t see the presentation click here

Guardian’s problem to solve was to counter asymmetric drone activities. This week was a big leap forward in truly understanding their problem and beneficiaries. They did a deep dive (slides 5-7) into really understanding what, exactly, is a forward operating base. They refined their options of the problem space (slide 4) and did a great job of truly understanding the workflow in slide 8. Their mission model canvas in slide 9 had a great update on their beneficiaries while the detailed value proposition canvases in slides 10-12 gave great insight about the pains/gains/jobs to be done those beneficiaries had.

If you can’t see the presentation click here

Advanced Lecture: Concept to Deployment in the DOD
This week Jackie Space and Lauren Schmidt gave the advanced lecture. Jackie, an exAir Force officer who spent her career managing overhead reconnaissance systems, flies up from LA every week and has now officially joined the teaching team. Lauren is a member of the Defense Innovation Unit Experimental (DIUx) based at Moffett Field in Mountain View and advises our students in the course along with multiple other members of the DIUx.

Slide 5 “purchasing authority” and Slide 6 “key activities” were real eye-openers for the team.

If you can’t see the presentation click here

Team Learnings
A few of the teams are now writing weekly one-page status reports to their sponsors and mentors. Great idea to keep them informed and make them feel they’re part of the team.

It’s been fun to watch as the teams learn from sponsors; a few teams have been broadening their sponsors understanding of the problem. (How do we know this? When the sponsors asked their team, “Can we use your slides to present to our organization?”) That’s a win for everyone.

This week we had one group of students volunteer to go to Iraq or Afghanistan to see the customer problem first-hand. Travel restrictions and other logistical challenges will likely make this trip infeasible, but the team’s genuine interest in getting to the ground level of customer discovery reflects well on their commitment to the principles of the course’s methodology.

Lessons Learned

Civilian students with no prior DOD experience can be taught to deeply understand military and intelligence problems and organizations in 4 weeks

These students are passionate and committed to solving problems that protect the homeland and keep Americans safe around the world

Filed under: Hacking For Defense, Teaching | Leave a comment »

Hacking for Defense (H4D) @ Stanford – Week 3

Posted on April 19, 2016 by steve blank

We just held our third week of the Hacking for Defense class. This week the 8 teams spoke to 108 beneficiaries (users, program mangers, etc.), we held a Customer Discovery workshop, we started streaming the class live to DOD/IC sponsors and other educators, our advanced lecture was on Product/Market fit for the DOD/IC and we watched as the students solved their customer discovery obstacles and started getting closer to their customers.

(This post is a continuation of the series. See all the H4D posts here. Because of the embedded presentations this post is best viewed on the website.)

—–

Customer Discovery in the DOD/IC Workshop
We normally hold a Customer Discovery workshop during the evening the first week of the class. But spring break and the “How to Work with the DOD” workshop got in the way. So we inserted an abbreviated version at the front of this week’s class.

When working with the DOD/IC there are some unique obstacles of “getting out of the building and talking to customers”. For example, members of the DOD will not respond to ”cold calls” and those in the Intel community won’t even tell you their names. In addition, most of the sponsors are working on classified problems. So how do teams understand the customer when the customer can’t tell you what they do? The Workshop talked about how to address those and other Discovery issues.

If you can’t see presentation click here

Team Presentations: Week 3
After the Customer Discovery workshop the 8 teams presented what their hypotheses, experiments and what they learned outside the building this week.

Team Right of Boom (previously named Live Tactical Threat Toolkit) is trying to help foreign military explosive ordnance disposal (EOD) teams better accomplish their mission. The team originally was developing tech-centric tools for foreign teams to consult with their American counterparts in real time to disarm IED’s, and to document key information about what they have found. Now they are honing in providing accurate high-volume post-incident IED reporting.

Last week this team was floundering. They had confused getting interviews and building minimal viable products with truly trying to “become the customer.” We strongly suggested that there was no way that could understand the day in the life of an explosive ordnance disposal expert by just listening to them – they needed to stand in their shoes. So to their immense credit the team suited up in full bomb disposal gear and got of the building. They earned our respect (and a name change for the team.)

If you can’t see the Right to Boom video click here (turn up the volume!)

If you can’t see the Right to Boom presentation click here

Team Capella Space  is launching a constellation of synthetic aperture radar satellites into space to provide real-time radar imaging.

This week the team learned a ton. They mapped out competitive offerings, found that Government funding is not the proper channel for Capella, but did find that the Coast guard is currently in dire need of situational awareness at high resolution and that military customers want access to raw data; commercial customers highly value processed data for actionable insights

If you can’t see the Team Capella Space presentation click here

Team aquaLink is working to give Navy divers a way to monitor their own physiological conditions while underwater (core temperature, maximum dive pressure, blood pressure and pulse.) Knowing all of this would give divers early warning of hypothermia or the bends.

This week they validated that divers will want real-time alerts regarding vitals (and put up with the additional gear/procedures) of issues that threaten mission success. The found that navy medical researchers want data on vitals, the rebreather (air consumption), and the dive computer (dive profile). Their hypotheses going forward are that a heads up display is the ideal form of information transmission during a dive and system should be modular to allow for the integration of evolving technology (geolocation and communication)

If you can’t see the Team aquaLink presentation click here

 Team Guardian is working to protect soldiers from cheap, off-the-shelf commercial drones. What happens when adversaries learn how to weaponize drones with bullets, explosives, or chemical weapons?

Guardians current hypotheses is that they have to provide drone detection, identification and protection against attacks from drones or swarm of drones. And that the user will be a 19 solider not trained to use complex equipment.

If you can’t see the Team Guardian presentation click here

Team Narrative Mind is trying to understand, disrupt, and counter adversaries’ use of social media. Current tools do not provide users with a way to understand the meaning within adversary social media content and there is no automated process to disrupt, counter and shape the narrative.

The team is coalescing around the idea that the two minimal viable products for their sponsor are, 1) automatically generate an organizational chart of a target terrorist groups over time, and 2) generate a social network map of how terrorist groups interact with each other.

If you can’t see the Team Narrative Mind presentation click here

Team Sentinel initially started by trying to use low cost sensors to monitor surface ships in a A2/AD environment.

The team has found that their mission value is really to enable more efficient and informed strategic decisions by filling in intelligence gap about surface ships in an A2/AD environment via:

Increased number of data streams (i.e. incorporate open source data)
Automated data aggregation (i.e. from disparate sources) and analysis
Enhanced intel through contextualization
Improved UI/UX

If you can’t see the Sentinel presentation click here

Team Skynet is also using drones to to provide ground troops situational awareness. (Almost the inverse of Team Guardian.)

The team invalidated the hypotheses that military/commercial systems exist that could already solve the problem. In addition, they originally believed that soldiers on foot needed a deployable drone system. They discovered that drones are best used with teams with vehicles or for short ranged dismounted operations.

If you can’t see the Team Skynet presentation click here

Advanced Lecture: Product/Market fit in the DOD/IC
The advanced lecture for week 3 was on the unique needs of finding Product/Market fit in the DOD/IC. Pete Newell described why a solutions in the DOD fails and then described “battlefield calculus” – how two identical sounding missions (and their inherent problems) are actually radically different based on what echelon of force executes them, by the size of force, their location, even by how well they are trained. Despite the obvious, people still try to deliver “one-size-fits-all” solutions. To properly insure a solution is actually used it is important to become familiar with the pattern of life of the user and their unit.

Pete also pointed out that teams need to “Look for Conflict” between what may have been provided to solve a similar problem and the solution the teams are about to recommend. You needed to ask: Are the circumstances similar? Or are their a myriad of conditions present that will invalidate what was a good solution under different circumstances?

If you can’t see the presentation click here

Mission Model and Value Proposition Canvas
To students, “who are the beneficiaries?” feels fuzzy on day one. And given most of them had no exposure to the DOD or Intel Community it’s not a surprise. The reason we have the teams talk to 10-15 people every week, is that with enough data they can begin to fill in the details. A few of our guests have commented how knowledgeable the teams were in talking about the sponsor organizations and problems.

That said, listening to the team presentations there was a wide difference between teams in how well they understood that the definition of “beneficiaries.” Many of teams were still listing names of organizations rather than the title and archetype of the people who mattered/cared/decided/users, etc.

Understanding who are the beneficiaries is critical to understanding the rest of the mission model canvas.

When the students have a more nuanced understanding who are the individual beneficiaries is when they can build a detailed Value Proposition Canvas for each beneficiary that makes sense. (Several teams had Value Proposition Canvas of organizations, some had fewer Proposition Canvas than they had beneficiaries, some Proposition Canvases were so generic it was clear that had insufficient data on individual needs of specific archetypes, etc.)

This is all par for the course and part of the student learning. We now need to sharpen their focus.

An after class action for the teaching team is to read through every team’s week 3 presentation slide-by-slide and give each team a detailed, written, box-by-box critique of the right-side of their Mission Model and Value Proposition Canvas. We want to help them get this right.

Sponsor Education – a Network Begins to Form
The teaching team, liaisons, mentors and DIUx are all working their networks to get students relevant beneficiaries to talk to. (More about what a wonderful asset DIUx has been in a future post.) Joe and Pete are continuing to work hard on educating the sponsors about their role. (We are collecting all our learning in an Educators Guide so other universities can run the class.)

One emerging unexpected benefit, is that Pete and Joe are continuing to expand the network of innovators in the DOD/IC who are helping our student teams. I’ve had several critique our presentations and offer suggestions on the nuanced parts of the IC mission and acquisition system I didn’t understand.

Live Streaming the Class
The DOD/IC sponsors who gave us these problems were curious about how the teams were learning so rapidly. (Others in their commands and agencies wanted to watch as well.) So this week we began to live-stream the student presentations. And other universities who want to offer this class have begun to have their educators watch the class. (We’ll be offering a train-the-trainer educators class later this year.)

Lessons Learned from Week 3

Teams still running at full speed
Understanding beneficiaries is critical to understanding the rest of the mission model canvas.
- Written team-by-team offline critique is needed to keep them on course
Support is coming from lots of places in the DOD/IC
- DIUx and our liasons have been great in connecting the students

Filed under: Hacking For Defense, Teaching | 1 Comment »

Entrepreneurs are Everywhere Show No. 28: Magdalena Yesil and Michael Mondavi

Posted on April 15, 2016 by steve blank

If I had spent less time on the business and more time with the family, we’d have been better off as a business and as a family.

Family must come first in a family business.

And if others don’t get your startup idea, it won’t matter how hard your team works to try to achieve it.

Balancing business and family, and ensuring demand for your product were key lessons shared by two veteran entrepreneurs on today’s Entrepreneurs are Everywhere radio show.

The show follows the journeys of founders who share what it takes to build a startup – from restaurants to rocket scientists, to online gifts to online groceries and more. The program examines the DNA of entrepreneurs: what makes them tick, how they came up with their ideas; and explores the habits that make them successful, and the highs and lows that pushed them forward.

Magdalena Yesil

Joining me in from the studio at Stanford University were

Magdalena Yesil, founding investor and board member of Salesforce
Michael Mondavi, founder and coach of Folio Fine Wine Partners

Michael Mondavi

Listen to the full interviews with Magdalena and Michael by downloading them from SoundCloud here and here.

(And download any of the past shows here.)

Clips from their interview are below.

Magdalena Yesil is a founding board member and first investor of Salesforce. In Silicon Valley for three decades, spent eight years as a partner at US Venture Partners. Before she was an investor, Magdalena founded two electronic commerce companies, CyberCash – a pioneer in the secure electronic payment systems, and MarketPay, an embedded payments software company.

Magdalena was a pioneer in the commercialization of the Internet, helping move it out of the government and university domains and in establishing the infrastructure for e-commerce and financial transaction platforms.

Despite her later career success, Magdalena’s first venture failed. She explained why:

Magdalena: … you can have a fantastic idea, you can have a great team, you can have what you believe is a great market opportunity but you can die at the end so none of those are sufficient.

Steve: Why? What did you miss?

Magdalena: What we missed was capital … We spent three years on developing and actually even structuring deals to buy Internet access companies out of Stanford and out of MIT, and no venture capitalist would give us a penny.

Steve: Because they didn’t get it?

Magdalena: (Nods)… They did not believe that taking a nonprofit from a university and turning it into a commercial entity made any sense. There was no demand in companies for using a wide area network like the Internet and they didn’t believe that the demand would ever be there so we got no funding. We had to fold after three years of not making a dollar. Basically, it was a very sad end.

We went and teamed up with a company called UUNET (one of the first Internet companies). UUNET ultimately ended up executing on the vision that we were trying to do and what was fantastic was that co-founder Dan Lynch and I as a team were able to make ourselves become part of UUNET and then we were able to realize our dreams through UUNET.

If you can’t hear the clip, click here.

—

Michael Mondavi is widely credited with helping to establish and build the Napa Valley wine industry as we know it. His career began in 1966 when he and his father Robert co-founded the Robert Mondavi Winery in Napa Valley.

In 2004, he launched Folio Fine Wine Partners with his wife Isabel and their children, Rob, Jr. and Dina.

A successful family business is a balancing act, he said:

…If my father and if I, when I was younger and my children were growing, spent less time on the business and more time with the family, we’d have been better off as a business and as a family.

(When I running the company) I would do extra travel to enhance the personal relationship with our customers across the United States. To do that, I had to sacrifice time away from my son and daughter and wife as the kids were growing. I didn’t get to as many ball games or soccer or whatever as I would have like to. I got to probably ten times as many or a hundred times as many as my father got when I was growing up, but still not enough.

One of the things we wanted to do for the next generation is have them have the entrepreneurial spirit, but understand more balance of family with business rather than business, business, business and then family. …

… you can drive your children away from the business if they are jealous of the time you spend in business rather than the time you spend with them.

If you can’t hear the clip, click here.

—

Magdalena shared one of the keys to her success:

Magdalena: Curiosity drove me more so than anything else. Technology is a fantastic field if you’re a curious person because there’s always something new to learn. My career pretty much mirrors Silicon Valley; because I always wanted to get on the next wave. I was always curious to find out what the next developments were. I moved from semiconductors to systems then from systems to software, then from software to online services.

Steve: But you weren’t qualified, you didn’t have 15 years of experience in any of these things. How did you get those jobs if you know nothing about them?

Magdalena: But you’re never qualified in technology. Everyone’s a newbie because when there’s a new wave happening, no one knows really the depths. We all figure it out together. The key isn’t to know a lot, the key is to know more from the guys next to you.

Steve: How did you that?

Magdalena: It’s really studying up. My skills as a student even today are in good use. Always studying up, always trying to figure out how you can learn as to where the research is, where the developments are, having a very good mind as to where the potential market opportunities might be.

Steve: You kept reading past your current domain expertise, is that?

Magdalena: I always did. I always have. … curiosity drives most technologists. Let’s face it. When there’s a new technology that’s emerging, there’s very little information about it but the only thing you can do is speak or look at the research that’s going on. Today, it’s not just what’s happening here in Silicon Valley but internationally and then apply yourself and become a specialist.

If you can’t hear the clip, click here.

Founders don’t have to be in Silicon Valley to have a successful venture, she added:

Everyone who is bright, ambitious and willing to work hard now seems to find their way to Silicon Valley from around the world.

But coming to Silicon Valley is not nirvana. The truth is you can start your startups wherever you are. What you need to do is to learn from Silicon Valley but apply it to your own ecosystem. In fact, the chances of you being successful where you are is probably a lot higher than packing your bags and coming mid-career to another country.

If you can’t hear the clip, click here.

—

When Michael and his father started the Robert Mondavi Winery, few people were drinking California wines. Europe had the market cornered. Michael explained how some Stanford grad students helped establish the California brand:

Michael: We loved to take European wines – whether it was a great Burgundy or great Bordeaux – that would cost three to 10 times the price of ours and put them on the table next to our California wines and have people taste them blind. The question we asked was not, “Which wine is better?” We asked, “Do these wines belong to be on the same table complementing this meal?” The majority of the time people preferred drinking our California and Napa wines over the Bordeaux or Burgundy ones.

Before that, restaurateurs would never compare California with France. It was “France is great” and “California is jug wine.” Time after time after time we had to take our wines and do tastings side by side against the first growth Bordeaux.

Steve: It seems like there was a multisided market. You had to convince the wholesalers and the distribution channel, but you also had to convince the end users, right? How did you do that?

Michael: Back then, the average wine drinker had to be over 50 years of age because the people below 50 were into cocktails. They didn’t care about wine.

So our first targets were Wine & Food Society groups, Medical Friends of Wine. Back then, they were all at least 50 percent older than me. At Stanford I would do all of these wine and food society groups, black tie events, and try to present our wines versus the French. Then I went to graduate schools, and I would conduct wine tastings for the graduate schools.

We began getting a group of young college graduates from Stanford, from Berkeley, from Harvard, from all of the key schools, who started following our wines. And we were the only people doing it.

I was tired of serving wine to penguins in tuxedos who were a lot older than me.

My thinking was graduate students are going to want to learn about wine. They’re going to be able to afford wine and who else to become your ambassador?

If you can’t hear the clip, click here.

A customer crisis nearly destroyed the Robert Mondavi Winery in the mid-1970s. Some quick thinking saved the business:

This large customer, the Geyser Peak Winery, owned by the Schlitz Brewery at the time, cancelled a 5-year contract for bulk wine and said, “If you don’t like it, sue us.”

If we didn’t do something with that wine and convert the liquid to cash in a relatively short period of time, we would have gone bankrupt.

I went home and took all of these different cabernet, pinot noir grape varieties and I put all the red together in a blend and all the white together in a blend and I called it “red table wine” and “white table wine,” put it in a magnum bottle with a cork and was able to convert that wine into cash in a period of a year and a half. … No one had done that before.

in 1974 60% of all wine sold was in half-gallon jugs with a screw cap and a handle called “Burgundy” and “Chablis.” I was the first one to put a quality wine in a magnum bottle with a cork and call it red table wine and white table wine.

It mainly sold through restaurants. …They were selling a glass of Chablis for $1.25 a glass, but the Chablis was kind of sweet and didn’t invite you to have a second glass. I convinced the restaurateurs to sell mine for $1.50 a glass. It would cost them a little more, but they’d sell 2 or 3 glasses because the wine was drinkable.

We went from 0 to 100,000 cases of wine in 1 year.

If you can’t hear the clip, click here.

One of the things that keeps Michael going at age 73 is his willingness to keep learning from others:

If I don’t learn something every day I’ve wasted the day. One of the beauties of working with different families in Europe and representing their wines here is that they have a different thought process. Take the Frescobaldi Family: before they’ll make a decision, on a strategic issue for the business, they ask, “Will this impact my great-great-grandchildren?”

Here in this country we say, “What will happen in the next 90 days?”

So dealing with different people and exchanging ideas with them it keeps you fresh, it keeps you young.

If you can’t hear the clip, click here.

Listen to my full interviews with Magdalena and Michael by downloading them from SoundCloud here and here. (And download any of the past shows here.)

Next on Entrepreneurs are Everywhere: Ajay Kshatriya, co-founder and CEO of Biota Technology; and Steven Cohn, founder and CEO of Validately.

Tune in Thursday at 1 pm PT, 4 pm ET on Sirius XM Channel 111.

Want to be a guest on the show? Entrepreneurship stretches from Main Street to Silicon Valley, from startups to big companies. Send an email to terri@kandsranch.com describing your entrepreneurial journey.

Filed under: Customer Development, SiriusXM Radio Show | Leave a comment »

Hacking for Defense (H4D) @ Stanford – Week 2

Posted on April 13, 2016 by steve blank

We just held our second week of the Hacking for Defense class. This week the 8 teams spoke to 106 beneficiaries (users, program mangers, etc.), we held a DOD/IC 101 workshop, our advanced lecture was on the Value Proposition Canvas, and we watched as the students ran into common customer discovery obstacles and found new ones.

(This post is a continuation of the series. See all the H4D posts here. Because of the embedded presentations this post is best viewed on the website.)

DOD/IC 101 – Workshop
We started the week by holding a Monday night workshop – DOD/IC 101. Our goal was to give the students with no military background a tutorial on the challenges facing DoD/IC in the current asymmetric threat environment, how the DOD/IC defines its missions and specifies the products it needs, how it accomplishes these missions and how they get to their ultimate user. This knowledge will help the students understand the overall environment that their Mission Model Canvas is operating in.

We posted the slides here and more important, an annotated narrative for each of the slides here. It’s truly a landmark presentation. Even if you think you know how the DOD works, read the narrative alongside the slides. I learned a lot.

If you can’t see the presentation click here

you can’t see the narrative click here.

Hacking for Defense: Week 2
The second week started with the 8 teams presenting what they learned in their first full week of class.

Capella Space
Team Capella is launching a constellation of synthetic aperture radar satellites into space to provide real-time radar imaging.

This week the team tested whether other beneficiaries – the Coast Guard and the Oil and Gas industry might be interested in their solution. Great learning.

If you can’t see the presentation click here

Live Tactical Threat Toolkit (LTTT)
Team LTTT (Live Tactical Threat Toolkit) is trying to enhance the capacity of foreign military explosive ordnance disposal (EOD) teams to accomplish their mission. The team is developing tech informed options for these teams to consult with their American counterparts in real time to disarm IED’s, and to document key information about what they have found.

The team did a good job in starting to diagram the customer workflow and intends to gain an appreciation for the ground user challenges in accomplishing these types of missions in this weeks customer discovery efforts.

If you can’t see the presentation click here

Narrative Mind
Team Narrative Mind is trying to understand, disrupt, and counter adversaries’ use of social media. Current tools do not provide users with a way to understand the meaning within adversary social media content and there is no automated process to disrupt, counter and shape the narrative.

The team did a good job in starting to diagram the customer workflow and their understanding of how to prioritize MVP features.

If you can’t see the presentation click here

Skynet
Team Skynet is also using drones to to provide ground troops situational awareness. (Almost the inverse of Team Guardian.)

Their Mission Model Canvas had a ton of learning, and their MVP engendered a lot of conversation from those who’ve been in combat and were familiar with the challenges of maintaining situational awareness under fire.

If you can’t see the presentation click here

Aqualink
Team aquaLink is working to give Navy divers a way to monitor their own physiological conditions while underwater (core temperature, maximum dive pressure, blood pressure and pulse.) Knowing all of this would give divers early warning of hypothermia or the bends.

In the first week of the class this team was suiting up in full navy diving gear and doing customer discovery by spending an hour in the life of the beneficiary. They did their homework.

If you can’t see the presentation click here

Guardian
Team Guardian is working to protect soldiers from cheap, off-the-shelf commercial drones. What happens when adversaries learn how to weaponize drones with bullets, explosives, or chemical weapons? This team is actively working to identify viable responses to these battlefield inevitabilities.

If you can’t see the presentation click here

Sentinel
Team Sentinel is trying to use low cost sensors to monitor surface ships in a A2/AD environment. The team appreciates that the problem include the sensors as well as the analytics of the sensor data.

Really good summary of hypotheses, experiments, results and action.

If you can’t see the presentation click here

Customer Discovery and the Flipped Classroom – Learnings
After talking to teams in office hours (the teaching team meets every team for 20 minutes every week,) and watching teams present, and then seeing a team send a sponsor an email that read like a bad business school sales pitch, we realized some students had skipped their homework/and or still hadn’t grasped the basics of Customer Discovery.

As a reminder, we run the class as a “flipped classroom” – the lectures – the basics of Customer Discovery and the Mission Model Canvas – are homework watched on Udacity and on Vimeo. It was painfully clear that many of the students hadn’t done their homework. We plan to remedy that in our next week class, warning the students that we will be cold calling on them to show us what they learned.

Some teams did their homework and understood that customer discovery meant “becoming the customer.” For example, the team solving a problem for Navy divers managed to get the Navy to suit them up in full diving regalia. On the other hand, some teams thought that customer discovery simply meant interviewing people and building a minimal viable products. For example, we suggested to the team working on solutions for defusing Improvised Explosive Devices (IEDs) that to truly understand their customer needs might require them to get close to the dirt with some explosive ordnance disposal teams. (Looking ahead we have no doubt that this team will respond aggressively to instructor feedback and suit up in Explosive Ordinance Disposal (EOD) equipment as part of their customer discovery efforts for week 3. Stay tuned.)

Part of the student confusion about customer discovery was the fault of the teaching team. We normally hold a “How to Do Customer Discovery” evening workshop, but we got caught by a tight spring break schedule and we punted this workshop to hold the DOD/IC workshop. In hindsight it was a bad idea – we should have found a way to hold both. We will remedy that by giving an abbreviated workshop first thing next week in the classroom.

All of these were problems we’ve seen before and we’re course correcting quickly to solve them. But, given the new form of the class we had a few problems we hadn’t encountered.

First, some teams were stymied by the classified nature of the specific data sets they thought they needed to understand the customer problem and build MVPs. In every case, what they lacked was a deep understanding of the customer problem. Which simply required going back to the basics of customer discovery.

Second, a few teams were truly blocked by a few sponsors who were also having a difficult time understanding the role they played in Customer Discovery and required follow up clarification by the teaching team and H4D military liaison officers.

Sponsor Education – Learnings
A few DOD sponsors believed they were not only the gatekeepers to the problem but were the sole source of information for our teams. Given they were supposed to maximize the number of beneficiaries the teams were supposed to talk to, the teaching team jumped on this and rapidly addressed it.

In another case the sponsor so narrowly defined the problem that it was viewed by the team as providing incremental changes to a solution they already have. After discussion the sponsor agreed that the team should focus on the realm of possible and how they would address the problem if there was not a current solution in place and in the process define new plans for how the solutions could be used.

In other cases a few of our sponsors had difficulty generating the leads and contacts within their own ecosystems that were necessary to sustain our teams’ customer discovery beyond the sponsor’s primary contacts. Ultimately teams are required to interview 80-120 beneficiaries, advocates and stakeholders (customers). This is a heavy lift if the sponsor has not thought through who those people are and where they will be found.

Finally, one of our problem sponsors departed their organization and was replaced by an alternate. This created some lag time in reestablishing contact and effectively interacting with the team. Next time we’ll designate a primary and secondary sponsor – the pace of this course requires this.

For us, this was a good learning opportunity to understand the type of sponsor education we need to do in the next class.

Advanced Lecture: Value Proposition Canvas
The advanced lecture for week 2 was on the Value Proposition Canvas – finding product/market fit between Beneficiaries (customers, stakeholders, users) and the Value Proposition (the product/service) in a DOD setting.

Pete Newell started the lecture with a video from his time in the Army’s Rapid Equipping Force.

Pete used the video to take the students through a value proposition canvas and asked the class:

Who are the primary beneficiaries? Who are the other beneficiaries?
What’s the value proposition:
- To the sergeant?
- To the mechanics?
- To the base commander?
- To contract engineers?
- To the military vehicle Program Manager?

Pete’ s experienced based vignettes and discussion helped the students appreciate the sometimes competing nature of the interests of a diverse array of beneficiaries.

If you can’t see the presentation click here

Lessons Learned from Week 2

Teams are running at full speed

Running a flipped classroom requires constant management

Problems need to be vetted to insure they can support customer discovery expectations

A Customer Discovery Workshop needs to be held

Teams need to understand how to work around security issues

Sponsors need education and management

Filed under: Hacking For Defense, Teaching | 4 Comments »

Entrepreneurs are Everywhere Show No. 27: Brandon Bruce and Jack Sundell

Posted on April 7, 2016 by steve blank

When your customers are grabbing your Minimal Viable Product out of your hands, it’s time to launch the product.

The latest guests on Entrepreneurs are Everywhere explained why.

The radio show airs on SiriusXM Channel 111 (weekly Thursdays at 1 pm Pacific, 4 pm Eastern). It follows the journeys of founders who share what it takes to build a startup – from restaurants to rocket scientists, to online gifts to online groceries and more. The program examines the DNA of entrepreneurs: what makes them tick, how they came up with their ideas; and explores the habits that make them successful, and the highs and lows that pushed them forward.

Brandon Bruce

Joining me in SiriusXM’s studio in New York were

Brandon Bruce, co-founder of Cirrus Insight software company
Jack Sundell, co-founder of The Root Café farm-to-table restaurant

Jack Sundell

Listen to the full interviews with Brandon and Jack by downloading them from SoundCloud here and here.

(And download any of the past shows here.)

Clips from their interview are below.

Brandon Bruce is a co-founder of Cirrus Insight, a plugin for Gmail and Outlook that allows Salesforce apps to be used inside an inbox. Before starting Cirrus Insight, Brandon was director of gifts and grants at Maryville College, and operations manager of Rangefire Integrated Networks.

Brandon explained how he knew it was time to launch:

Brandon: … customers told us that it was ready. They said, “We know it needs more and we want more from it, but it’s ready enough and we find value from it.”

One customer found the website — they weren’t supposed to find it. … They put their credit card in and paid for the app. We said, “We’re not going to charge you yet. We’ll refund the money.” They said, “It’s OK, I’m going to buy it once it’s for sale so I’ll be your first customer.” That was a vote of confidence. We figured there’s a company behind the app.

Steve: You tested with customers, you got customer feedback, you listened … Your thought, “We need to fill out our feature set because our plan said so” (but customers said) “No you don’t. Features 1,6, and 12 are good enough now.”

Brandon: That’s exactly what they said. I’m glad that they did because it got us to market first; we captured a lot of mind share. People said, “Well, if you want Gmail and Salesforce, then Cirrus Insight is the app for you.

They were telling us, “This is what we need and want. These are the features we need and want. This is a great product and is saving us a lot of time and it’s getting better data in Salesforce. We can run better reports and it’s elevating the whole business.”

We thought, “Well, that’s a big win for them. There’s value there in the marketplace, so we decided to get it out.

If you can’t hear the clip, click here.

Before opening The Root Café with his wife Corri in 2011, Jack Sundell was in the Peace Corps. Stationed in Morocco he taught English and organized activities at an after school youth center. When he returned home to Arkansas, he volunteered at the Heifer Ranch in Perryville and quickly fell in love with producing and cooking fresh food.

The experience stoked a passion in him for opening his own café, but rather than jump in to the farm-to-table venture, Jack took three years to launch. He said it was time well spent:

Jack: We learned a lot about hard work, about the importance of working to build community, the importance of building capital on the front end and trying to stay out of debt. The real driver was that we wanted to fund the café without borrowing money, so we decided to spend these three years doing a capital campaign.

We would do things like fundraisers where we would just invite a lot of friends to come and they would donate to this project. We did canning and food preservation workshops. We did catering out of a church kitchen. We also did something we called the share campaign, which was a lot like a kick-starter or a crowd-funding campaign, where we basically pre-sold our food and promised that for every $10 that someone donated, we would pay them back with a meal once we opened.

Steve: So while raising money, you were running a branding and a customer-acquisition campaign. People knew you were going open a restaurant for three years?

Jack: Right! It helped us build a great mailing list. It helped us get our brand out there. It helped raise awareness of local foods in general, so all of those things turned out to be really great.

It also helped us create a network of farmers, which was another one of those things that we didn’t realize was important, but through all the catering work we had done and the food preservation workshops, we had connected with lots and lots of the farmers that deliver to Little Rock.

Steve: Those farmers are your supply chain?

Jack: Right. We purchase every week from 25 or 30 different farmers and producers and on an annual basis, maybe 50 or 60. There is no way that we would have had time to establish all those connections once we were in the trenches of actually opening a restaurant.

If you can’t hear the clip, click here.

—

Building a partner network was another crucial thing for Cirrus, Brandon said:

Brandon: People said a SAAS (Software as a Service) companies like ours, haven’t had a lot of success selling through partners. But it just made sense to us that partners could be like an extended sales team before we could afford to have one. We developed these relationships …

Steve: These partners sold your product for you because it complemented some of the other products they sold?

Brandon: Yeah. Our partners are Salesforce consultants. They’re implementing Salesforce and would tell the client, “This is the way to boost Salesforce. “You’re using Gmail or Outlook, and you’re scheduling appointments with customers on the calendar. That’s where you live, and all that data really needs to go into Salesforce and vice versa so you need Cirrus Insight”. … and those folks help drive a lot of sales for us. So we use a partner channel, we do telesales and we do a lot of email.

If you can’t hear the clip, click here.

A crisis showed Brandon and his co-founder, Ryan Huff, that they had achieved success:

… Ryan and I … both have young kids and we decided well, so far, so good. We’re about a year into building the company and let’s take the kids to Disneyland and, of course, it’s while we’re at Disneyland that it’s one of the biggest power outages in history took our app down as well as Netflix and Instagram and Foursquare and other far better-known apps down.

For 30 seconds or so, we thought maybe we’d have a breakout sales day because we had about 100 calls and then we figured, no, something’s actually wrong.

Meanwhile, our customers cared that Cirrus was down.

… We were at Disneyland on our phones with not a lot of ability to do anything. Not that we could have done anything back at the office either, because it was out of our control. That was a very challenging day. The silver lining to that was that the feedback that we got from the customers was stuff like “people have stopped working at the office because your site is down.” We thought, wait a second, Google is still up, Salesforce is still up. You can just work the way you did before but they said “no, it’s become such an ingrained part of our workflow and it’s so important, we won’t go back to the other way. Until the app comes back up, everyone’s going to kind of hang out.”

We thought, it’s a must-have application now for companies.

If you can’t hear the clip, click here.

—

Jack went the hands-on route to learn about the restaurant business:

Once we had figured out that we were going to go forward with the idea of opening a café, I worked in a couple of places in Little Rock that were really similar. Kind of the fast, casual model where you order at the counter, find a seat, they bring you your food. I picked a couple of those places in Little Rock that I thought would be good for learning my way around.

… (It was) a lot of trying to learn how orders happen, how did they make sure they had the food they needed to produce the menu every day, how did they make the schedule so that employees knew when to come to work.

… It was a huge learning experience…. Behind the veil of a restaurant there’s a lot of things that go on that once you see and you realize, “Gosh, that’s really a smart way.” It’s not that every restaurant reinvents the wheel. There’s almost never a situation where someone opens a restaurant without ever having had any contact. This is all knowledge that’s been passed down over generations.

If you can’t hear the clip, click here.

And he quickly learned that running an eatery is about far more than the food:

Jack: Really when we started there was this goal, and we did whatever felt right at each turn to reach it. If I had known, for example, when I was in college that I would be operating a restaurant some day, I would have loved to take some accounting and bookkeeping courses. It would be so helpful to know more about electrical and plumbing (because) anything that I have to pay someone $75 an hour to fix now, when it goes wrong, I’d love to be able to do that myself.

… (Also) it never even occurred to me to go to culinary school when I was in college or going to college, or getting out of college, but it’s fascinating, and there’s so many culinary schools that offer a great education, so I could have done that instead of just bouncing around with an undecided major in college. Then, I think it also really would have been helpful to identify employee management …

Steve: How many people do you have?

Jack: When we started, there were about four. My wife and me, and two employees, and now we’re at about 18. … We have a front of house staff, we have a back of house staff, so it’s just a really steep learning curve, how to attract, how to motivate, how to maintain great relationships with employees because really, if you think about it, employees are your ambassadors.

They’re your representatives all the time, and if you’re ever not going to be there, you have to trust that your employees are going to do the kind of job that you would do if you were there. Trying to teach that, trying to verbalize it, trying to instill it as a philosophy, we found it to be a really difficult thing.

It’s a challenge but it’s also really rewarding, and now we have really an incredible staff that we’ve built, it’s taken us four and a half years to get to this point. But we’re open today and I was able to come to New York to do this interview, so I think we’ve come a long way.

If you can’t hear the clip, click here.

Listen to my full interviews with Brandon and Jack by downloading them from SoundCloud here and here. (And download any of the past shows here.)

Next on Entrepreneurs are Everywhere: Michael Mondavi, founder and coach of Folio Fine Wine Partners, and Magdalena Yesil, founding investor and board member of Salesforce.

Tune in Thursday at 1 pm PT, 4 pm ET on Sirius XM Channel 111.

Want to be a guest on the show? Entrepreneurship stretches from Main Street to Silicon Valley, from startups to big companies. Send an email to terri@kandsranch.com describing your entrepreneurial journey.

Filed under: Customer Development, SiriusXM Radio Show | 4 Comments »

Hacking for Defense (H4D) @ Stanford – Week 1

Posted on April 4, 2016 by steve blank

We just had our first Hacking for Defense class and the 8 teams have hit the ground running.

They talked to 86 customers/stakeholders before the class started.

(Because of the embedded presentations this post is best viewed on the website.)

Hacking for Defense is a new class in Stanford’s School Engineering, where students learn about the nation’s security challenges by working with innovators inside the Department of Defense (DoD) and Intelligence Community. The class teaches students the Lean Startup approach to entrepreneurship while they engage in what amounts to national public service.

Hacking for Defense uses the same Lean LaunchPad Methodology adopted by the National Science Foundation and the National Institutes of Health and proven successful in Lean LaunchPad and I-Corps classes with 1,000’s of teams worldwide. Over 70 students applied to this new Stanford class and we selected 32 of them in 8 teams.

One of the surprises was the incredible diversity of the student teams – genders, nationalities, expertise. The class attracted students from all departments and from undergrads to post docs.

Before the class started, the instructors worked with the Department of Defense and the Intelligence Community to identify 20 problems that the class could tackle. Teams then were free to select one of these problems as their focus for the class.

Most discussion about innovation of defense systems acquisition starts with writing a requirements document. Instead, in this class the student teams and their DOD/IC sponsors will work together to discover the real problems in the field and only then articulate the requirements to solve them and deploy the solutions.

Hacking for Defense: Class 1
We started the first class with the obligatory class overview slides. (Most of the students had already seen them during our pre-class information sessions but the class also had team mentors seeing them for the first time.)

If you can’t see the slides click here

Then it was time for each of the 8 teams to tell us what they did before class started. Their pre-class homework was to talk to 10 beneficiaries before class started. At the first class each team was asked to present a 5-slide summary of what they learned before class started:

Slide 1 Title slide
Slide 2 Who’s on the team
Slide 3 Minimal Viable Product
Slide 4: Customer Discovery
Slide 5: Mission Model Canvas

As the teams presented the teaching team offered a running commentary of suggestions, insights and direction.

Unlike the other Lean Launchpad / I-Corps classes we’ve taught, we noticed that before we even gave the teams feedback on their findings, we were impressed by the initial level of sophistication most teams brought to deconstructing the sponsors problem.

Here are the first week presentations:

Team aquaLink is working on a problem for divers in the Navy who work 60 to 200 feet underwater for 2-4 hours, but currently have no way to monitor their core temperature, maximum dive pressure, blood pressure and pulse. Knowing all of this would give them early warning of hypothermia or the bends. The goal is to provide a wearable sensor system and apps that will allow divers to monitor their own physiological conditions while underwater.

If you can’t see the presentation click here.

Team Guardian is asking how to protect soldiers from cheap, off-the-shelf commercial drones conducting Intelligence, Surveillance and Reconnaissance. What happens when adversaries learn how to weaponize drones with bullets, explosives, or chemical weapons?

Slides 6 and 7 use the Value Proposition canvas to provide a deeper understanding of product/market fit.

If you can’t see the presentation click here.

Team Skynet is also using drones to to provide ground troops situational awareness. (Almost he inverse of Team Guardian.)

Slides 6 – 8 use the Value Proposition canvas to provide a deeper understanding of product/market fit.

If you can’t see the presentation click here.

Team LTTT (Live Tactical Threat Toolkit) is providing assistance to other countries explosive ordnance disposal (EOD) teams – the soldiers trying to disarm roadside bombs (Improvised Explosive Devices – IEDs). They’re trying to develop tools that would allow foreign explosive experts to consult with their American counterparts in real time to disarm IED’s, and to document key information about what they have found.

If you can’t see the presentation click here.

Team Narrative Mind is trying to determine how to use data mining, machine learning, and data science to understand, disrupt, and counter adversaries’ use of social media (think ISIS). Current tools do not provide users with a way to understand the meaning within adversary social media content and there is no automated process to disrupt, counter and shape the narrative.

If you can’t see the presentation click here.

Team Capella is launching a constellation of satellites with synthetic aperture radar into space to provide the Navy’s 7^th fleet with real-time radar imaging.

If you can’t see the presentation click here.

Pre-Computing the Problem and Solution
As expected, a few teams with great technical assets jumped into building the MVP and were off coding/building hardware. It’s a natural mistake. We’re trying to get students to understand the difference between an MVP and a prototype and the importance of customer discovery (hard when you think you’re so smart you can pre-compute customer problems and derive the solution sitting in your dorm room.)

Mentors/Liaisons/DIUx Support
Besides working with their government sponsors, each team has a dedicated industry mentor. One of the surprises was the outpouring of support from individuals and companies who emailed us from across the country (even a few from outside the U.S.) volunteering to mentor the teams.

Each team is also supported by an active duty military liaison officer drawn from Stanford’s Senior Service College Fellows.

Another source of unexpected support for the teams was from the Secretary of Defense’s DIUx Silicon Valley Innovation Outpost. DIUx has adopted the class and along with the military liaisons translate “military-speak” from the sponsors into English and vice versa.

Advanced Lectures
The Stanford teaching team uses a “flipped classroom” (the lectures are homework watched on Udacity.) However, for this class some of the parts of the business model canvas, which make sense in a commercial setting, don’t work in the Department of Defense and Intelligence Community. So we are supplementing the video lectures with in-class “advanced” lectures that explain the new Mission Model Canvas. (We’re turning these lectures into animated videos which can serve as homework for the next time we teach this class.)

The first advanced lecture was on Beneficiaries (customers, stakeholders, users, etc.) in the Department of Defense. Slides 4-7 clearly show that solutions in the DOD are always a multi-sided market. Almost every military program has at least four customer segments: Concept Developers, Capability Managers, Program Managers, Users.

If you can’t see the presentation click here.

Each team is keeping a running blog of their customer interactions so we can virtually look over their shoulder as they talk to customers. From the look of the blogs week 2 is going to be equally exciting. Check in next week for an update.

Steve, Pete, Joe & Tom

Lessons Learned from Class 1

Talented and diverse students seem eager to solve national defense problems

Teams jumped on understanding their sponsors problems – even before the class

We’ve put 800+ teams through the NSF I-Corps and another 200 or so through my classes, but this class feels really different. There’s a mission focus and passion to these teams I’ve not seen before