The State Department Meets the Lean Startup – Hacking For Diplomacy

Posted on October 31, 2016 by steve blank

h4dip-screen-shotThe academic year is in full swing at Stanford and already we’re deep into our new Hacking for Diplomacy course. Building off last spring’s pioneering Hacking for Defense class, which sought to connect Silicon Valley’s innovation culture and mindset to the Pentagon and the intelligence community, we’ve now expanded our horizons to the Department of State.

The cross-disciplinary class brings students from widely divergent backgrounds together in teams of three to five, each aiming to tackle a gnarly international problem vexing Foggy Bottom in just 10 weeks by applying Lean LaunchPad methodology.

Guiding, drilling and grilling these teams are Jeremy Weinstein, former deputy to the U.S. ambassador to the United Nations and a Stanford professor of political science; Zvika Krieger, the State Department’s representative to Silicon Valley and senior advisor for technology and innovation; retired U.S. Army Col. Joe Felter, who co-created Hacking for Defense and is a senior research scholar at the Center for International Security and Cooperation at Stanford; Steve Weinstein, chief executive of MovieLabs who teaches entrepreneurship at Stanford and UC Berkeley; and yours truly, Steve Blank.

In addition, we’ve recruited a host of mentors, including folks from Google and the cloud computing firm SalesForce; Stanford Law School; and veteran State Department employees now engaged in studies, research or retirement in the Bay Area.julie-makinen

L.A. Times China bureau chief Julie Makinen, who is on a JSK journalism fellowship at Stanford, joined in at the last minute and is helping students with customer discovery techniques, particularly how to find and interview people. I’ve invited Julie to share some observations here on the class to date.
She writes:

When I stumbled into the introductory session for Hacking for Diplomacy a few weeks ago, there was a palpable, kinetic charge in the room at Stanford’s Tresidder Memorial Union. My reporter’s Spidey Sense began to tingle. It feels like something big is going on here, I thought.

The energy was also fed by the crowd of prospective students — a motley, enthusiastic and clearly wicked smart group including engineering PhDs and computer science whiz kids, U.S. Army veterans and mid-career MBAs hailing not just from the United States but from countries including Saudi Arabia, India, France, Israel and Austria.

And ultimately, it was the get-your-hands-messy conceit of the whole shebang:  Make the cut for this class and we are going to throw you headlong at some major real-world problems put forth by the U.S. State Department and see what products you can come up with to solve them. Along the way, you will actively learn the Lean LaunchPad methodology, the framework first developed for business start-ups.

This is no class for slackers, the students were admonished: You will work at warp speed in teams, trying to get your arms around challenges that experts have failed to wrestle to the ground, like tracking refugees missing at sea, countering violent extremism online, and evaluating the effectiveness of peacekeeping forces.

You will get schooled on the labyrinthine bureaucracy of the State Department, its alphabet soup of acronyms, its secret language of abbreviations. You will sniff out and pin down stakeholders and beneficiaries – from Washington functionaries to Syrian migrants – by conducting at least 10 interviews each week. You will meet and interact with VIPs.

You will learn a new rubric for asking questions, posing hypotheses and verifying those ideas. You will prototype solutions, developing and refining them over multiple rounds of iteration and feedback.  Your team will pen detailed updates of your progress and post them online each week for fellow students to learn from and for teachers to evaluate.

At every class, your team must stand up, explain – and defend – what you did in the last seven days and how you have moved the ball forward. In the back row, perched like a panel of fair yet tough judges, the teaching team will listen intently but also interrupt you without mercy, forcing you to drill deeper or acknowledge weaknesses. Simultaneously, your classmates will write critiques of your presentation on a sprawling shared Google spreadsheet in real time.

This is not for the thin-skinned or the weak-kneed. It’s “Shark Tank” meets “American Idol,” with heavy doses of foreign service school, business school and Journalism 101 thrown in. Here’s how it’s been going:

Weeks 1 and 2 – Mission Model, Customer Discovery & Figuring Out Who’s Who at State
For the students, the first week was a mad scramble through a gantlet of tasks: assemble teams, decide which challenge proposed by the State Department to work on, submit a written application and pass an interview with the teaching team. In the end, teams were selected to work on seven different challenges:

The teaching team began with an introduction to the Mission Model Canvas, a slightly modified version of the Business Model Canvas. This one-page schematic with 9 boxes, which students must revise and update each week, acts as the teams’ anchor throughout the class – guiding their research and discovery process and keeping them focused on who their customers or beneficiaries are, what value the team can bring to them with a new product, how to define success, and key tasks and relationships to identify and leverage.mission-model-canvas-sm

Krieger and Jeremy Weinstein took the class on a blitzkrieg tour through the State Department’s byzantine organizational chart, introducing different bureaus and their functions and explaining how their missions often intersect, overlap and sometimes collide.  Students also got a crash course on customer discovery in the foreign policy universe.  “Get out of the building!” Blank encouraged the class. “Talk to people in person or face-to-face on Skype! You need to see their pupils dilate!”

state-dept-org-chart“You have to be comfortable with the amount of uncertainty at the start of class,” said Leonard Bronner, a master’s student in statistics from Austria who is on the team working on the question of missing refugees. “You have to really actively work to consolidate everything that’s coming at you.”

In theory, teams were to start by liaising with their designated sponsor in the State Department, who is supposed to make time each week to check in with the students, offer information and guidance and suggest other people to talk to. In practice, students learned that civil servants are busy and sometimes hard to reach. The time difference between Washington and California often doesn’t help. For many, the first week was a jumble of what felt like disjointed interviews and a mad scramble for even basic information – who are the relevant people and organizations working on or affected by this problem? What do they do? How do they interact?

“In week one, everyone is totally disoriented,” said Blank. “That’s how it works.”

When students did make contact with their State Department sponsors and started asking questions, for some it quickly became apparent that sponsors themselves had trouble articulating exactly what problem they really needed to solve. Other teams learned that there was disagreement within and between different State Department offices about what they hoped the Stanford teams would be doing — or whether they should be working on the problem at all. Some teams got a quick crash course in turf wars and Government Bureaucracy 101.

“In some cases, the sponsors confuse the symptoms of the problem with the root cause,” says Felter. “Last spring [in Hacking for Defense], some of our sponsors didn’t have a good understanding of their problems. At a minimum, coming from the outside and using these tools we give them, students can help their sponsors understand their problems better.”

Because customer discovery is such a key part of the Lean LaunchPad methodology, the student teams have had to rapidly ramp up their interviewing skills. Many realized that it can be a challenge to find sources to speak with, or extract useful information once you do locate them. How do you go about talking to a Syrian refugee who crossed the Mediterranean on a rickety boat? How do you get a supply chain manager for a clothing manufacturer to take your call?

“We are asking students to do a lot in 10 weeks,” admitted Krieger. “They have to tackle a challenge that is new to them. In many cases, they are learning an entirely new field. Like the space team – no one on that team knew about satellites a few weeks ago.”

“Next they have to learn in minute detail about the State Department bureau,” he added. “And then they have to learn about other agencies, because almost all of these problems have an interagency dimension, whether that’s with the Department of Defense, USAID, NASA or beyond.”

And that’s just all prelude to the ultimate work.

“Finally, they have to find an opportunity – a ‘pain point’ as we say, come up with a solution, and prototype it in like six weeks,” said Krieger. “I’m impressed with what they’ve been able to do already. They probably know more about their corners of the State Department than most people at the State Department.”

Weeks 3 and 4 – Fast-tracked by Secretary Kerry, Diving Into the Value Proposition and Defining Mission Achievement
After being put through the ringer of the first two weeks, Hacking for Diplomacy teams got a boost in Week 3 when Secretary of State John Kerry made a swing through Silicon Valley and met with the students.

Asked by business school student Kaya Tilev whether the solutions the students were working on had any actual chance of being implemented, Kerry offered words of encouragement.

kerry-and-students“I have absolute confidence if you come up with a viable solution it is going to be implemented, adopted, and institutionalized,” Kerry said.  “You have a fast track for making that happen because you’re in the program and you know Zvika. So you’re on the right track. Just come up with the deal, okay?”

Later, Kerry would tweet: “Brilliant minds are applying technology to world’s toughest problems. Their perspective will inform our diplomatic engagement going forward.”

Krieger said he’s been overwhelmed by the level of interest among State Department officials in the class. Although the department has long had ways for university students to work on diplomatic issues, the end products have tended to be policy papers or think-tank like reports penned by political science or international relations majors. So the idea that students with engineering or other technical backgrounds might create actual tangible products for diplomatic ends feels fresh, novel and necessary.

“A lot of people are really excited about this, and I vacillate between being excited myself and trying to calibrate expectations” within State, said Krieger.

Unlike the Defense Department, which Krieger describes as “comfortable with technology” and flush with funds, State is a relative tech backwater with a much more limited budget. “Thinking in terms of technology solutions is a paradigm shift for the State Department,” he said.

In Week 3, teams began to really focus in on potential customers/beneficiaries. They rigorously tried to identify what “pains” could be alleviated for these people – and what “gains” might be offered to them that would be irresistible? What value proposition could the teams come up with to make each of their prospective beneficiaries’ lives better?

Many teams made diagrams to help drill down to beneficiaries.

Consider Team Space Evaders, which is working on the satellite collision issue. The team made a detailed flow chart of how data about satellite positioning and potential collisions is shared by entities ranging from the FAA to the Department of Defense and commercial operators. Then they started looking at which customers they might serve – is it a bureaucrat in the State Department? Or is it satellite operators, or satellite insurers? Who has what problems, and which ones might be ripe for solving?

space-evaders-diagramTeam Exodus, working on improving coordination among groups trying to assist Syrian refugees, made an elegant diagram of dozens of organizations involved the “customer workflow” of refugees, from U.N. agencies to the Red Cross and Doctors Without Borders.

Team 621, working on the missing refugees challenge, literally drew a map of the Mediterranean, showing departure countries, target arrival countries, and location of where boats sink.

team-621-diagramIn Week 4, a number of teams were sketching out minimal viable products, or MVPs. These super basic “products” are stabs at something that might address the pains and gains of their customers. team-trace-mvpTeams must take these products out to the real world and ask potential users for feedback. Would anyone want to buy or use these things – assuming the teams could even make them? Would the product be considered essential, a must-have? Or just “nice to have?” Would the product help each beneficiary achieve their core mission?

exodus-week-5-mvpThe rigorous, continual customer discovery process demands fortitude, students say. “Every week we learn something that completely invalidates something we thought we knew,” said Anusha Balakrishnan, a 23-year-old master’s student in computer science who is working on countering violent extremism. “So we have to keep iterating.”

Balakrishnan said the class has prompted her to think a little differently about how she might use her skills after graduation. “I didn’t realize before this how many companies are interested in applying machine learning to problems like countering violent extremism,” she said. “Even if I’m working at a tech company in the future, maybe I can still do stuff like this. So it’s opened my eyes to that.”

Even in the first few weeks, the response to the students’ work so far has been gratifying, she added.

“It’s great that people are taking us so seriously when we contact them and tell them what we are doing – it feels that we could actually add value to NGOs or the State Department,” she said.  “I didn’t think that was possible before this class.”

Filed under: Hacking for Diplomacy, Teaching | 2 Comments »

Why Tim Cook is Steve Ballmer and Why He Still Has His Job at Apple

Posted on October 24, 2016 by steve blank

What happens to a company when a visionary CEO is gone? Most often innovation dies and the company coasts for years on momentum and its brand. apple-equals-microsoftRarely does it regain its former glory.

Here’s why.

Microsoft entered the 21st century as the dominant software provider for anyone who interacted with a computing device. 16 years later it’s just another software company.

After running Microsoft for 25 years, Bill Gates handed the reins of CEO to Steve Ballmer in January 2000. Ballmer went on to run Microsoft for the next 14 years. If you think the job of a CEO is to increase sales, then Ballmer did a spectacular job. He tripled Microsoft’s sales to $78 billion and profits more than doubled from $9 billion to $22 billion. The launch of the Xbox and Kinect, and the acquisitions of Skype and Yammer happened on his shift. If the Microsoft board was managing for quarter to quarter or even year to year revenue growth, Ballmer was as good as it gets as a CEO. But if the purpose of the company is long-term survival, then one could make a much better argument that he was a failure as a CEO as he optimized short-term gains by squandering long-term opportunities.

How to Miss the Boat – Five Times
Despite Microsoft’s remarkable financial performance, as Microsoft CEO Ballmer failed to understand and execute on the five most important technology trends of the 21st century: in search – losing to Google; in smartphones – losing to Apple; in mobile operating systems – losing to Google/Apple; in media – losing to Apple/Netflix; and in the cloud – losing to Amazon. Microsoft left the 20th century owning over 95% of the operating systems that ran on computers (almost all on desktops). Fifteen years and 2 billion smartphones shipped in the 21st century and Microsoft’s mobile OS share is 1%. These misses weren’t in some tangential markets – missing search, mobile and the cloud were directly where Microsoft users were heading.  Yet a very smart CEO missed all of these.  Why?

Execution and Organization of Core Businesses
It wasn’t that Microsoft didn’t have smart engineers working on search, media, mobile and cloud. They had lots of these projects. The problem was that Ballmer organized the company around execution of its current strengths – Windows and Office businesses. Projects not directly related to those activities never got serious management attention and/or resources.

For Microsoft to have tackled the areas they missed – cloud, music, mobile, apps – would have required an organizational transformation to a services company. Services (Cloud, ads, music) have a very different business model. They are hard to do in a company that excels at products.

Ballmer and Microsoft failed because the CEO was a world-class executor (a Harvard grad and world-class salesman) of an existing business model trying to manage in a world of increasing change and disruption. Microsoft executed its 20th-century business model extremely well, but it missed the new and more important ones. The result?  Great short-term gains but long-term prospects for Microsoft are far less compelling.

In 2014, Microsoft finally announced that Ballmer would retire, and in early 2014, Satya Nadella took charge. Nadella got Microsoft organized around mobile and the cloud (Azure), freed the Office and Azure teams from Windows, killed the phone business and got a major release of Windows out without the usual trauma. And is moving the company into augmented reality and conversational AI. While they’ll likely never regain the market dominance they had in the 20th century, (their business model continues to be extremely profitable) Nadella likely saved Microsoft from irrelevance.

What’s Missing?
Visionary CEOs are not “just” great at assuring world-class execution of a tested and successful business model, they are also world-class innovators. Visionary CEOs are product and business model centric and extremely customer focused.

The best are agile and know how to pivot – make a substantive change to the business model while or before their market has shifted. The very best of them shape markets – they know how to create new markets by seeing opportunities before anyone else. They remain entrepreneurs.

arc-2-5
One of the best examples of a visionary CEO is Steve Jobs who transformed Apple from a niche computer company into the most profitable company in the world. Between 2001 to 2008, Jobs reinvented the company three times. Each transformation – from a new computer distribution channel – Apple Stores to disrupting the music business with iPod and iTunes in 2001; to the iPhone in 2007; and the App store in 2008 – drove revenues and profits to new heights

apple-2001-to-08-arcThese were not just product transitions, but radical business model transitions – new channels, new customers and new markets–and new emphasis on different parts of the organization (design became more important than the hardware itself and new executives became more important than the current ones).

Visionary CEOs don’t need someone else to demo the company’s key products for them. They deeply understand products, and they have their own coherent and consistent vision of where the industry/business models and customers are today, and where they need to take the company.  They know who their customers are because they spend time talking to them. They use strategy committees and the exec staff for advice, but none of these CEOs pivot by committee.

Why Tim Cook Is the New Steve Ballmer
And that brings us to Apple, Tim Cook and the Apple board.

One of the strengths of successful visionary and charismatic CEOs is that they build an executive staff of world-class operating executives (and they unconsciously force out any world-class innovators from their direct reports). The problem is in a company driven by a visionary CEO, there is only one visionary. This type of CEO surrounds himself with extremely competent executors, but not disruptive innovators. While Steve Jobs ran Apple, he drove the vision but put strong operating execs in each domain – hardware, software, product design, supply chain, manufacturing – who translated his vision and impatience into plans, process and procedures.

slide1When visionary founders depart (death, firing, etc.), the operating executives who reported to them believe it’s their turn to run the company (often with the blessing of the ex CEO).  At Microsoft, Bill Gates anointed Steve Ballmer, and at Apple Steve Jobs made it clear that Tim Cook was to be his successor.

Once in charge, one of the first things these operations/execution CEOs do is to get rid of the chaos and turbulence in the organization. Execution CEOs value stability, process and repeatable execution. On one hand that’s great for predictability, but it often starts a creative death spiral – creative people start to leave, and other executors (without the innovation talent of the old leader) are put into more senior roles – hiring more process people, which in turn forces out the remaining creative talent. This culture shift ripples down from the top and what once felt like a company on a mission to change the world now feels like another job.

As process oriented as the new CEOs are, you get the sense that one of the things they don’t love and aren’t driving are the products (go look at the Apple Watch announcements and see who demos the product).

Tim Cook has now run Apple for five years, long enough for this to be his company rather than Steve Jobs’. The parallel between Gates and Ballmer and Jobs and Cook is eerie. Apple under Cook has doubled its revenues to $200 billion while doubling profit and tripling the amount of cash it has in the bank (now a quarter of trillion dollars). The iPhone continues its annual upgrades of incremental improvements. Yet in five years the only new thing that managed to get out the door is the Apple Watch. With 115,000 employees Apple can barely get annual updates out for their laptops and desktop computers.

But the world is about to disrupt Apple in the same way that Microsoft under Ballmer faced disruption. Apple brilliantly mastered User Interface and product design to power the iPhone to dominance. But Google and Amazon are betting that the next of wave of computing products will be AI-directed services – machine intelligence driving apps and hardware. Think of Amazon Alexa, Google Home and Assistant directed by voice recognition that’s powered by smart, conversational Artificial Intelligence – and most of these will be a new class of devices scattered around your house, not just on your phone. It’s possible that betting on the phone as the platform for conversational AI may not be the winning hand.

It’s not that Apple doesn’t have exciting things in conversational AI going on in their labs. Heck, Siri was actually first. Apple also has autonomous car projects, AI-based speakers, augmented and virtual reality, etc in their labs. The problem is that a supply chain CEO who lacks a passion for products and has yet to articulate a personal vision of where to Apple will go is ill equipped to make the right organizational, business model and product bets to bring those to market.

Four Challenges for the Board of Directors
The dilemma facing the boards at Microsoft, Apple or any board of directors on the departure of an innovative CEO is strategic: Do we still want to be a innovative, risk taking company?  Or should we now focus on execution of our core business, reduce our risky bets and maximize shareholder return.

Tactically, that question results in asking: Do you search for another innovator from outside, promote one of the executors or go deeper down the organization to find an innovator?

Herein lies four challenges. Steve Jobs and Bill Gates (and 20th century’s other creative icon -Walt Disney) shared the same blind spot: They suggested execution executives as their successors. They confused world-class execution with the passion for product and customers, and market insight. From the perspective of Gates there was no difference between him and Ballmer and from Jobs to Cook. Yet history has shown us for long-term survival in markets that change rapidly that’s definitely not the case.

The second conundrum is that if the board decides that the company needs another innovator at the helm, you can almost guarantee that the best executor – the number 2 and/or 3 vice president in the company – will leave, feeling that they deserved the job. Now the board is faced with not only having lost its CEO, but potentially the best of the executive staff.

The third challenge is that many innovative/visionary CEOs have become part of the company’s brand. Steve Jobs, Jeff Bezos, Mark Zuckerberg, Jeff Immelt, Elon Musk, Mark Benioff, Larry Ellison. This isn’t a new phenomenon, think of 20th-century icons like Walt Disney, Edward Land at Polaroid, Henry Ford, Lee Iacocca at Chrysler, Jack Welch at GE and Alfred Sloan at GM. But they’re not only an external face to the company, they were often the touchstone for internal decision-making. Years after a visionary CEO is gone companies are still asking “What would Walt Disney/Steve Jobs/Henry Ford have done?” rather than figuring out what they should now be doing in the changing market.

Finally, the fourth conundrum is that as companies grow larger and management falls prey to the fallacy that it only exists to maximize shareholder short-term return on investment, companies become risk averse. Large companies and their boards live in fear of losing what they spent years gaining (customers, market share, revenue, profits.) This may work in stable markets and technologies. But today very few of those remain.

In the 21st Century an Execution CEO as a Successor Increasingly May be The Wrong Choice
In a startup the board of directors realizes that risk is the nature of new ventures and innovation is why they exist. On day one there are no customers to lose, no revenue and profits to decline. Instead there is everything to gain. In contrast, large companies are often risk-averse engines – they are executing a repeatable and scalable business model that spins out the short-term dividends, revenue and profits that the stock market rewards. And an increasing share price becomes the reason for existing. The irony is that in the 21st century, the tighter you hold on to your current product/markets, the likelier you will be disrupted. (As articulated in the classic Clayton Christensen book The Innovators Dilemma, in industries with rapid technology or market shifts, disruption cannot be ignored.)

Increasingly, a hands-on product/customer, and business model-centric CEO with an entrepreneurial vision of the future may be the difference between market dominance and Chapter 11. In these industries, disruption will create opportunities that force “bet the company” decisions about product direction, markets, pricing, supply chain, operations and the reorganization necessary to execute a new business model.  At the end of the day CEOs who survive embrace innovation, communicate a new vision and build management to execute the vision.

Lessons Learned

  • Innovation CEOs are almost always replaced by one of their execution VPs
  • If they have inherited a powerful business model this often results in gains in revenue and profits that can continue for years
  • However, as soon the market, business model, technology shifts, these execution CEOs are ill-equipped to deal with the change – the result is a company obsoleted by more agile innovators and left to live off momentum in its twilight years
A shorter version of this article previously appeared in the Harvard Business Review.

Filed under: Corporate/Gov't Innovation | 125 Comments »

The 11 Bad Habits Killing Innovation in Your Company

Posted on October 13, 2016 by steve blank

osterwalder-photoAlexander Osterwalder invented the Business Model Canvas, co-founded strategyzer.com and was the lead author of Business Model Generation which sold a million copies in 30 languages.

Alexander and I often collaborate on new ideas for corporate innovation.  Here’s his guest post on what bad habits to avoid inside of a company.

Big companies have great execution habits to manage and improve successful business models and value propositions. But the habits that foster execution can easily kill new growth initiatives inside your company.

Bad Habit #1: The current business model dominates the agenda
In most companies the future suffers at the expense of the present. Companies are great at improving their existing business model and value propositions, but fall short when it comes to inventing entirely new business models, value propositions, and growth engines. In fact, by the time a company realizes it needs to reinvent itself for future success, it’s often too late. This happens because managing the present often takes oxygen away from inventing the future. Rita McGrath, a Columbia Business School professor says, “there’s pleasing today’s customers and there’s developing tomorrow’s business.” You need to be excellent at both.

Remedy: Create a protected space in your org chart where you invent and test new business models and value propositions. Equip this “space” with power and prestige. Become an ambidextrous organization — one that is excellent at managing and improving your existing business, alongside inventing new ones.

Bad Habit #2: One-size-fits-all decision making hurts speed & inventiveness
Companies that grow in size and scale proven products and services can quickly fall into a trap of slowness, unthoughtful risk aversion, and failure to experiment. As Jeff Bezos puts it, one-size-fits-all decision making “hurts speed and inventiveness” inside large organizations. In fact, Bezos constantly adjusts Amazon’s culture to ensure that the company never slows down and loses its entrepreneurial and nimble approach to finding future business success.

Remedy: Amazon distinguishes between non-reversible decisions with substantial sunk costs (like e.g. investing in a new warehouse in Amazon’s case), and reversible decisions like experimenting with a new offer. The former requires slow and careful decision making. The latter requires speed and agility.

Bad Habit #3: Insisting on untested and detailed business plans
Most established companies require detailed business plans for new ideas. This results in carefully crafted and thought-through documents with detailed spreadsheets and a great focus on how an idea will be implemented. However, the first goal of an innovator should not be to think hard about an idea and describe its implementation. First and foremost, an innovator’s job should be to rapidly, cheaply, and continuously test and adapt ideas until there’s enough evidence from the field to prove they will work. Only the latter helps avoiding big flops because it systematically reduces the risk and uncertainty of new ideas. Business plans actually maximize the risk of failure because of the focus on executing an unproven idea rather than testing it.

Remedy: Use business plans only for execution of existing businesses. Don’t ask innovators for business plans. Instead, implement processes that force innovators to systematically prototype and test ideas, reduce risk and uncertainty, and ultimately provide the evidence that an idea will work and is worth doing.

Bad Habit #4: Opinions matter more than evidence
Senior leaders acquire a lot of knowledge and experience about their business over the course of their  career. Unfortunately, this knowledge may be irrelevant when it comes to new value propositions and new business models. For example, the knowledge that Kodak’s leaders acquired during their successful decades in analog film didn’t equip them for digital photography. Quite the contrary. The rules to compete in the digital age are completely different. That’s why it’s so important for companies to “get out of the building” and interact with customers. Steve Blank, father of the Lean Startup movement, stresses that you will never know enough about your customers if you are holed up inside a boardroom. A good idea might still be a bad idea because customers don’t care about it. Michael Schrage, a research fellow at MIT, emphasizes that “a testable idea is better than a good idea”.

Remedy: Educate leaders that judging ideas for new value propositions, business models, and growth engines requires evidence from the field rather than just “expert opinion” from leadership. Implement processes that judge ideas based not on how they look, but based on the evidence from the field that support them.

Bad Habit #5: Outsourcing customer discovery and testing
Large companies have a habit of hiring outside agencies to do market research and customer discovery. That’s dangerous when it comes to developing new value propositions, business models, and growth engines. You can’t hire outside professionals to test and learn from customer interactions and make decisions for you. New ideas require many rapid iterations between prototyping, immediately testing with customers, and then deciding how to adapt your idea based on the acquired insights.

Remedy: For radically new ideas you should defer hiring outside agencies until you’ve found product/market fit. Instead, roll up your sleeves and internalize the hard work of rapid prototyping, testing, learning, and deciding. Third parties can help you with the process, but they can’t do the work for you.

Bad Habit #6: Senior leadership too busy for hands-on innovation
Senior leaders are very busy and time pressed people. Typically, they see the “getting out of the building” to test ideas with customers as a task to be performed by subordinates. But leaders have to be more than just sponsors of new business ideas. Decision makers are the ones who can make things happen. They are the ones who need to feel the market and talk to (potential) customers to learn that some of their initial assumptions or strong opinions might be completely wrong. Equipped with these market insights they can help move things faster.

Remedy: Distinguish between senior leaders who manage the present like running factories, and senior leaders who are involved in creating the future and need to “get out of the building”.

Bad Habit #7: Obsessing about competitors rather than customers
Unfortunately, many companies are more obsessed by their competition than their customers. Your customers are far more important than your competitors. Your (potential new) customers can tell you how to beat your competitors. Customer have the evidence your organization needs to validate or invalidate new business ideas and potential growth engines. That doesn’t mean you should completely ignore the competition. After all, business models and value propositions aren’t designed in a vacuum. However, competitors should not be your primary focus. As Steve Blank says, “You can’t drive forward by looking in the rear view mirror.”

Remedy: Obsess over your customers first when developing and testing new value propositions, business models, and growth engines. Then, evaluate how these new ideas perform in the competitive landscape.

Bad Habit #8: Focus on technology risk at the expense of other risks
New business ideas face many different risks. The California design firm IDEO distinguishes between three types of risk when they assess prototypes: desirability, feasibility, viability. Desirability is about the risk of your customers not being attracted by your new value proposition. Feasibility is about technology and infrastructure risks. Viability is about financial risks. We added a fourth risk, adaptability. Adaptability is about the risk of a business model and value proposition not being fit for evolving external factors, like competition, technology change, or regulation (risk: external threats).

Remedy: Make sure you test all four types of risks: desirability, feasibility, viability, and adaptability.

Bad Habit #9: Innovation is career limiting
In many companies being an innovator is not an attractive career path. First, in most organizations any type of failure is seen as a negative for your career. Yet good innovation processes require rapid experimentation and failure to gain insights, adapt, and ultimately succeed. Second, corporate incentives are geared to rewarding execution, where failure is not an option. Third, in most companies, innovation is still seen as a department for pirates and “the crazy ones” who really add no value to revenue and profit. And finally, prestige in companies is measured by who commands the largest budget and staff. But great innovation programs always start small.

Remedy:
Create different incentive systems for the people focused on execution, and the people focused on innovation. Make innovation a prestigious job in your company. After all, the innovators are ensuring your organization’s survival in an age of constant change.

Bad Habit #10: Innovation is siloed from Execution
Companies struggle to get the “execution engine” and “innovation engine” to collaborate, rather than to compete. Rather than realizing that managing the present and inventing the future are equally important and should be equally resourced, they often fight for the same resources. Often the execution engine deprives the innovators from access to valuable resources like customers, brand, or skills. That means the innovators end up competing without any competitive advantage against the more nimble and agile startups.

Remedy: Create a culture where executors and innovators collaborate because they understand each other’s value to the organization. Create processes and incentives that grant innovators access to customers, brands, and skills so they can outcompete the more nimble and agile startup ventures.

Bad Habit #11: Integrating new ideas into the execution engine too quickly
New ideas are fragile and they need to be carefully nurtured and scaled before they are integrated into the execution engine with its rigid processes, key performance indicators rules, and procedures. If you integrate new ideas before they fully mature you might kill them. For example, Nespresso, the successful daughter company of Nestlé, only survived and thrived because they were physically distant from Nestlé’s headquarters.

Remedy: Protect new ideas until they fully mature; for example, like in Nestlé’s case, by locating the project outside of the company’s headquarters.

Join Alex Osterwalder at the Business Model Canvas Masterclass in San Francisco, Nov. 3 – register here

osterwalder-photo


 

Filed under: Corporate/Gov't Innovation | 8 Comments »

Entrepreneurs are Everywhere Show No. 45: Dan Miller and Brian Zuercher

Posted on October 11, 2016 by steve blank

I always told myself that I would stop pushing forward when there was an overwhelming force from the outside saying that this is not working. But even when I reached that point, I continued to try to brute force it into existence. I wound up losing a lot.

We followed every test and experimental process from the get-go but we didn’t tell our investors we were doing that. They still thought we were building what we had presented in a PowerPoint slide. When they found out, they questioned my decision-making and me as an entrepreneur.

The same passion that got your startup idea off the ground can blind you to signs that your company is failing.

And not keep investors informed about changes to your business model can have serious consequences.

How to recognize when it’s time to pull the plug on your startup idea, and why founders can’t operate afford to operate in a vacuum were the focus 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.

dan-miller

Dan Miller

Joining me in the Stanford University studio were

brian-zuercher

Brian Zuercher

Listen to my full interviews with Dan and Brian by downloading them from SoundCloud here and here

(And download any of the past shows here.)

Clips from their interviews are below.

Dan Miller is the co-founder and CEO of Level Therapy, which provides access to psychotherapists through video, voice, and text. Before Level, Dan was the founder and CEO of Freshsessions, the world’s first marketplace for musicians to find and book studio time anywhere.

Before setting out on his own, Dan held various product, research, and operations roles at Salesforce, SurveyMonkey, Forrester Research, and The Ladders. He was also on the team that wrote the business plan for BlackGirlsCode. In 2014, Business Insider listed Dan as one of the top 46 African Americans in Tech.

With Freshsessions, Dan thought he was on to a great idea. Other people thought so, too, but weren’t willing to pay for the service:

It was going pretty well at the very beginning. We built a landing page, and ran some ads, and started to drive targeted traffic to the ads to see if people would be interested in it.

There was a lot of interest. But it was very difficult to find engaged studio owners that wanted to change how they were operating their businesses to adopt a technology-based model, and find musicians that had enough money to book consistent sessions through the platform.

We found the need, but no payers.

If you can’t hear the clip, click here

He wanted Freshsessions to work so badly that he was tone-deaf to signs that it was time to shut the business down:

I always told myself that I would stop pushing forward when there was an overwhelming force from the outside saying that this is not working. Even when, I believe, in hindsight, that I reached that point, I continued to try to brute force it into existence.

We were trying out different cities, and I was flying around the country, and we were trying different campaigns and various things, and ultimately they were not working.

Through that process, I lost a lot including some relationships with individuals, and I started to develop symptoms of acute anxiety.

 

If you can’t hear the clip, click here

Brian Zuercher is the CEO and co-founder of Seen, a marketing software platform that is helping marketers tell the story of their brand and build relationships with their customers through consumer generated photos and videos. Seen was recognized as the “Innovation Game Changer” at the 2012 Ohio Interactive Awards.  

Actively involved in the local startup community, Brian is a Startup Weekend Columbus host and MC at the monthly morning pitch event for entrepreneurs, WakeUp StartUp.

Additionally, he has an extensive background in building and launching consumer products at Seen, Clearwish (founder), and Woods Industries.

Today, Seen has achieved some success, but it took Brian and his team several pivots to get where they are. They didn’t always keep their angel investors informed about the changes they were making and it nearly cost them:

We followed every test and experimental process from the get-go but we didn’t tell our investors we were doing that. They still thought we were building what we had presented in a PowerPoint slide as the product, but that didn’t work out in our case. 

We did three iterations of the product in less than 12 months, each one progressively going off of different consumer metrics that we found and then partner feedback.

Ultimately, it didn’t work and we decided we had enough time to maybe do one last iteration. We did the tough thing of letting everyone go, reducing the burn down to two of us from almost 10 at one point, and gave ourselves six weeks to turn into a new product.

Meanwhile, the investors thought we were dead. We’d told them, “Hey, we let everyone go. We’ve got some money left, but we don’t know if we’ve got much left.” 

They questioned my decision-making and me as an entrepreneur. Fortunately we had the confidence of a couple board members as well who were able to stand up for us.

If you can’t hear the clip, click here

—

Seeking help to cope with the anxiety he developed as Freshsessions was falling apart, Dan tried some web-based mental health practitioners. The experience wasn’t positive, and led him to come up with the idea for Level Therapy:

I tried one that was solely web-based, with an interesting subscription model, but they didn’t accept insurance. I walked away from that experience feeling cold, and more like a number than a person.  

Immediately, the entrepreneur in me started to kick in, and I started to think about why, objectively, was I having those thoughts? Where did this company miss? How could I build a solution that would address those points?

If you can’t hear the clip, click here

Dan suggests other founders seek out not just a single mentor but a network of fellow entrepreneurs that can act as a kind of advisory board:

I would aim to find other entrepreneurs that are perhaps six months ahead of where you currently are as a company, or six months to a year or two years ahead of where you are, so they are contemporaries that have experience, potentially the same types of challenges that you’re experiencing. They can give you timely advice.  

Also, individuals that are further out, so perhaps they have either sold companies or they’ve been operating companies for three plus years, five plus years, etc. They can give you more long-term strategic advice.

If you can’t hear the clip, click here

Based on his experience with Freshsessions, he also counsels founders to never work with friends:

It was difficult to overnight go from being someone whose relationship was based around just having fun to actually motivating them and inspiring them and pushing them.  

Maybe that was a function of me being young in my professional career as well, but that was my experience. I wouldn’t do it again.

If you can’t hear the clip, click here

—

In his first startup, Clearwish, Brian learned it isn’t enough to focus on trying to realize your vision. The founding team must be on the same page about possible future directions for the company, too.

We were approached to get funded and had enough success and promise at the time, but we couldn’t find alignment around the notion of building a lifestyle business first, a venture-based business, and how big it could really be.

 We had never discussed everyone’s expectations when we founded the company. Oh we had a happy, fun conversation over a couple of beers, but we did not sit down and say, ‘Hey wait, where’s everyone want to go with their life?”

Instead, we launched the product, got momentum very quickly, and were swept up in this process. We misfired on that and broke down that team. It was a learning experience for sure.

 

If you can’t hear the clip, click here

Having worked with startups in Columbus, Ohio, Brian says it’s not necessary to be in a startup ecosystem to make your startup work:

When I was complaining about raising money in Columbus many years ago, Bill Diffenderffer, who ran SkyBus and is now one of the founders of Silvercar, told me, “You keep saying here, but there is no here here, so just go get the money.”

That really stuck with me. The place isn’t necessarily going to make the business go.

If you can’t hear the clip, click here

His advice for other founders? Think big:

I think I try to ask all the questions that I’ve been asking myself, like why are you doing this? Why are you making the decision? Why are you looking at that? Is this what you believe is right for the business versus right for what some financier asked you to do? I push them to think really big.

If you can’t hear the clip, click here

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

Coming up next on the blog: Emily Kennedy, founder and CEO of Marinus Analytics; and Chris Cabrera, founder of Xactly

Tune in Thursday, Oct. 13, at 1 pm PT, 4 pm ET on Sirius XM Channel 111 to hear these upcoming guests on Entrepreneurs are Everywhere: George Zimmer, founder of Men’s Wearhouse and now founder, chairman and CEO of Generation Tux; and Scott Adams, creator of Dilbert

 

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

Entrepreneurs are Everywhere Show No. 44: Jacqueline Ros and Christina Stembel

Posted on October 10, 2016 by steve blank

The first two years of my startup were the most challenging years of my life; I just felt like a complete failure all the time.

In moments of darkness you need to remember why you’re here and why you’re fighting that fight.

Grueling. Demoralizing. Chaotic. Miserable.

Most first-time entrepreneurs aren’t prepared for the challenges they will face building a startup, and yet they wouldn’t trade the experience for anything.

How founders find the determination to push through tough times was the focus 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.

jacqueline-ros

Jacqueline Ros

Joining me in the Stanford University studio were:

christina-stembel

Christina Stembel

Listen to my full interviews with Jacqueline and Christina by downloading them from SoundCloud here and here

(And download any of the past shows here.)

Clips from their interviews are below.

Jacqueline Ros left a teaching job to found Revolar. She and her team ran a successful Kickstarter campaign, went through the Techstars Boulder 2015 accelerator program,  and recently closed a $3 million financing round with The Foundry Group.  

Jacqueline’s goal for the company is to change the way women keep themselves and those they love safe.

She had no startup experience going in and was surprised by the learning curve she faced. Here’s what she tells other first-time founders:

In moments of darkness you need to remember why you’re here and why you’re fighting that fight.

You have to be obsessed with what you’re doing. You have to believe, especially if you have no idea, and you’re coming from a completely different background than tech or entrepreneurship.

You have to be 1000% dedicated to the mission and the problem you’re trying to solve and always be customer focused, because it is a long ride.

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

Christina Stembel dreamed up the idea for Farmgirl Flowers in 2010 after gaining experience across a variety of industries including hospitality and event planning. Her goal was to start a business that was not only innovative and creative, but did some good in the world.  

Her idea for creating signature daily arrangements of locally grown flowers disrupted the floral delivery industry, but Christina quickly found herself overwhelmed:

The first two years were the most challenging years of my life; I just felt like a complete failure all the time.

I would go to networking events and everybody had like a sappy smile on their face and all the stories I was hearing was how much funding everybody had raised and how great everything was and how they had free lunch and all that stuff. I was like, I just switched from coffee to tea because tea bags are like 16 cents a piece and I can’t afford coffee right now.

I just felt really alone and I felt like nobody else was feeling that way. Now that I amd on the other side and can have coffee again, I want to tell people that because I feel people are ashamed to say it.

If you can’t hear the clip, click here

Everybody glosses over how lonely you’re going to feel, but this is really hard. It’s excruciating.

You’re going to cry. You’re going to feel like you’re going to fail all of the time. You’re going to be scared all the time.

If you can’t hear the clip, click here

—

Revolar is a wearable device that allows users to alert a preset list of contacts at the click of a button if they are feeling unsafe or in need of help.

Jacqueline came up with the idea after her sister was attacked twice. By talking to people, including students on college campuses, she found that she was on to something. Then she went to work on the technology:

I hired some contract engineers who used to work on the Life Alert product to build us a really dinky prototype that you could plug into the wall. And I found a couple who worked out of their house to build me a really chintzy app.

If you plugged this prototype into the wall, it would send an alert.

That was enough to get our Kickstarter campaign going.

If you can’t hear the clip, click here

—

She explains why they turned to Kickstarter and what happened with their campaign:

We kept hearing from investors, “Who are your customers? How do you have proof that they’ll pay for this?” Kickstarter was the only platform we could think of to prove that people would buy our product.

We naively thought we would have a viral campaign, but it took us 4 months to create and cost us $25,000. It was an incredible undertaking, and we had the hustle for every last dollar.

By the end of the 45-day campaign, we had 1,200 pre-orders.

If you can’t hear the clip, click here

Today, Revolar has retail partnerships with Brookstone, Best Buy and Amazon. Here’s one thing Jacqueline wishes she’d done differently.

I wish I had talked to an accountant before I talked to a lawyer, because if we had established ourselves as a S Corp or an LLC in the beginning, I could have gotten a lot of my own money back and then reinvested it in the company.

It would have been great in the Ramen noodle days to have the ability to get money back to reinvest in what we were doing.

If you can’t hear the clip, click here

—

Christina started Farmgirl Flowers with $49,000 in her bank account. She set herself up at her dining room table, watched YouTube tutorials on flower-arranging and gave herself two years – or until she ran out of cash – to build the business.

The money didn’t last. She came precariously close to shuttering the company, reaching a point where she had just $411 in the bank.

A single moment gave her the fortitude to keep going, however:

I was taking every order that would possibly come in. Even if it was midnight, I didn’t care.  

As I was walking to my car one night with a delivery of three arrangements, a couple of women stopped me and were like, “Oh my gosh, is that Farmgirl Flowers?” They recognized the burlap wrap that I created. 

The fact that these women on the street recognized the brand I was trying to create and identified it as Farmgirl, I felt like, “Oh my gosh. I’m going to make it. Even though I only have $400 in the bank I’m going to make it. People recognize our product now.”

If you can’t hear the clip, click here

Farmgirl Flowers is on track to make $11 million this year, but two years ago, Christina was again panicked that the company wouldn’t make it:

I started to see a lot of companies that looked eerily similar to us pop up.

I was pretty convinced we were going to be out of business within a year because everywhere I looked there was a lot of consumer confusion or people were asking if we were the other companies now with our burlap-wrapped bouquets.

I thought all of these are raising $5 million, $10 million, $15 million pre-revenue. Here is my brilliant idea and now all these guys from tech companies are quitting their jobs and starting these companies that look like Farmgirl. I was really scared that we were going to be the Friendster to their Facebook.

I thought I had to raise funding to compete with them, so I pitched to 26 companies here on Sand Hill Road in San Francisco and even Boston and New York. I was unsuccessful, so I felt like I failed my team.

Every networking event I would go to, the first, second or third question anybody would ask me is, “What round are you on? Who’s invested?” As soon as I would say, “We’re bootstrapped,” I would see their eyes go over my shoulder and look for someone more valuable to talk to. 

It was really frustrating and demoralizing.

Then I took a step back and realized I had equated my success and my company’s success with funding. I realized that my benchmark for success should be, “Am I creating a company that I’d want to work for, that I’d want to sell to and that I would want to buy from?” If I can do those things, then that’s success.

If you can’t hear the clip, click here

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

Coming up next on the blog: Dan Miller, co-founder of Level; and Brian Zuercher, founder of Seen

Tune in Thursday at 1 pm PT, 4 pm ET on Sirius XM Channel 111 to hear these upcoming guests on Entrepreneurs are Everywhere:

Filed under: Customer Development | Leave a comment »

There are 145 Entrepreneurship Courses at Stanford

Posted on October 6, 2016 by steve blank

Stanford is an incubator with dorms

Download the full text file with links to the courses here.
http://www.slideshare.net/sblank/stanford-entreprenuership-classes

stanford-ent-classes-page-1-of-8stanford-ent-classes-page-2-of-8stanford-ent-classes-page-3-of-8stanford-ent-classes-page-4-of-8stanford-ent-classes-page-5-of-8stanford-ent-classes-page-6-of-8stanford-ent-classes-page-7-of-8stanford-ent-classes-page-8-of-8stanford-ent-classes-page-9-of-9

Filed under: Hacking For Defense, Hacking for Diplomacy, Lean LaunchPad, Teaching | 2 Comments »

Entrepreneurs are Everywhere Show No. 43: Dakin Sloss and Ajeet Singh

Posted on October 3, 2016 by steve blank

In large companies innovators have to work twice as hard – they spend time fighting the system. In a startup, your ideas turn into reality really, really fast.

A startup founder needs to never lose sight of the vision, but be extremely adaptable to pretty much everything else.

Lots of people have visions. Most are hallucinations.

In a startup, you don’t fight the system; you are the system.

And realizing your vision as a founder takes equal parts determination and flexibility.

How startup ideas are conceived and nurtured was the focus of the guests 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.

dakin-sloss

Dakin Sloss

Joining me in the Stanford University studio were

  • Dakin Sloss, co-founder of Tachyus, which offers predictive analytics and quantitative optimization for the petroleum industry
  • Ajeet Singh, co-founder of ThoughtSpot, provider of search-driven analytics
ajeet-singh

Ajeet Singh

Listen to my full interviews with Dakin and Ajeet by downloading them from SoundCloud here and here

(And download any of the past shows here.)

Clips from their interviews are below.

Dakin Sloss co-founded Tachyus, providing predictive analytics and quantitative optimization for the petroleum industry, in 2013.

Prior to Tachyus, Dakin co-founded OpenGov, a platform to share, visualize, and analyze government financial data. Before OpenGov, he built California Common Sense, the open data and government watchdog non-profit.

Dakin was recognized as one of the Forbes 30 Under 30 in 2016. 

While building OpenGov, Dakin learned that founders must maintain the vision for their startup idea while being flexible about how best to achieve it:

Lots of people have visions. Not as many people can figure out how to make them happen.

One of the hardest parts about starting something is being very firm in your big picture vision, and being extremely adaptable to pretty much everything else.

For example, customers usually have a good intuitive understanding of the problem they have. But they can struggle with communicating exactly what that problem is and exactly what solution they’d like. Your job is to help them figure that out.

If you can’t hear the clip, click here

Ajeet Singh is co-founder and CEO at ThoughtSpot.  

Prior to starting ThoughtSpot, Ajeet was co-founder and Chief Products Officer at Nutanix, an enterprise data storage industry. Ajeet learned the ropes of enterprise startups at Aster Data Systems, where he was Senior Director of Product Management.

Prior to Aster, Ajeet worked at Oracle where he was part of the team that first launched Oracle Database to the Amazon EC2 cloud.

Leaving a big company like Oracle to work at a startup was an eye-opener for Ajeet:

In a large company, you come up with new ideas but then you are mostly fighting the system. When you move from a large company to a small company, your ideas turn into reality really, really fast.

Once you realize that your ideas will get implemented very quickly, you think, ‘I’m the only one watching,’ so the bar for your idea actually goes up. You have to make sure that you looked through all the implications of what you are suggesting. Ideas have to be that much higher quality because there are not too many people watching.

If you can’t hear the clip, click here

—

One of the things Dakin struggled with at OpenGov was how important it is to get team communication right. Being the smartest person in the room doesn’t always mean you’re the most effective, he said:

We made so many silly communication mistakes – like we weren’t doing consistent one-on-ones and we weren’t facilitating good communication across the team. We were growing really fast and we would deal with issues as they came up, rather than proactively making sure everyone was working really well together.

So much of building a company is about people, independent of the particular subject that you’re focusing on, and so much is about setting things up for it to be a great environment for people to collaborate, to trust each other. A lot of small things – things like how you set up meetings, and how you schedule out your week – have big, cascading consequences. If you get them right, things are really smooth. If you get them a little bit off, you have a lot to fix.

If you can’t hear the clip, click here

Here’s how he makes sure the Tachyus team works well together:

Companies really thrive on rhythms in the same way that people, or families, or relationships do. So we dedicate the beginning of each of our week to our leadership team meetings and then an “all hands” meeting. These seem like small things, but they turn out to be really important, because as you’re pivoting, changing your business model and changing your product, there need to be some things that are stable to keep people on the same page.

The really the big advantage you have as a small company, is that you can get a lot of things wrong but as long as you get people around the table that are flexible, are good communicators, and are smart, you’re going to be able to figure a lot of things out. You may be in the wrong market at first. You may be in the wrong product at first. The key is getting your organization set up to be adaptable.

If you can’t hear the clip, click here

Having the opportunity to make a difference in the world drives Dakin, and so does working with like-minded people

Part of what’s fun about building a company is bringing together people that have a shared thesis or shared world view. There are obviously lots of differences, but creating an environment in which those people thrive and can collaborate together, it’s a new type of community basically.

If you can’t hear the clip, click here

—

Rather than put work into creating a new markets for his business ideas, Ajeet looks for business opportunities in existing markets. He explains:

What I am excited about is opportunities in very large markets with multiple multibillion dollar exits and where the technology has become old.

The most important thing is to come up with an idea that solves a big problem. Your solution has to be 10x to 100x better, compared to what is out there. People already have an existing way of solving the same problem.

If you can’t hear the clip, click here

At Aster Data Systems, Ajeet and his team ran into challenges trying to transition their product to mainstream customers:

We had a lot of success working with large web companies. Companies like MySpace and LinkedIn became some of our biggest customers. We tried to sell inside Silicon Valley, so these were all tech companies. We were mostly selling our product to engineers.

As we tried to sell outside the Valley, it is a very different world. Selling to an IT person or businessperson in the middle of Chicago is very different from selling to a LinkedIn engineer.

We struggled with our messaging, how we positioned our product to companies that were in the Valley versus outside.

If you can’t hear the clip, click here

He carried the customer lessons with him to Nutanix and it paid off:

At Nutanix, most of our early customers were on the East Coast. We learned that if you are building a product for enterprises, start with the East Coast. You can scale much better. Your learning will be much, much better.

There are 500 Fortune 500 companies and there are global 2000, and there are another maybe 1 million small and medium businesses in the world. A lot of them do not have the engineering talent that companies in the Valley do.

So if you’re building a product, you’ve got to build it, test it, position it for the large market and the large market is not the Valley – unless you are building technology for developers, then Silicon Valley is a great place to do that.

If you can’t hear the clip, click here

Ajeet added that Silicon Valley’s unique startup ecosystem offers founders a chance to do things they could never do elsewhere in the world:

There is no place like this anywhere else. When it comes to cultural diversity, the freedom to express yourself, the freedom to fail, being able to talk about your failures with pride, these kinds of things just don’t exist anywhere else in the world.

You can go to a coffee shop and run in to a billionaire. If they have been successful, they want to give back and they are very open about giving you their time.

I have been really fortunate to have some really good mentors and advisers over the years from whom I have learned a lot.

If you can’t hear the clip, click here

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

Coming up next on the blog: Jackie Ros, founder of Revolar; and Christina Stembel, founder of Farm Girl Flowers

Tune in Thursday at 1 pm PT, 4 pm ET on Sirius XM Channel 111 to hear these upcoming guests on Entrepreneurs are Everywhere:

Filed under: Customer Development | Leave a comment »