Hacking for Defense @ Stanford – Week 6

We just held our sixth week of the Hacking for Defense class. Now with over 660 interviews of beneficiaries (users, program managers, stakeholders, etc.) the teams are getting deep into problem understanding and their minimal viable products are getting sophisticated enough to generate detailed customer feedback; we gave them advice on how to “stand and deliver” in class; and our advanced lecture explained how to find and measure mission achievement.

(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.)


Stand and Deliver: Preparing for Presentations
In other classes I’d normally check-in with students in the middle of the quarter / semester to hear any concerns. But in this class I don’t. Not because I don’t care, but because I know what response I’ll get in the middle of the quarter having insisted on an impossible pace while beating them with a stick. (In week 9 we’ll get the teams off the customer discovery treadmill and use that session for “reflection”. They’ll look back in awe at their own accomplishments.) This week, instead of a mid-class check-in, I give the Stand and Deliver presentation. In it I remind them what to do to prepare before each class session, tips on what to do when presenting in the class, and thoughts about opportunities after the class.

If you can’t see the presentation click here.

BTW, when I first starting teaching I noticed that teams picked the most articulate team members to give the weekly Lessons Learned presentation. And while that makes sense for a fund raising pitch, it’s the wrong model for a classroom – I want everyone to learn how to present. So each week we select a different team member to lead their team presentation. This means that even students whose first language isn’t English are up in front of the class presenting at least twice during the quarter.

Filling in the Gap: Advanced Lectures
Our advanced in-class lectures are designed to fill the knowledge gap between the on-line lectures and reading assigned for homework and the new realities of the Mission Model canvas and the DOD/IC as beneficiaries.

The goals of the weekly advanced lectures are:

  1. Define what specifically the teams need to accomplish outside of the building in the coming week to test their hypothesis for that specific part of the canvas
  2. Describe why the next part of the mission model canvas is important (to the user, organization, country, etc.)
  3. Offer specific examples of the deliverables we expect to see in their next week’s presentation as a result of their discovery

We can gauge how effective the lecture was when we see the team’s slides the next week. If the team presentations are all over the map, then our lectures were not effective. If the presentations across the teams are consistent then our lectures were on-target. This is a pretty quick way for us to tune our content.

This week some of the teams failed to present anything about last week’s buy-in lecture so it was a wakeup call that we needed to be more prescriptive in the lectures.

Pivots
A pivot is defined as a substantive change in one or more components of the mission model canvas (any of the 9 boxes). A pivot occurs after learning that your hypotheses about a specific part of the canvas are wrong. Often it’s a change in who’s the beneficiary / stakeholder / customer. Or it may be a change in the value proposition you’re delivering to those beneficiaries or it can be a substantive change in any of the 9 boxes of the canvas.

The two most important parts of a mission model canvas are the beneficiaries and the value proposition. The combination of these two is called “product/market fit.” If you’re not getting beneficiaries grabbing your value proposition out of your hands, you don’t have product/market fit.

While this sounds simple, as the teams are discovering this week, you don’t get a memo that says your hypotheses are wrong. At first you just get ambiguous data. You think hmm, perhaps I just need to talk to more people or the “right” people or just tweak the feature set. After a while you begin to realize your assumptions are incorrect, (or in this class, it’s even possible that the sponsor’s assumptions were incorrect.) It feels depressing and confusing. Finally, it dawns on you that it’s time to consider a pivot. A pivot is the lean methodology’s way to fire the plan without firing people. Pivots are what allows startups to be agile, and to move with speed and urgency.

In an actual startup, trying to complete the rest of the mission model canvas if you don’t have product/market fit is just going through the motions. Yet for the purpose of the class (versus an incubator) we do just that – we keep marching the teams through each canvas component because we want to teach them about all nine parts of the canvas. This creates cognitive dissonance for the teams – on purpose. Even though they are focused on learning about the next part of the canvas, every team continues to tenaciously search for that fit. (If we would insist they do it, it would feel like extra assigned work. When they do it on their own, it’s because it’s an obsession to solve the problem.)

This week we are seeing the typical class distribution. Several teams are in the despair, depressed and confused stage, a few are coming to the realization that it’s time to pivot, and others think they have product/market fit. It’s all part of the class. They and you will be surprised where the teams end up by the end of the class.

Team Presentations: Week 6
This week the teams’ assignment was to understand how to get “buy-in” inside their sponsors’ agency: specifically, how do they “get, keep and grow” their product inside their sponsors’ agency/command from initial interest all the way through expansion.

Aqualink started the class 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. Now they understand that the problem the divers want solved is underwater 3-D geolocation.

Week6_H4D_Aqualink buyinSlides 3-11 are a good example of what is required to go from initial Buy-in to scale in the sponsors organization.

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 gaps about surface ships from heterogeneous data.

Slide 11 is the team’s first pass at understanding what a get-keep-grow pipeline would look like. Note the details of the “get” stage – awareness, interest, consideration and purchase.

If you can’t see the presentation click here

Capella Space started class believing that launching a constellation of synthetic aperture radar (SAR) satellites into space to provide real-time radar imaging was their business.  Now they’ve realized that the SAR data and analytics is the business.

On slide 3 Capella gave me a reminder why Customer Discovery in this class is hard. In most other classes we insist in face-to-face interviews and if those aren’t possible high resolution video conference. This way you can read their body language and see their reactions to minimal viable products. But for some in the DOD/IC that’s not possible. The team realized that sending their MVP before the interview got them very different reactions then just conversations.

If you can’t see the presentation click here

Right of Boom is trying to help foreign military explosive ordnance disposal (EOD) teams better accomplish their mission.  Now they are developing systems, workflows, and incentives for allied foreign militaries with the goal of improved intelligence fidelity.

The team is discovering that the value proposition for the problem they are solving may not be a hardware or software solution, but perhaps could be solved by different information flows across the beneficiaries.

If you can’t see the presentation click here

NarrativeMind is developing tools that will optimize discovery and investigation of adversary communication trends on social media, allowing ARCYBER and others to efficiently respond and mitigate threats posed by enemy messaging.

This week the team further refined the rapid funding of R&D and prototypes through a funding mechanism called Other Transactional Authority in Slides 2-5. They further refined the org chart of who owned the problem within the DOD/IC in slide 6. They further refined their Minimal Viable Product to product/market fit in Slides 8-10.

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.

Slides 3-4 are the team’s first pass at understanding what a get-keep-grow pipeline would look like. Note the details of the “get” stage – awareness, interest, consideration and purchase.  In slide 5 the team had a first demo of their MVP auto tracking of drones.

If you can’t see the presentation click here

Guardian is trying to counter asymmetric threats from commercial drones. This week the team worked to understand what a get-keep-grow pipeline would look like in slides 5-7.  Their sponsor invited them to attend the drone conference at Fort A.P. Hill in Virginia. The team will be flying there and back in between classes.

If you can’t see the presentation click here

Advanced Lecture – Mission Achievement
Joe Felter presented the advanced lecture on Mission Achievement.

In a business the aim is to earn more money than you spend and you measure achievement/success by the revenue you bring in. In a mission-driven organization such as the defense and intelligence community, there is no revenue to measure. Instead you mobilize resources and a budget to solve a particular problem and create value for a set of beneficiaries (customers, support organizations, warfighters, Congress, the country, etc.)  So we ask the teams: how do you measure mission success/achievement for both the sum of the beneficiaries and for each individual beneficiary.

If you can’t see the presentation click here

Lessons Learned

  • The deeper teams dig into the problems some are discovering their initial hypotheses about product/market fit are wrong
    • Some are also discovering that they are adding to their sponsors understanding of the problem
  • This creates uncertainty and confusion
    • Some teams are in the “ditch of despair”
  • They all come out of it
    • with a deeper understanding of the problem and the product/market fit between the beneficiaries/value proposition
  • Many of them will pivot
    • This is what enables Lean teams to move with speed and urgency

Entrepreneurs are Everywhere Show No. 30: Guido Kovalskys and Doris Korda

There was a time when having the information gave you the power. That’s no longer the key. The problem isn’t getting information or data; it’s knowing what to do with it.

Founders will always encounter naysayers, shut out the voices and listen to the customers instead. It gets you to a business faster.

Two lessons from 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.

Guido Kolvaskys

Guido Kovalskys

Joining me in from the studio at Stanford University were:

DorisKorda

Doris Korda

Listen to the full interviews with Guido and Doris by downloading them from SoundCloud here and here.

(And download any of the past shows here.)

Clips from their interview are below.

Guido Kovalskys founded four companies in the last 15 years — classroom education, entertainment, health care and adventure vacation destinations and worked at McKinsey & Company before becoming a startup founder.

 While doing Nearpod his education startup, Guido learned to listen to the customers and shut out the naysayers:

Guido: I was clueless about how the education system worked other than as a consumer… so I’m learning a lot. Including that there are a lot of naysayers in the education business. They say things like “There’s a lot of government money and we don’t want to deal with that.” “There’s unions and you don’t want to deal with unions.”

There’s a lot of negative stuff from investors, from sometimes employees. … the publicity around working in education as a for-profit company is not the best one, but it’s huge and important for our society, and I think we need more entrepreneurs in this space.

So I decided to ignore the naysayers. If you feel passionate, and have positive customer feedback, then go do it. You’ll find a way to actually make a business in the space.

Steve:  With almost everything great, people have said, you can’t do that. “The world is flat, you’re going to fall of the edge.” “You can’t go to the moon.” “You can’t build electric cars.” “Who’s going to want a personal computer on your desk?” and “Who’s going to want to talk to your friends on some Facebook? That’s just some kind of stupid idea.” I think every great idea has had that phrase. 

Guido: (Nods.) Nearpod in particular had a lot of that feedback. The first one was, “Mobile devices are not going to get into classrooms anytime soon.” Well they were wrong, it’s happening now.

The second thing we heard was, “Teachers, these are not great customers. They don’t make a lot of money. They will not spend their money on these lessons. They don’t have an influence on the ways the districts spend money. I’ve seen it before. There’s a Death Valley of startups trying to do business with schools and teachers. Don’t do that.”

Well, here we are with $5 million in annual revenues and we’re a consumer company that starts with teachers first, and we don’t charge them a dime.

Now the new naysayer narrative is, “this is not going to scale. …”

So there’s always a good way to destroy what you’re doing. If you really believe it, you put energy and effort, there might be a chance.

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

Prior to her 21 years as an educator, Doris Korda spent 15 years as an engineer-turned-entrepreneur in the cowboy days of the high tech industry. She started at AT&T Bell Laboratories, then grew a small network company she sold to Sterling Commerce.

While working at Bell Labs, Doris honed one of the most essential skills for a founder:

Doris:  I learned to ask questions and not to be afraid of asking questions. That sounds like a simple thing, but back then, in the tech world, it was mostly engineers talking tech, bits and bytes. There were lots of people in the room (who were) a lot smarter than I was, technically. I always wanted to know why should we do this, who wants it, who needs it. I talked to people.

I learned a lot about asking questions, asking why? I learned how to form and cultivate shared interest among people in a system where everybody had individual interests. That sounds like a fancy thing, but it’s really just about a lot of relationship-building.

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

Doris had been on the job at Bell Labs for a year when the company was broken up. Her youth and inexperience became assets as the company worked to remain competitive:

Doris: Some of my colleagues were paralyzed by the change, but I looked for ways to take the piece parts that my particular unit was allowed to work with and create new solutions. I partnered with people all over the company and I basically built new products.

It was really exciting, because they were so desperate for any kind of competitive success, and I was really, really successful. I ended up at a very early age being promoted, and that put me on the fast track, given awards, all this stuff. When I look back and I think about how young I was, and what they let me do, they were crazy. But it was a great opportunity.

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

A founder must love his work, Guido said:

You have to fall in love with the problem. If you’re going to spend your next 5, 10, 15 years working on something it might be as well something that you really feel passionate about. 

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

He talked about what went wrong with Bionexo, his first startup:

Our plan was very theoretical. The business model for automating hospitals was perfect on paper, but we missed very tiny little details, like hospitals don’t have computers for example! This is back in 2000 and most hospitals in Brazil didn’t have computers. And we missed another detail like the procurement process in hospitals in Brazil were corrupt. The person that needed to approve the system was not really interested in actually pushing it forward.

Even though the theory was perfect, we were way ahead of our time.

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

And he discussed why immigrant founders face cultural challenges:

Guido: I get the feeling that as an immigrant when you put your feet off the plate you get punished harder. You always have to be watching your back. It’s not that I feel that way at all. I was lucky to come legally to the U.S I came for business school I came for work. I didn’t suffer the typical stigma. I worked at McKinsey. That gave me that interesting aura, really respect academic and professional background. But I think immigrants in general have a challenge in terms of behaving extremely well …

Steve: They have to be better citizens than the citizens just to prove that you deserve to be a citizen?

Guido: Yeah.

If you can’t hear the clip, click here

The Hawken School entrepreneurship program is modeled on the Lean LaunchPad curriculum, and has been adopted by high schools across the country. Doris explained how it works and why it’s effective:

I find real businesses with real and urgent startup problems around Cleveland who are willing to let a bunch of high school kids work on those problems.

The students get out of the building to talk with customers. They learn creative problem solving. They learn collaboration.

We run the class like a startup. The students are on four different teams working on real problems with real deadlines. They learn critical thinking. They read more and write more. We can’t imagine how much. They learn quantitative analysis. They learn statistics.

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

She also discussed why the education system is ripe for an overhaul:

Doris:  The school system that we have now was created at a time when what mattered most was that everybody learn pretty specific content and it worked. It worked for a long time.

Steve:  What do you mean, like math and history?

Doris:  Yeah,  if you’re going to take a math class, these are the exact things you need to know and this is out of all of what’s happened in history, you need to graduate high school having learned the following things, etc.

What the world needs is not a bunch of people who’ve graduated high school and can recite the quadratic formula from memory, but people who can be smart about knowing what questions to ask and how to solve really complicated problems that the world has never seen yet. 

There was a time when having the information gave you the power. That’s no longer the key. The problem isn’t getting information or data; it’s knowing what to do with it.

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

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

Next on Entrepreneurs are Everywhere: Congressmen Daniel Lipinski and Seth Moulton discuss how the government’s innovation efforts are now Lean.

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.

Hacking for Defense @ Stanford – Week 5

We just held our fifth week of the Hacking for Defense class. This week the teams passed the half way mark in the class. They’ve collectively talked to over 550 beneficiaries (users, program managers, stakeholders, etc.) Their focus for this week was to figure out how to get products rapidly deployed into their sponsors organization. Our advanced lecture explained how to get buy-in for your solution by creating an insurgency among your supporters and advocates.

(This post is a continuation of the series. See all the H4D posts here (and also read Pete Newell’s weekly class summaries here.) Because of the embedded presentations this post is best viewed on the website.)


This is not a typical class
If you’ve been reading these weekly blogs, you’ve seen by now this is not a typical class.

The class is a combination of theory and intensive practice. First and foremost, it is experiential and hands-on. The teams live and die by the Lean Startup credo: “There are no facts inside the building so get the hell outside.” That’s why, just halfway through the class, they’ve already talked to 550 beneficiaries (users, program managers, stakeholders, etc.)

The Lean Methodology requires teams to abandon their preconceived notions of how one builds startups and solve problems – The class is designed to break students out of that all too common mindset that they understand customer’s problems, can design a solution and want to get right to work on building it – all without contact with the stakeholders, users, decision makers, etc.

After decades of teaching I have found that getting students to really change these beliefs cannot be done with reading, case studies or in-class simulations – at least not in the short time we have them in the class. If we really want them to understand how to efficiently and rapidly understand and solve customer problems, we needed to immerse them with customers on day one.

And if we want them to understand what life outside the classroom in an early stage venture will look like, then they need to experience chaos, conflicting data, uncertainty and good-enough decision making for 10 confusing weeks.

We start by pushing the teams incredibly hard to set the pace (and wash out any of those who can’t work at this pace.) Teams hit the class running. Before the first class, each team has already spoken to 10 customers, and they are challenged to present their mission model canvases within 20 minutes of walking through the classroom door. Within 5 minutes from the first time a team starts to present, they get hit with “relentlessly direct” critiques.

If you can’t see the presentation click here

But by week 5, (this week) the teams have either embraced the Lean process or we’re not going to get through to them. So at this point in the class we begin to dial down the tone and tenor of the comments, and over the next four weeks become their cheerleaders rather than their taskmasters.

In week 9 we’ll stop and use the week and class for “reflection”. We’ve found that getting the teams off the customer discovery treadmill at this point helps them to look back and reflect on what they’ve really learned, not just about their product/customers but more importantly about the lean processes, themselves, and team work.

Team Presentations: Week 5
This week the teams were primarily trying to answer how products get from demo to deployment in their sponsors agency.

In all team presentations, note that their new learnings each week are highlighted on their Mission Model canvas in red.

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 gaps about surface ships from heterogeneous data.

Slides 4-27 is one of the best illustrations (actually an animation) of how all the beneficiaries work and interact. Slide 29-33 is their detailed drill-down on how their solution could get acquired and deployed in the Navy.
Sentinel Mission Model

Slide 34 summarizes their current Mission Model canvas. Notice that each beneficiary has a matching value proposition. These relationships are expanded in detail on slides 35-38.

If you can’t see the presentation click here

NarrativeMind is developing tools that will optimize discovery and investigation of adversary communication trends on social media, allowing  the U.S. Army Cyber Command (ARCYBER) and others to efficiently respond and mitigate threats posed by enemy messaging.

This week, in slide 3, the team further refined where ARCYBER sat in the org chart of who owned the problem within the DOD/IC and the  acquisition process.

They learned about getting rapid funding of R&D and prototypes through a funding mechanism called Other Transactional Authority in slide 4. They further refined their Minimal Viable Product to product/market fit in Slides 7 and 8. Their Mission Model canvas in slide 9 has an updated set of beneficiaries now refined in the Value Proposition canvases in slides 10 – 17.

If you can’t see the presentation click here

Guardian is trying to counter asymmetric threats from commercial drones. This week the team worked to understand a day-in-the-life of a Forward Operating Base (FOB) documenting the roles of the captain, lieutenant and a private on a guard tower (slides 5 and 6). They worked on understanding how they would get a counter drone solution deployed through the Army’s Asymmetric Warfare Group (slides 7-9).

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 validated several critical hypotheses about technology and acquisition (slide 2), further refined their Minimum Viable Product (slide 3) and really dug into the path of getting a solution acquired and deployed in the Special Operations Command (SOCOM) in slides 4 – 9.  Their summary of their learning is highlighted on their Mission Model canvas on Slide 10.  Like Fishreel’s analysis, Skynet’s detailed Value Proposition canvases (slides 11 – 16) are also case studies on how to get to a deep understanding of the problems of all the beneficiaries and stakeholders in an organization.

If you can’t see the presentation click here

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

Capella Space is pivoting towards commercial customers based on consistent feedback from the government. They’re finding that the government doesn’t want to pay for launch and sustainment, but instead would rather be users of commercial data.

One of the previous weeks’ hypotheses was that the Coast Guard would want and need synthetic aperture radar images and data (slide 5.) The team did extensive customer discovery at the Coast Guard 11th district command center and seemed find that the problem was not all that acute.  Depressing – but great learning. They continue to believe that the National Geospatial Agency may be a potential DOD customer (slide 9), but are struggling to find the people to talk to.

If you can’t see the presentation click here

Aqualink started the class 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. Their customer discovery helped them to understand that there were three beneficiaries (slide 2): the operators (SEAL divers), medical officers and medical researchers.  Slides 4 and slide 5 show their decision process to focus on the more immediate problem – underwater geolocation. Slides 6 and 7 describe the organization of SOCOM and how products get deployed to the divers. Slide 8, their mission model canvas, highlights their new learnings about deployment and beneficiaries in red. Slides 15-17 diagrams their understanding of the product acquisition and deployment process.

If you can’t see the presentation click here

Right of Boom is trying to help foreign military explosive ordnance disposal (EOD) teams better accomplish their mission. Now they are developing systems, workflows, and incentives for allied foreign militaries with the goal of improved intelligence fidelity.

This week their customer discovery got them to the current lead in Iraq for the Joint iED Defeat Agency (JIDA) (slide 2). This helped them refine their map of how IED information flows (slide 6).  They mapped how to get a product deployed in JIDA in slide 9. This is leading them to a Minimal Viable Product neither they nor JIDA expected in slide 15.

If you can’t see the presentation click here

Advanced Presentation Supporters and Advocates- Creating an Insurgency
The advanced lecture for this week explained how to create “buy-in” among all the beneficiaries.  Pete Newell described how to use anecdotes, artifacts and story-telling to create an insurgency among the advocates for your solution.

If you can’t see the presentation click here

Team Learning Updates
A few of the teams independently starting writing weekly one-page status reports to their sponsors and mentors. This was a great idea. It keeps the sponsors and mentors informed and makes them feel they’re part of the team.

Hacking for Defense Goes National
This week three Universities announced their intention to offer Hacking For Defense this fall –  The University of California at San Diego (UCSD), the University of Pittsburg, and the University of Rochester/ Rochester Institute for Technology.

As we scale the program, the DOD/IC sponsors have requested they have a single point of contact for the soliciting and validating the problems. So we’ll have a single site acting as the “sponsor challenge clearinghouse” for the schools that will be teaching the course.

We’ll have more to say about scaling the program, funding and the Hacking for Defense educators course in later blog posts.

Lessons Learned

  • The teams are learning what it takes to turn a demo into a deployable solution that gets to the field
  • The teams and sponsors are both learning how to accurately define the problem(s)
  • This learning will save time, money and lives

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

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

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

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:

  1.  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. …
  2. 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.
  3. 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.

Hacking for Defense @ Stanford – Week 4

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.

Week_4_H4D_Right_Of_Boom Info flowAnd 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

Hacking for Defense (H4D) @ Stanford – Week 3

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:

  1. Increased number of data streams (i.e. incorporate open source data)
  2. Automated data aggregation (i.e. from disparate sources) and analysis
  3. Enhanced intel through contextualization
  4. 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

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

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

Magdalena Yesil

Joining me in from the studio at Stanford University were

Michael Mondavi

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.

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