Steve Blank Podcast
Summary: Steve Blank, eight-time entrepreneur and now a business school professor at Stanford, Columbia and Berkeley, shares his hard-won wisdom as he pioneers entrepreneurship as a management science, combining Customer Development, Business Model Design and Agile Development. The conclusion? Startups are simply not small versions of large companies! Startups are actually temporary organizations designed to search for a scalable and repeatable business model.
As more and more companies face disruption from globalization, new technology, and startups that have more capital than the incumbents, the continuing cry from Wall Street investors is, “Why can’t companies be as innovative as startups?” Here’s one reason why: Startups can do anything. Companies can only do what’s legal.
Automobile manufacturers shipped 88 million cars in 2016. Tesla shipped 76,000. Yet Wall Street values Tesla higher than any other U.S. car manufacturer. What explains this more than 1,000 to 1 discrepancy in valuation? The future.
We just finished our second Hacking for Defense class at Stanford. Eight teams presented their Lessons Learned presentations. Hacking for Defense is a battle-tested problem-solving methodology that runs at Silicon Valley speed. It combines the same Lean Startup Methodology used by the National Science Foundation to commercialize science, with the rapid problem sourcing and curation methodology developed on the battlefields in Afghanistan and Iraq by Colonel Pete Newell and the US Army’s Rapid Equipping Force.
I gave the Alumni Day talk at U.C. Santa Cruz and had a few things to say about innovation...Even though I live just up the coast, I’ve never had the opportunity to start a talk by saying “Go Banana Slugs.” I’m honored for the opportunity to speak here today. We’re standing 15 air miles away from the epicenter of technology innovation. The home of some of the most valuable and fastest growing companies in the world. I’ve spent my life in innovation, eight startups in 21 years, and the last 15 years in academia teaching it.
I was having coffee with the CEO of a new startup, listening to her puzzle through how to communicate to potential customers. She was an academic on leave from Stanford now selling SAAS software to large companies, but was being inundated with marketing communications advice. “My engineers say our website is old school, and we need to be on Facebook, Twitter and Instagram, my VP of Sales says we’re wasting our marketing dollars not targeting the right people and my board keeps giving me their opinions of how we should describe our product and company. How do I sort out what to do?”
When Colonel Peter Newell headed up the Army’s Rapid Equipping Force (REF) he used lean methods on the battlefields of Iraq and Afghanistan to provide immediate technology solutions to urgent problems. Today, his company BMNT does for government and commercial customers what the Rapid Equipping Force did for the U.S. Army. Pete and I created the Hacking for Defense class (with Joe Felter and Tom Byers.) One of the problems our students run into is that there are always multiple beneficiaries and stakeholders associated with a problem, often with conflicting value propositions and missions. So how do you figure out whose needs to satisfy? Here’s Pete’s view of how you do it.
I was having a second coffee with an ex student, now the head of a marketing inside a rapidly growing startup. His company had marched through customer discovery, learning about the customer problem, validated solutions and was now scaling sales and marketing. All good news.
Getting ready for our next semester’s class, I asked my Teaching Assistant why I hadn’t seen the posters for our new class around campus. Hearing the litany of excuses that followed –“It was raining.” (The posters go inside the building.) “We still have time.” (We had agreed they were to go up a week ago) — I had a strong sense of déjà vu. When I took the job of VP of Marketing in a company emerging from bankruptcy, excuses seemed to be our main product. So we created The No Excuses Culture.
The latest “aha” moment for me when I was at Columbia University teaching an intensive 5-day version of the Lean LaunchPad/I-Corps class. The goal of the class is to expose students to the basics of the Lean Methodology – Business Model Design, Customer Development and Agile Engineering.
On the last day Congress was in session in 2016, Democrats and Republicans agreed on a bill that increased innovation and research for the country. For me, seeing Congress pass this bill, the American Innovation and Competitiveness Act, was personally satisfying. It made the program I helped start, the National Science Foundation Innovation Corps (I-Corps) a permanent part of the nation’s science ecosystem. I-Corps uses Lean Startup methods to teach scientists how to turn their discoveries into entrepreneurial, job-producing businesses. I-Corps bridges the gap between public support of basic science and private capital funding of new commercial ventures. It’s a model for a government program that’s gotten the balance between public/private partnerships just right. Over 1,000 teams of our nation’s best scientists have been through the program.
We’re holding our 2nd Hacking for Defense, Diplomacy,… educators and sponsors class January 17-19 at Georgetown University.
We just held our final week of the Hacking for Diplomacy class, teaching students entrepreneurship and “Lean Startup” principles while they engaged in national public service applying advanced technologies to solve global challenges. Seven student teams delivered their final Lessons Learned presentations documenting their intellectual journey over just 10 short weeks in front of several hundred people in person and online. And what a journey it’s been.
I had to laugh when my post about what happens when innovative CEOs retire or die appeared in both the bastion of capitalism– the Harvard Business Review— and in the official newspaper of the Chinese Communist Party – The People’s Daily.Then I didn’t.
We just finished our Lean LaunchPad class at UC Berkeley’s engineering school where many of the teams embedded machine learning technology into their products. It struck me as I watched the teams try to find how their technology would solve real customer problems, is that machine learning is following a similar pattern of previous technical infrastructure innovations. Early entrants get sold to corporate acquirers at inflated prices for their teams, their technology, and their tools. Later entrants who miss that wave have to build real products that people want to buy.
We’ve just held our seventh and eighth weeks of Hacking for Diplomacy at Stanford, and the attention our course is getting from Washington – and around the world – has been interesting. Following Secretary of State John Kerry’s meeting with the students early in the quarter, Deputy Secretary of State Tony Blinken paid a visit to the class in Week 7 and four foreign ministers in week 8.