story of the lean launch pad jan 2013

The Story of the Lean LaunchPad

www.steveblank.com@sgblank

8 Startups in 21 Years

21 Years Executing the Plan

Actual Photo of What Happened When My Plan Had

First Contact With Customers

All I Need is the 5-Year Forecast

VC’s and the Soviet Unionare the onlypeople to require5-Year Plans

Is this all there is?

Business Schools

Students as Management

ProfessorsConsulting

Existing Companies

© 2012 Steve Blank

Business Schools

Students as Management

ProfessorsConsulting

Existing Companies

© 2012 Steve Blank

Business School Curriculum

• Finance Gov’t & Law• Leadership Supply Chain• Org Behavior Ethics• Operations Global Business• Marketing Accounting• Strategy Global Mgmt

Business Schools

Students as Management

ProfessorsConsulting

© 2012 Steve Blank

Existing Companies

Entrepreneurship

small business, family

business, high-tech

business, new product

development

Execute Execute

Business Schools

Students as Management

ProfessorsConsulting

© 2012 Steve Blank Source: Katz, table 1 http://ideas.repec.org/a/eee/jbvent/v18y2003i2p283-300.html

Existing Companies

1923: Knight: Risk, Uncertainty and Profit

Myles Mace - 1st entrepreneurship course at Harvard1947

1968 4 schools teaching entrepreneurship

1934 Schumpeter: The Theory of Economic Development in english 1945 Weissman: Small Business and Venture Capital

1953 Small Business Administration formed

1954 Small Business Management, first MBA small business course at Stanford

1915: Taussig: Principles of Economics

1952 Kelley & Lawyer: Case Problems in Small Business Management

1953 C. Roland Christensen: Management Succession in Small and Growing Enterprises

1986 First national business plan competition, University of Miami.

1983 First entrepreneurship course in an engineering school, Univ of New Mexico.1979 Livesay: American Made

1988 von Hippel: The Sources of Innovation

2000 McGrath & MacMilian: The Entrepreneurial Mindset1997 Christensen: The Innovator's Dilemma

Entrepreneurship

small business, family

business, high-tech

business, new product

development

Execute

1911: Taylor The Principles of Scientific Management

1993 Karl Vesper New Venture Mechanics

Execute

Business Schools

Students as Management

ProfessorsConsulting

© 2012 Steve Blank Sources: Katz, table 1 http://ideas.repec.org/a/eee/jbvent/v18y2003i2p283-300.html

Existing Companies

Entrepreneurship

small business, family

business, high-tech

business, new product

development

Execute

Business School Curriculum

• Finance Gov’t & Law• Leadership Supply Chain• Org Behavior Ethics• Operations Global Business• Marketing Accounting• Strategy Global Mgmt•Entrepreneurship Small Business

?

It Resulted in a Few Hypotheses

• Startups were not smaller versions of large companies• Startups were about search, not execution• Entrepreneurs and their VC’s were executing on guesses• But the facts were outside the building• Planning needed to come before the plan

Startups Are Not Smaller Versions of Large Companies

Startups Are Not Smaller Versions of Large Companies

Large Companies Execute Known Business Models

Startups Are Not Smaller Versions of Large Companies

Startups Search for Unknown Business Models

What’s A Startup?

A temporary organization designed to search

for a repeatable and scalable business model

A temporary organization designed to search

for a repeatable and scalable business model

A temporary organization designed to search

for a repeatable and scalable business model

A temporary organization designed to search

for a repeatable and scalable business model

Startups Fail Because They Confuse Search with Execute

Startups need their own tools, different from those used

in existing companies

Startups need their own tools, different from those used

in existing companies

And a Question

Can We Build a Process to Search?

Before we Execute

Yes

• Lead User Research - Von Hippel• Crossing the Chasm - Moore• Entrepreneurial Mindset - McGrath/MacMillan• Innovators Dilemma - Christensen• Profitable Value - Lanning• Lanchester Strategy - Yano• High Tech Marketing - Davidow

• OODA Loop - Boyd• Question-based Selling - Freese• Solution Selling - Bosworth• Conceptual/Strategic Selling - Heiman• Spin Selling - Rackham• US Marine Corps Warfighting Manual• Tipping Point - Gladwell

Customer Development Process

+

+ +

So I Wrote A “Book”

And Then A Class

MBA 295: Customer DevelopmentCo-taught with: Rob Majteles @ Treehouse Ventures

Eric Ries Extends the Model

• Took my class at U.C. Berkeley • Co-founded IMVU, I sat on his board

– 1st implementation of Customer Development– Paired it with an Agile Development Model

• Called it the Lean Startup

Which Turned Into A Better Model

+Agile Development

Alex Osterwalder - Business Model

• Business Model Generation• Defines what the “search” is about

Which Turned Into an Even Better Model

+

+

+

And that Turned into Another Book

What I Used to Believe

Education

Entrepreneurial Education was about execution

Entrepreneurial Education was about execution

What We Now Know

Education

Entrepreneurial Education begins with the Search for a

business model

Business Model Hypotheses

Strategy

Organization Customer DevelopmentTeam, Founder-driven

Process Customer Development,Agile Development

Education Creativity/Innovation, Business Model Design, Customer Development, Startup team building,

Entrepreneurial Finance, Agile Development, Customer Funnel:

Get/Keep/Grow Market

Operating Plan +Financial Model

Product ManagementAgile or Waterfall Development

Functional Organization by Department

Organizational Behavior, HR Mgmt, Accounting,

Modeling, Strategy, Operations, Leadership,

Marketing, Manufacturing

Search Execution

Putting Search first is a radical change

It’s not just one more methodology

What We Used to Believe

Instructional Strategies

Cases and a Business Plans were good entrepreneurial teaching tools

Cases and a Business Plan were good teaching tools

What We Now Know

Instructional Strategies

~100 GOOTB connections

Experiential Immersion

Business Model Patterns Replace Cases

56

Nespresso machines

retail mailorder

Nespresso.com

callcenter

Nespresso

stores

households

business

1 x machinesales

repetitive pod sales

distribution channels

coffeeproduction

facilites

production B2C distribution brand

marketing

brandpatents

machine

manufacturer

production

B2C

distributionbrand

marketing

Nespresso club

brandbrand

Nespresso pods

Business Model Competitions Replace Business Plan Competitions

Business Model Competitions Replace Business Plan Competitions

http://www.businessmodelcompetition.com/

Business Model Hypotheses

Strategy

OrganizationCustomer DevelopmentTeam, Founder-driven

Process Customer Development,Agile Development

Education Business Model Design, Customer Development, Startup team building,

Entrepreneurial Finance, Agile Development,

Marketing

Instructional Strategies

Experiential, constructivist, learner-centered,

inquiry-based

Search

Operating Plan +Financial Model

Product ManagementAgile or Waterfall Development

Functional Organization by Department

Organizational Behavior, HR Mgmt, Accounting,

Modeling, Strategy, Operations, Leadership,

Marketing, Manufacturing

Case, Lecture, Small Group, Mentorship

Execution

Classes on Entrepreneurial Execution Follows Search

Entrepreneurship is Experiential

Let’s Teach it That Way

Entrepreneurship is Experiential

And Then Into Another Class

Engr 245: The Lean LaunchPadCo-taught with: Jon Feiber @ MDV

Ann Miura-Ko @ Floodgate

Admission By Application and Team(business model canvas)

Engr 245: The Lean LaunchPadCo-taught with: Jon Feiber @ MDV

Ann Miura-Ko @ Floodgate

VC’s As Part of the Teaching Team

Engr 245: The Lean LaunchPadCo-taught with: Jon Feiber @ MDV

Ann Miura-Ko @ Floodgate

Venture Capitalists

One Mentor Per Team

Engr 245: The Lean LaunchPadCo-taught with: Jon Feiber @ MDV

Ann Miura-Ko @ Floodgate

Venture CapitalistsMentors

Joint Engineering & MBA Class

Engr 245: The Lean LaunchPadCo-taught with: Jon Feiber @ MDV

Ann Miura-Ko @ Floodgate

Venture CapitalistsMentors

Add LaunchPad Central Software to to improve the outcomes

Then It Turned Into Another Class

Co-taught with: Jon Feiber @ MDV Jim Hornthal @ CMEA John Burke @ True Ventures Jerry Engel @ Haas/Monitor Ventures Bhavik Joshi @ Better Place Oren Jacob @ Pixar

Admission By Application and Team

Co-taught with: Jon Feiber @ MDV Jim Hornthal @ CMEA John Burke @ True Ventures Jerry Engel @ Haas/Monitor Ventures Bhavik Joshi @ Better Place Oren Jacob @ Pixar

VC’s As Part of the Teaching Team

Co-taught with: Jon Feiber @ MDV Jim Hornthal @ CMEA John Burke @ True Ventures Jerry Engel @ Haas/Monitor Ventures Bhavik Joshi @ Better Place Oren Jacob @ Pixar

Venture Capitalists

Mentors are Part of the Team

Co-taught with: Jon Feiber @ MDV Jim Hornthal @ CMEA John Burke @ True Ventures Jerry Engel @ Haas/Monitor Ventures Bhavik Joshi @ Better Place Oren Jacob @ Pixar

Venture Capitalists

Mentors

Then It Turned Into Another Class

Managed by

Trained the Trainers

Added two More Schools

Train 9 More Universities

Train 9 More Universities

Taught by Takashi Tsutsumi @ Hosei

Co-taught with Murray Low @ Columbia Bob Dorf Co-taught with: Jon Feiber @ MDV

Taught by Jim Hornthal

And Four More Schools

Taught by Takashi Tsutsumi @ Hosei

Co-taught with Murray Low @ Columbia Bob Dorf Co-taught with: Jon Feiber @ MDV

Taught by Jim Hornthal

And Four More SchoolsAdd 5-day version of the class

5-day Version

79

Put the class online75,000 students

And Then Add an Online Classenables a “flipped classroom”

Lean LaunchPad Educators Class

• Train 65 educators/quarter• Run by NCIIA• Taught with Jerry Engel @ Haas

1,000+ events 100+ countries100,000+ entrepreneurs

Add hundreds of Facilitators and Coaches

5-week hands-on courseCurriculum = Stanford, Berkeley, Columbia100’s of locations in 2013

We now know how to make startups fail less

How?

Teach Them the Entrepreneurial API

Entrepreneurial API = 3 parts

Business Model Canvas

Part 1

Entrepreneurial API

Part 1

Part 2

Customer Development

+

Entrepreneurial API

Part 1

Agile Engineering

+

+

Part 2

Agile Engineering

Part 3

Business Model Hypotheses

Strategy

OrganizationCustomer DevelopmentTeam, Founder-driven

Process Customer Development,Agile Development

Education Business Model Design, Customer Development, Startup team building,

Entrepreneurial Finance, Agile Development,

Marketing

Instructional Strategies

Experiential, constructivist, learner-centered, inquiry-

based

Search

Business Model Hypotheses

StrategyOperating Plan +Financial Model

OrganizationCustomer DevelopmentTeam, Founder-driven

Process Customer Development,Agile Development

Product ManagementAgile or Waterfall Development

Functional Organization by Department

Education Business Model Design, Customer Development, Startup team building,

Entrepreneurial Finance, Agile Development,

Marketing

Organizational Behavior, HR Mgmt, Accounting,

Modeling, Strategy, Operations, Leadership,

Marketing, Manufacturing

Instructional Strategies

Experiential, constructivist, learner-centered, inquiry-

based

Case, Lecture, Small Group, Mentorship

Search Execution