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  • Watching My Students Grow

    Originally published at www.steveblank.com
    By Steve Blank
    “You cannot teach a man anything, you can only help him find it within himself.”
    Galileo Galilei

    Steve BlankOne of the great things about is that while some students pass by like mist in the night others remain connected forever. I get to watch them grow into their careers and cheer them on.

    It’s been three and a half years since I first designed and taught the Lean LaunchPad class and lots of water has gone under the bridge since then. I’ve taught hundreds of teams, the has taught close to 400 teams led by our nations top scientists, and the class is being taught around the world.

    But I still remember a team from the first class, one which wanted to build a robotic lawnmower. It’s now been over 3 years since the team has left my classroom and I thought I’d share with you what the two founders, Jorge Heraud and Lee Redden, learned then and what they’re doing now.

    The Autonomous Lawnmower
    They called their company Autonomow. And they were absolutely convinced what the world needed was an auto-driving lawn mover for institutions with large green spaces.

    You can see their first slide deck in class here.

    Like in all our classes we teach a combination of theory coupled with intense and immersive experiential learning outside the classroom. Students need to get out of the building and talk to 10-15 customers a week.

    The next week they came back in class and presented this.

    Each week we’d teach them about one more part of what makes up a business model. All teams struggle with finding product/market fit.

    By week four their presentation looked like this.

    Notice something different about the cover slide? Massive pivot. Like all great Silicon Valley companies they started with a and guessed who the customers will be. They’re almost always wrong. They could have never figured this out sitting inside a classroom writing a business plan.

    At week five (see here) they were actually getting into farm fields wearing hip boots and overalls. Now they were figuring out how to create demand.

    The process, this relentless drive to turn hypotheses into facts is what makes this learning so rapid.

    At week six they were trying to figure out their distribution channel (here) after another pivot. They got their minimal viable product (a machine vision platform) up and running in the lab.

    At week seven (here) another pivot happened when farmers taught them about how to price their product. Instead of an of selling hardware they were selling a service.

    BTW, notice that they were now dragging their machine vision platform through the farm fields!  If there was ever any question of whether a minimal viable product can work for hardware, see what they say in their video below.

    By week eight they were learning who they needed to partner with (see here). Most importantly they found a customer who taught them while weeding carrots was nice, thinning lettuce was where the money was.

    After 9 weeks their final presentation looked like this.

    When I teach in universities I’m not running an incubator. What I’m trying to do is to get students to learn a way of thinking about new ventures that will stick with them for life. And I try to do by having them teach themselves, rather than us teaching at them. Whether they start a company or not, I don’t keep score.

    But some teams remain connected forever. I get to watch them grow into their careers and cheer them on. This was one of those teams. After class they took this idea and formed a company – Blue River Technology.

    Over the last three years they turned their vision and PowerPoint slides into real hardware that solves real customer problems. And with 3 rounds of funding, including a grant from the National Science Foundation, they’ve raised $13 million.

    Take a look and see what they’ve done.

    If you can’t see the video click here

    “The customers had way more insights then we had. They had been thinking about their own problems for so long…If you just go out and try to sell maybe you’ll find some buyers, but you won’t be learning about what you should be doing.”

    Lee Redden – Blue River Technology

    ——

    I’m off next week on the next great adventure. We’re going to launch the I-Corps @ NIH and change how our country commercializes life sciences.

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  • The Woodstock of K-12 Education

    Steve BlankOriginally posted on www.steveblank.com

    By Steve Blank

    Describing something as the “Woodstock of…” has taken to mean a one-of-a-kind historic gathering. It happened recently when a group of educators came to the ranch to learn how to teach Lean to K-12 students.

    Hawken1

    We Can Do Better than Teaching Students How to Run a Lemonade Stand
    Over the last few years it’s become clear that the days of teaching “how to write a business plan” as the cornerstone of university entrepreneurship are over. We now understand the distinction between – who search for a business model – versus existing companies – that execute a business plan. Learning how to keep track of inventory and cash flow and creating an income statement and a balance sheet are great skills to learn for managing existing businesses.

    But to teach startup entrepreneurship we need to teach students new skills. They need to learn to find answers to questions like: who are my customers, what product features match customer needs, how do I create demand and what metrics matter? Learning these skills requires a very different type of entrepreneurship class, best taught through a hands-on, team-based, experiential approach. (The Lean LaunchPad/I-Corps class is the canonical model of such a class, with versions now taught in hundreds of colleges and universities.)

    In addition, most programs fail to teach students the distinction between a lifestyle business, small business and scalable startup. While the core principles of lean work the same for building a small business versus a scalable startup, there is a big difference between size, scaling, risk, financing, decision-making, uncertainty, teams, etc.

    in grades K-12, if it exists at all still focuses on teaching potential small business entrepreneurship – the equivalent of “how to run a lemonade stand.” This is fine if what we want to do is prepare our 21st-century students to run small businesses (a valid option), but it does real damage when students leave entrepreneurship classes thinking they’ve learned something about how entrepreneurs who build scalable startups think and operate.

    On Fire With A Vision
    In 2013, after taking the 2½-day “Lean LaunchPad for Educators” seminar, a few brave educators from Hawken School, a K-12 school in Cleveland, Ohio, decided to change the status quo. They returned to Hawken on fire with a vision of building a completely different sort of entrepreneurship course in their school. They saw the future was a course where students would learn by working on actual problems in the real world instead of sitting in a lecture hall. They adopted the methodology because, as they said, it provides a framework for the chaos of a startup, where nothing is predictable. They found that they could approach like the scientific method. They ask their students to develop hypotheses and then get out of the classroom to conduct interviews to test them. They learn techniques for , analytical approaches to research, and evidence-based systems for decision-making and problem-solving.

    Teaching Other K-12 Educators
    I had blogged about what Hawken learned implementing something this radical in High School here, and in middle school here. (Take a minute to look at the posts for context.) Honestly, I had never expected the Lean LaunchPad class to work so well in high school. But an even bigger surprise was when Doris Korda, Hawken’s program director, told me she was getting calls and emails from K-12 teachers across the country asking her to hold a “Hawken Lean LaunchPad for K-12 Educators” workshop.

    So the Hawken teaching team took a deep breath and they offered this class – here at the K&S Ranch – so other educators could learn what Hawken is doing and how they’re doing it. Here’s what they were trying to accomplish.

    To see the video click here

    Thirty educators from 19 public and private schools throughout the U.S. attended their inaugural workshop.

    Hawken2

    These educators arrived at the ranch with a palpable sense of urgency, eager for the tools needed to build their own classes. There are no established Lean K-12 curricula, textbooks or handbooks for entrepreneurship programs. The class offered the first set of Lean educators’ materials anywhere. It took the attendees through the basics of Lean and how to build the class at their own schools.

    The Hawken folks knew that in the back of the minds of other educators there was going to be the question, “Will this really work with my students? Can I really get them out of the classroom and expect real learning?” In what I thought was a stroke of genius, the Hawken team brought seven Hawken students who had taken the lean entrepreneurship class to help teach this educators course. These students told the attendees real world stories of how the class changed their lives and offered input and advice about what worked and didn’t for them.

    The energy at the ranch was off the charts. Every minute was filled with talk about how to build this new model of learning and how to use LLP to encourage students to think creatively and analytically.

    The attendees went back to their schools armed with a methodology and sample curriculum to develop their own entrepreneurship courses and put what they learned into practice. Some will take what they learned and apply Lean entrepreneurial principles to create innovate programs and/or to encourage the growth of entrepreneurial ecosystems beyond school walls.

    Here’s what some of them had to say about the experience:

    Watch the video click here

    Jeremy Wickenheiser, a high school teacher with the Denver School of Science and , a STEM public school serving 6,500 students, summed up the remarks we heard again and again: “This is the beginning of a movement to change how students learn.”

    What’s Next
    Encouraged by the attendees, Hawken is developing a comprehensive educational program for educators, with workshops on the East and West coasts, an educator’s handbook, and codified systems to help educators build their own experiential, LLP-based K-12 programs.

    To learn about the workshops and sign up, click here.

    Lessons Learned

    • The old ways of teaching entrepreneurship prepared students for small businesses
    • We needed a new educational approach to prepare them for scalable startups
    • Using the Lean LaunchPad, the developed a successful entrepreneurship program for middle and high school students to do just that
    • Now they are teaching other educators how to do the same
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  • Why Translational Medicine Will Never Be the Same

    Originally posted at www.steveblank.com

    By Steve Blank

    There have been 2 or 3 courses in my entire education that have changed
    the way I think.  This is one of those
    .
    Hobart Harris Professor and Chief, Division of General Surgery at UCSF

    Steve BlankFor the past three years the National Science Foundation Innovation Corps has been our nations best scientists how to build a Lean Startup.  Close to 400 teams in robotics, computer science, materials science, geoscience, etc. have learned how to use business models, get out of the building to test their hypotheses and minimum viable product.

    However, business models in the Life Sciences are a bit more complicated than those in software, web/mobile or hardware. in the Life Sciences (therapeutics,diagnosticsdevicesdigital health, etc.) also have to understand the complexities of reimbursement, regulation, intellectual property and clinical trials.

    Last fall we prototyped an I-Corps class for life sciences at UCSF with 25 teams. Hobart Harris led one of the teams.

    What Hobart learned and how he learned it is why we’re about to launch the I-Corps @ NIH on Oct 6th.

    If you can’t see the video click here

    will never be the same.

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  •  
  • How To Think Like an Entrepreneur: The Inventure Cycle

    Originally posted at www.steveblank.com

    By Steve Blank

    Steve BlankThe  is a process for turning ideas into commercial ventures. Its premise is that begin with a series of untested hypotheses. They succeed by getting out of the building, testing those hypotheses and learning by iterating and refining minimal viable products in front of potential customers.

    That’s all well and good if you already have an idea. But where do come from? Where do inspiration, imagination and creativity come to bear? How does that all relate to and ?

    Quite honestly I never gave this much thought. As an entrepreneur my problem was that I had too many ideas. My imagination ran 24/7 and to me every problem was a challenge to solve and new product to create. It wasn’t until I started that I realized that not everyone’s head worked the same way. While the Lean Startup gave us a process for turning ideas into businesses – what’s left unanswered was, “Where do the ideas come from?  How do you get them?”

    It troubled me that the practice of entrepreneurship (including the Lean Startup) was missing a set of tools to unleash my students’ imaginations and lacked a process to apply their creativity. I realized the innovation/entrepreneurship process needed a “foundation” – the skills and processes that kick-start an  imagination and creative juices. We needed to define the language and pieces that make up an “entrepreneurial mindset.”

    As luck would have it, at Stanford I found myself teaching in the same department with Tina Seelig. Tina is Professor of the Practice at Stanford University School of Engineering, and Executive Director of the Stanford Technology Ventures Program. Reading her book inGenius: A Crash Course on Creativity was the first time I realized someone had cracked the code on how to turn imagination and creativity into innovation.

    Here’s Tina’s latest thinking on the foundational skills necessary to build a new venture.

    —-

    There is an insatiable demand for innovation and entrepreneurship. These skills are required to help individuals and ventures thrive in a competitive and dynamic marketplace. However, many people don’t know where to start. There isn’t a well-charted course from inspiration to implementation.

    Other fields — such as physics, biology, math, and music — have a huge advantage when it comes to teaching those topics. They have clearly defined terms and a taxonomy of relationships that provide a structured approach for mastering these skills. That’s exactly what we need in entrepreneurship. Without it, there’s dogged belief that these skills can’t be taught or learned.

    Below is a proposal for definitions and relationships for the process of bringing ideas to life, which I call the Inventure Cycle. This model provides a scaffolding of skills, beginning with imagination, leading to a collective increase in entrepreneurial activity.

    Inventure Cycle

    • Imagination is envisioning things that do not exist
    • Creativity is applying imagination to address a challenge
    • Innovation is applying creativity to generate unique solutions
    • Entrepreneurship is applying innovation, bringing ideas to fruition, by inspiring others’ imagination

    Inventure CycleThis is a virtuous cycle: Entrepreneurs manifest their ideas by inspiring others’ imagination, including those who join the effort, fund the venture, and purchase the products. This model is relevant to startups and established firms, as well as innovators of all types where the realization of a new idea — whether a product, service, or work of art — results in a collective increase in imagination, creativity, and entrepreneurship.

    This framework allows us to parse the pathway, describing the actions and attitudes required at each step along the way.

    • Imagination requires engagement and the ability to envision alternatives
    • Creativity requires motivation and experimentation to address challenges
    • Innovation requires focusing and reframing to generate unique solutions
    • Entrepreneurship requires persistence and the ability to inspire others

    Not every person in an entrepreneurial venture needs to have every skill in the cycle. However, every venture needs to cover every base. Without imaginers who engage and envision, there aren’t compelling opportunities to address. Without creators who are motivated to experiment, routine problems don’t get solved. Without innovators who focus on challenging assumptions, there are no fresh ideas. And, without entrepreneurs who persistently inspire others, innovations sit on the shelf.

    Let’s look at an example to see these principles at work:

    As a Biodesign Innovation Fellow at Stanford University, Kate Rosenbluth spent months in the hospital shadowing neurologists and neurosurgeons in order to understand the biggest unmet needs of physicians and their patients.

    In the imagination stage, Kate worked with a team of engineers and physicians to make lists of hundreds of problems that needed solving, from outpatient issues to surgical challenges. By being immersed in the hospital with a watchful eye, she was able to see opportunities for improvement that had been overlooked. This stage required engagement and envisioning.

    In the creativity stage, the team was struck by how many people struggle with debilitating hand tremors that keep them from holding a coffee cup or buttoning a shirt. They learned that as many as six million people in the United States are stricken with Parkinson’s disease, and other conditions that cause tremors. The most effective treatment is deep brain stimulation, an onerous and expensive intervention that requires permanently implanting wires in the brain and a battery pack in the chest wall. Alternatively, patients can take drugs that often have disabling side effects. The team was driven to help these patients and began meeting with experts, combing the literature, and testing alternative treatments. This stage required motivation and experimentation.

    In the innovation stage, Kate had an insight that changed the way that she thought about treating tremors. She challenged the assumption that the treatment had to focus on the root cause in the brain and instead focused on the peripheral nervous system in the hand, where the symptoms occur. She partnered with Stanford professor Scott Delp to develop and test a relatively inexpensive, noninvasive, and effective treatment. This stage required focus and reframing.

    In the entrepreneurship stage, Kate recently launched a company, Cala Health, to develop and deliver new treatments for tremors. There will be innumerable challenges along the way to bringing the products to market, including hiring a team, getting FDA approval, raising subsequent rounds of funding, and manufacturing and marketing the device. These tasks require persistence inspiring others.

    While developing the first product, Kate has had additional insights, which have stimulated new ideas for treating other diseases with a similar approach, coming full circle to imagination!

    The Inventure Cycle is the foundation of frameworks for innovation and entrepreneurship, such as design thinking and the lean startup methodology. Both of these focus on defining problems, generating solutions, building prototypes, and iterating on the ideas based on feedback. The Inventure Cycle describes foundational skills that are mandatory for those methods to work. Just as we must master arithmetic before we dive into algebra or calculus, it behooves us to develop an entrepreneurial mindset and methodology before we design products and launch ventures. By understanding the Inventure Cycle and honing the necessary skills, we identify more opportunities, challenge more assumptions, generate unique solutions, and bring more ideas to fruition.

    With clear definitions and a taxonomy that illustrates their relationships, the Inventure Cycle defines the pathway from inspiration to implementation. This framework captures the skills, attitudes, and actions that are necessary to foster innovation and to bring breakthrough ideas to the world.

    Lessons Learned

    • The Inventure Cycle defines entrepreneurship as applied innovation, innovation as applied creativity, and creativity as applied imagination
    • Entrepreneurship requires inspiring others’ imagination, resulting in a collective increase in creativity, innovation, and entrepreneurship
    • This framework allows us to parse the skills, attitudes, and actions needed at each step in the entrepreneurial process.
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  • Why Founders Should Know How to Code

     

    Steve BlankOriginally posted on www.steveblank.com

    By Steve Blank

    By knowing things that exist, you can know that which does not exist.”
    Book of Five Rings

    A startup is not just about the idea, it’s about testing and then implementing the idea.

    A founding team without these skills is likely dead on arrival.

    —-

    I was driving home from the BIO conference in San Diego last month and had lots of time for a phone call with Dave, an ex student and now a founder who wanted to update me on his Customer Discovery progress. Dave was building a mobile app for matching college students who needed to move within a local area with potential local movers. He described his idea like “Uber for moving” and while he thought he was making real progress, he needed some advice.

    Customer Discovery
    As the farm fields flew by on the interstate I listened as Dave described how he translated his vision into a series of hypotheses and mapped them onto a business model canvas. He believed that local moves could be solved cheaply and efficiently through local social connections. He described when he got out of the building and quickly realized he had two customer segments – the students – who were looking for low budget, local moves and the potential movers – existing moving companies, students and others looking to make additional income. He worked hard to deeply understand the customer problems of these two customer segments. shutterstock_158330768After a few months he learned how potential customers were solving the local moving problem today (do it themselves, friends, etc.) He even learned a few things that were unexpected – students that live off campus and move to different apartments year-to-year needed to store their furniture over the summer breaks, and that providing local furniture storage over the summer was another part of his value proposition to both students and movers.

    As he was learning from potential customers and providers he would ask, “What if we could have an app that allowed you to schedule low cost moves?” And when he’d get a positive response he’d show them his first minimal viable product – the mockup he had created of the User Interface in PowerPoint.

    This was a great call. Dave was doing everything right. Until he said, “I just have one tiny problem.” Uh oh…

    “I organized some moves by manually connecting students with the movers. And I even helped on some of the moves myself. But I’m having a hard time getting to my next minimal viable product. While I have all this great feedback on my visual mockups I can’t iterate my product. My contract developers building the app aren’t very responsive. It takes weeks to make even a simple change.”

    I almost rear-ended another car when I heard this. I said, “Help me understand.. neither you nor your cofounder can code and you’re building a mobile app? And you’ve been at this for six months??” Whoah. This startup was broken at multiple levels. In fact, it wasn’t even a startup.

    The Problem
    Dave sounded confused. “I thought building a company was all about having hypotheses and getting out of the building and testing them?’

    There were three problems with Dave’s startup.

    • He was confusing having an idea with the ability to actually build and implement the idea
    • He was using 3rd parties to build his app but he had no expertise on how to manage external developers
    • His inability to attract a co-founder who could code was a troubling sign

    A Startup is Not Just About a Good Idea
    As the miles sped by I explained to Dave that he had understood only two of the three parts of what makes a Lean Startup successful. While he correctly understood how to frame his hypotheses with a business model canvas, and he was doing a good job in – the third component of Lean is using to rapidly and iteratively build incrementally better versions of the product – in the form of minimal viable products (MVP’s).

    The emphasis on the rapid development and iteration of MVP’s is to speed up how fast you can learn; from customers, partners, network scale, adoption, etc. Speed keeps cash burn rate down while allowing you to converge on a repeatable and scalable business model. In a startup building MVP’s is what turns theory into practice.

    Dave had fallen into the new founder trap of looking at the business model canvas and thinking that was simply an activity (rapidly build mockups of first the the U/I and then the app). And that he could identify the resources needed, (outsourced contract developers who could build it for him) and he would hire a partner to do so. All great in theory but simply wrong. In a web/mobile startup coding is not an outsourced activity. It’s an integral part of the company’s DNA.

    Having a coder as part of the founding team is essential.

    Coding is the DNA of a Web/Mobile Startup
    I offered that if Dave wanted to be the founding CEO then he was going to have to do two things: first, create a reality distortion field large enough to attract a technical co-founder. And second, learn how to code.

    Dave was a bit embarrassed when he explained, “I’ve been trying to attract another co-founder who could code but somehow couldn’t convince anyone.” (This by itself should have been a red flag to Dave.) And then he continued, “But why should I have to know how to code, I’m not going to write the final app.”

    One interesting thing about the is that it teaches founders about Sales and Marketing (and a bit of finance) without making them get an MBA or a decade of sales experience. Founders who go through the process will have an appreciation of the role of sales and marketing like no textbook or classroom could provide. Having done the job themselves, they’ll never be at the mercy of a domain expert. The same is true for coding.

    I was glad I had a lot of time in the car, because I was able to explain my belief that all founders in a web or mobile startup need to learn how to code. Not to become developers but at a minimum to appreciate how to hire and manage technical resources and if possible to deliver the next level of MVP’s themselves.

    shutterstock_161223782

    Dave’s objection was to list a few successful that he knew where that wasn’t the case. I pointed out that are always “corner cases” and if he thought I was wrong he could simply ignore my advice.

    As I was about to pull off an exit for lunch and to recharge my car I strongly suggested to Dave that for both this startup and the rest of he put his startup on hold and invest his time in attending a coding bootcamp. It would take him to the first step in appreciating the issues in managing web development projects, identifying good developers, and finding a technical co-founder.

    Weeks later Dave dropped me a note, “Boy, what I didn’t know about how much I didn’t know. Thanks!”

    Lessons Learned

    • Startups are not just about the idea, they’re about testing and implementing the idea
    • A founding web/mobile team without a coder past the initial stages of Customer Discovery is not a startup
    • Everyone on the founding team ought to invest the time in a coding bootcamp
    • Your odds of building a successful startup will increase
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  • Pioneering Women in Venture Capital: Kathryn Gould

    Originally posted at www.steveblank.com

    By Steve Blank

    Steve BlankI met Kathryn Gould longer ago than either of us want to admit. Kathryn has been the founding VP of Marketing of Oracle, a successful recruiter, a world class Venture Capitalist, a co-founder of a  firm, a great board member, one of my mentors and most importantly a wonderful friend. During her she made a big point of not telling you: she was one of the first women Venture Capitalist’s in Silicon Valley (along with M.J. Elmore and Ann Winblad) – “I’m just a VC.”  Or one of the first women co-founders of a VC firm – “I co-founded a great firm.” She was twice as smart and just as tough as the guys. She has been a mentor and role model not just for a generation of women VC’s and CEO’s but for all VC’s and CEO’s – and I’m honored to have been one of them.

    One of the reasons I took up is my strong belief that it’s incumbent on all of us to make those who come after us smarter than we were.” So when I heard Kathryn gave the University of Chicago commencement speech I suggested that she reach out to a larger audience and share her decades of experience.

    Her response? “The last thing I want is a bunch of people bugging me while I’m growing my grapes, flying, painting, playing music, and generally goofing off.”  I pointed out that, “Now that you retired, what happens to all the knowledge and experience you’ve acquired?” She still demurred so I gave it one last shot. I sent her an email saying, “When you’re gone everything you learned goes with you. This really is bigger than you. I have two daughters starting careers and nothing could be more inspiring than hearing your story. You really ought to share your journey.”

    So for the first time ever, she has. Here’s Kathryn’s story.

    ——-

    Why Give a Commencement speech
    One of the more fun things I’ve been asked to do lately was give the commencement speech at the University of Chicago Booth School of Business in June 2014.  What I didn’t tell them before, during, or after the talk was that I’d never gone to my own University of Chicago MBA graduation, nor had I gone to my BSc in physics graduation at University of Toronto.  I’ve never been big on pomp, and I had fun jobs I wanted to go to right away after each of them.  And to be fair, I wasn’t summa cum laude in either case.  I was merely respectable, so there was no appealing ego trip involved.  Anyway it was high time I went to a graduation.

    The most personally interesting part of writing this speech was thinking about what I could say to the young women that I wish I’d heard at their age. (I heard nothing).

    So, for the first time, I thought hard about what it was like to be a woman in a man’s business.  Not thinking about it earlier was a survival strategy—because if I’d thought about it, I’d have wanted to TALK about it, and that would have been stupid. I was working and competing with men daily.  And successfully. And the truth is, I like working with men. Being a physicist-turned-engineer, I have very little experience working with anything but men. So when members of the press or militant feminist types would question me about this stuff, I would avoid and be annoyed. Now that I’m retired I can speak out and let the chips fall. Still, a nod to Sheryl Sandberg for saying her piece while in the thick of it.

    In the aftermath of the speech, I got the most resonance in two areas:

    1) make unconventional choices that fit YOUR OWN aspirations

    2) from women appreciating the advice to go around obstacles, and enjoying hearing from a fellow ‘dragon lady’

    Actually it wasn’t “dragon lady,” it was a stronger, less feminine term — “Ball Buster” — but, hey, I couldn’t say that in a speech.  Reason I know is that I’m still very close to most of the former CEOs from my boards. I ran this speech by a couple of them.  Over time they had heard me referred to as that other term. They would jump to my defense – and they report that the people who said this had never met me –it was just the “word on the street.”  Insidious, yes?

    Anyway, mine is a study in making unconventional career choices (not that I recommend everybody go be a recruiter for a few years!), and searching for what you’re great at, and meant to encourage women to go right through those walls.

    So they call you a “dragon lady”; so what?!

    Here’s the speech:

    2014 University of Chicago Commencement speech ‘Your Great Adventure’
    “I’m so happy to be here today:  First, to help you celebrate your success thus far, and more important:  to celebrate your last day of doing what is expected of you —now each of you embark on your own great adventure—there is no ‘expected’ path from here on. You get to create your own history. No more tests, get into this school, get into that class, get this degree—now the real adventure begins. The second reason I’m glad to be here today is that 2 years ago, when Dean Kumar first asked me to do this speech, I wasn’t sure I”d even be alive, so I had to pass.  More on that later.

    So, about your adventure:  should you have a plan? Maybe. But don’t follow it. Planning prepares the mind, and chance favors the prepared mind, but chance usually messes up plans!  When I was where you are, 36 years ago (can ya believe it) I didn’t have a plan—but I did have an aspiration: I wanted to go to Silicon Valley and I wanted to work in .  I had no idea how I was going to get from here to there.  I was completely unprepared!  We had literally one course here in the mid 70s—taught by a guy who commuted in from Silicon Valley.  Compare that to now—with our superb curriculum, and I understand 70% of this class has either an interest or focus in .

    Chance Favors the Prepared Mind
    So here’s how it happened for me.  I had had a love affair with computers since I was 18 and a freshman physics major.img013

    Computers were so different from now—arcane, annoyingly difficult— and interesting. But they weren’t really in Silicon Valley at the time—they were in Boston, Minneapolis, New York. So going to Silicon Valley wasn’t an obvious move at the time. It was the invention of the microprocessor that made it obvious for me. I quit my good job here and moved to the valley. Most people thought I was nuts.  I had no idea what I was doing—just that I had to be there, and in a startup—so I took a job with the smallest company that made me an offer (passing up Intel, Tandem and Apple). It wasn’t a great choice, but I was THERE. But then, one our customers was Larry Ellison, with this little company that wasn’t even called Oracle at the time. I loved what he was working on (thanks to perspective in data management from my large company experience here—that prepared mind thing).  So I joined Oracle when it was about 20 people, eventually becoming VP Marketing. And it was an amazing time. Larry was the best entrepreneur I’ve ever known, and completely unconventional…

    What can you learn from this story so far?

    Put yourself in the way of success—get in front of an important wave and ride it.

    Gravitate to what’s new.

    Don’t be afraid to take a step down (Oracle was a $1 Million business, I had been marketing manager for a $100 Million  business).

    Build Your Skills Not Your Resume
    Eventually I left Oracle, wanting to do another startup. Problem is, startups that have world changing potential are not that easy to find. I wanted another Oracle, not any old startup. So I did something completely crazy and unplanned—which looks brilliant only in hindsight! I noticed that I loved looking for a job, even tho I didn’t’ find a company I wanted to join. I liked meeting people, hearing the company plans, learning about their , figuring out if it was for real—all that was fun. How could I do that for a living? The answer of course, was Venture Capital, but that was not in the cards—as yet. I had met a few exec recruiters in the process and thought what they did was similar and interesting.  So I started an exec search firm as a creative way to look for a new startup.  Turns out that I quickly became one of the few best recruiters in the valley for CEO and VP levels, got to work with the best VCs and their startups. And who would have guessed—perfect preparation for the VC business. I ended up doing that for 5 years, and in the process saw about 80 startups in various stages of success and disarray. I developed a deadly accurate intuition on people, an unbeatable set of contacts, and loved working for myself in my little firm. By the 4th year, VCs were asking me to join them, partly for recruiting help, but more because I kept introducing them to startup investment opportunities. As you’ve heard, it’s excruciatingly hard to get in to the VC business, and there I was. Because I”d built some unique skills.

    Plus, I had learned some stuff that you don’t get in business school:

    • How to cold call –adrenaline, real time, 3 seconds to grab their attention—learn this!
    • Also the adage As hire As, Bs hire Cs—absolutely true—be careful of the company you keep,
    • And what goes around comes around.   Help people with their careers, their ideas, contacts—and I’m serious, good things come back years later.

    I also learned that the first time without a paycheck is a little scary.

    Find Your Obession
    I joined VC firm Merrill Pickard in 1989. My first IPO wasn’t until 1995—the VC business takes patience. Two companies I helped start in 1992, DCTM and Grand Junction Networks both became Stanford business school cases and very valuable, successful companies. I was on the way to my lifetime IRR of 90%. I loved the business, and I was good at it.  But then, trouble. My two best partners went off to start Benchmark Capital, very successful to this day, so my firm was going to blow up. I went Boogie Boarding where I do my best thinking. I thought, gee, I could already afford to ride waves the rest of my life. That might be neat. But I couldn’t do it. I loved the business, couldn’t stop.  So I started Foundation Capital in 1995. I loved starting my own firm, doing it my way.  We brought in all operating guys—all had done startups, all had technical backgrounds. In 5 years we were one of the top firms in the Valley by any measure.  I had found my obsession.

    It’s Not the Calls You Take, It’s the Calls You Make  One of my sayings
    You are the creator of your destiny. In whatever business you’re in, there is always so much coming at you that you can stay insanely busy just responding.  Don’t do that. Always think about what is your agenda, what do you want to make happen, what do you want the future to look like.  This is not so easy.

    Go Where the Action Is: It’s not over in the Valley
    Now 35 years later, should you still move to the Valley (or Hollywood, or London, or Chicago!—or wherever the action is in your area of interest?). I can’t speak to the other places, but I”ll tell you what, it’s not over in the Valley.  From electric cars to drones, DNA sequencing to robotic surgery, enterprise software to social media –the size and variety of these markets makes the Valley of my early days look bush league. There’s no end in sight. The valley startup culture and talent pool is unique in the world.  If you think maybe you should go there—maybe you should.

    I retired in 2006. My husband and I bought a vineyard—so I’m a beginner again!  With another startup!

    A Word to the Ladies Here
    I understand a third of the class is women. I have always said, with an annoyed attitude when people ask, that there are no obstacles to women these days, just look at me! That’s the safe way to answer, right? But it’s not entirely true. One of the gifts of talking to you ladies here is that I forced myself to reflect on this.  I’ll just mention two obstacles that hit me—neither of which I even reacted to at the time, just accepted.

    First Obstacle
    I wanted to go to Caltech, but they didn’t take women undergrads until 1970. I wasn’t mad about that; I just thought it was my fault for being interested in guy things. So I dated a Caltech student and got to use their computer—first computer I ever met too—a monster. Structural obstacles like this are over with for you.  Good riddance.

    Second Obstacle
    Remember that business of starting Foundation Capital when my first firm blew up?  I did it because I didn’t have a choice—couldn’t get a job.  Really.  I spent a couple of months talking with the few VC firms that I was willing to join. (yes, I was picky) It became clear it was going to take a long time to get into one, and I didn’t have a long time.  I didn’t want to lose my momentum. Mind you, I was one of the top handful of VCs in the business at the time. Not on the Midas list yet, because it hadn’t been invented, but anybody could see that my results were heading toward extraordinary. I have to think that a guy with my numbers would have been snapped up pretty fast.  For me, starting the firm and raising the money was way faster. Don’t you think that’sstunning? A pretty big fat obstacle. So we went from Boogie Board to money in the bank in 6 months. Not that I’m sorry—it turned out great.  But you ambitious women will surely face something like this in your career. Just go around it!  There is always a way.  Note on the VC business, only 4% of senior VCs are women, according to Fortune Magazine. I don’t think it’s changing anytime soon either.

    Now to be fair, consider your advantages:  you’re much more memorable than most of the guys, they won’t forget you, and there is a self selection:  the men who have the guts to do business with you have the extra self confidence to be more successful.  The guys that wanted me on their board of directors had moxy—because of course they had heard all the crap about how I was a dragon lady (all ambitious women get called that as you know) and they still went for it. Who knows—could be why my companies were so successful…

    I often walk among my grapevines and think how grateful I am for my life right now.  But if the vines had come first, without the adventure and hard work, it wouldn’t be nearly as sweet. So that’s my story so far—but it’s not over yet, because the cabernet is really good!

    Tending a New Crop in My Next Venture

    So now, for each of you, go create your own unique adventure.  You are done preparing—go do it! Make a plan, but don’t stick to it. Let chance favor your prepared mind.  Break rules, find your obsession, be extraordinary!”

    View the speech in its entirety here

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  •  
  • Getting Lean in Education — By Getting Out of the Classroom

    Steve BlankOriginally posted at www.steveblank.com

    By Steve Blank

    This week the goes Lean on education by providing $1.2 million to educators who want to bring their classroom innovations to a wider audience.

    shutterstock_157439453——–

    The I-Corps program started when the U.S. National Science Foundation adopted my Lean LaunchPad class. Their goal was to train University scientists and researchers to use Lean Startup methods (business model design, and agile engineering) to commercialize their science. Earlier this month the announced I-Corps @ NIH, to help scientists doing medical research take their innovations from the lab-bench to the bedside and accelerate translational medicine.

    This week, the NSF is announcing the next step in the program– I-Corps for Learning  ().  This version of I-Corps is for STEM educators – anyone  who teaches Science, , Engineering and Math from kindergarten to graduate school, and wants to learn how to bring an innovative strategy, technology, or set of curriculum materials to a wider audience. Following a successful pilot program, the NSF is backing the class with $1.2 million to fund the next 24 teams.

    The Problem in the Classroom
    A frustration common to both educators and policymakers is how difficult it has been to get new, innovative, education approaches into widespread use in classrooms where they can influence large numbers of students. While the federal government and corporations have dumped a ton of money into STEM education research, a disappointing few of these brave new ideas have made it into practice. These classroom innovations often remain effectively a secret – unknown to most STEM educators or the research community at large.

    It turns out that on the whole educators are great innovators but have had a hard time translating their ideas into widespread adoption. What we had was a very slow classroom diffusion rate.  Was there any was to speed this up?

    A year ago Don Millard of the National Science Foundation (who in a previous life had been a STEM Educator) approached me with a hypothesis that possibly could solve this problem. Don observed that educators with innovative ideas who actively got out of their classrooms and tested their innovations with other educators/institutions/students had a much better adoption rate.

    Up until now there was no formal way to replicate the skills of the educators who successfully evangelized their new concepts. Don’s insight was that the I-Corps model being rolled out for scientists might work equally well for educators/teachers. He pointed out that there was a close analogy between scientists trying to bring product discoveries to market and educators getting learning innovations into broad practice. Don thought that a formal Lean LaunchPad/I-Corps methodology might be exactly what educators needed to understand how their classroom innovations could be used, how to get other educators and institutions to adopt them, and how to articulate their value to potential investors .

    Don then recruited Karl Smith from the University of Minnesota to pilot a class of 9 teams made up of STEM educators. Karl recruited a teaching team (Ann McKenna, Chris Swan, Russ Korte, Shawn Jordan, Micah Lande and Bob MacNeal) and Jerry Engel trained them. The team ran their first I-Corps for Learning class earlier this year.

    Karl and his teaching team really nailed it. So much so that the NSF is now rolling out I-Corps for Learning on a larger scale.

    I-Corps for Learning Details
    NSF will provide up to $1.2 million to support 24 teams. The I-Corps L cohort teams will receive additional support — in the form of mentoring and funding — to accelerate innovation in learning that can be successfully scaled, in a sustainable manner.

    To be eligible to pursue funding, applicants must have received a prior award from NSF (in a STEM education field relevant to the proposed innovation) that is currently active or that has been active within five years from the date of the proposal submission. Consideration will be given to projects that address K-12, undergraduate, graduate, and postdoctoral research, as well as learning in informal science education environments.

    Each team will consist of:

    • The principal investigator (who received the prior award);
    • An entrepreneurial lead (who is committed to investigate the landscape surrounding the innovation); and
    • A mentor (who understands the evidence concerning promise, e.g., from an institutional education-focused center or commercial background that will help inform the efforts)

    The outcomes of the pilot projects are expected to be threefold:

    • A clear go/no go decision concerning the viability and effectiveness of the learning-oriented resources/products, practices and services,
    • An implementation “product” and process for potential partners/adopters, and
    • A transition plan to move the effort forward and bring the innovation to scale

    Proposals from potential I-Corps L teams will be accepted through September 30, 2014. Class starts January 2015.

    Check out the I-Corps for Learning website here.

    Lessons Learned

    • The diffusion of STEM classroom innovations is excruciatingly slow
    • The Lean LaunchPad/I-Corps model may accelerate that process
    • I-Corps for Learning is accepting applications
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  • The Path of Our Lives

    Originally posted at www.steveblank.com

    By Steve Blank

    Some men see things as they are and say, why;
    I dream things that never were and say, why not
    ?”
    Robert Kennedy/George Bernard Shaw

    Steve BlankI got a call that reminded me that most people live their life as if it’s predestined – but some live theirs fighting to change it.

    At 19 I joined the Air Force during the Vietnam War. Out of electronics school my first assignment was to a fighter base in Florida. My roommate, Glen, would become my best friend in Florida and Thailand as we were sent to different air bases in Southeast Asia.

    An Enemy Attack May Make Your Stay Here Unpleasant

    On the surface, Glen and I couldn’t have been more different. He grew up in Nebraska, had a bucolic childhood that sounded like he was raised by parents from Leave it to Beaver. I didn’t, growing up in a New York City apartment that seemed more like an outpatient clinic. Yet somehow we connected on a level that only 19-year-olds can.  I introduced him to Richard Brautigan and together we puzzled through R.D. Laing’s The Politics of Experience. We explored the Everglades (and discovered first-hand that the then-new national park didn’t have any protective barriers on their new boardwalks into the swamps and that alligators sunning themselves on a boardwalk look exactly like stuffed ones – until you reach out to touch them.) In Thailand I even figured out how to sneak off base for a few days, cross Thailand via train, visit him in his airbase and convince everyone I had been assigned to do so (not that easy with a war on.) The chaos, the war, our age and our interests bonded us in a way that was deep and heartfelt.

    steve in Thailand 2 ARL-46Yet when the Vietnam War wound down, we were both sent to bases in different parts of the U.S. And as these things happen, as we grew older, more people and places came between us, and we went on with our lives and lost touch.

    Four Decades Later
    Last week I got an email with a subject line that only someone who knew me in the could have sent. While that caught my attention, the brief note underneath stopped me in my tracks. It read, “You have crossed my thoughts through the years. The other night you appeared in my dreams. I actually remembered it in the morning and googled your name. By God, there you were. A bit overwhelming…”

    You bet it was overwhelming, it’s been 40 years since I last heard from Glen.

    On the phone together, I spent an hour with an ear-to-ear grin as both of us recounted, “when we were young, crazy and stupid” stories, stories I still won’t tell my children (which makes me grateful it was life before social media documented every youthful indiscretion.) Glen even reminded me of my nickname (which still makes me cringe.)  The feel of long forgotten camaraderie let me wallow in nostalgia for a while. But as Glen began to catch me up with the four decades of his life, it was clear that while we both had the same type of advanced electronics training, both had been on the same airbases, and essentially both had been given the same opportunities, our careers and lives had taken much different paths. As he talked, I puzzled over why our lives ended up so different. Listening to him, I realized I was hearing a word I would never use to describe my life. Glen used the word “predestined” multiple times to describe his choices in life. His job choices were “predestined,” where he lived was “predestined,” who he married and divorced had been “predestined.”  I realized that our world views and how we lived our lives differed on that one single word.

    “Predestined.”

    The path of our lives
    While the call brought me back to when we were foolish and fearless, thinking about how Glen lived his life troubled me. It took me awhile to figure out why. I wasn’t bothered about anything that Glen did or didn’t accomplish. It was his life and he seemed happy with it. Hearing his voice brought back those days of enthusiasm, exploration, adventure and unlimited horizons. But listening to forty years of a life lived summed up as “preordained” felt like a sharp reminder of how most people live their lives.

    Glen’s worldview wasn’t unique. Most people appear to live an unexamined life, cruising through the years without much reflection about what it means, and/or taking what life hands them and believing it’s all predestined.

    As I’ve gotten older I’ve come to grips that the unexamined life is what works for most people. Most take what they learned in school, get a job, marry, buy a house, have a family, become a great parent, serve their god, community and country, hang with friends and live a good life. And for them that’s great.stages of awareness

    Some do want more out of life, but blame their circumstances on others – their parents or government or spouse or lack of opportunities, but almost never on their own lack of initiative. Initiative means change and change is hard for most. (Clearly there are still pockets in the world where opportunities and choice are limited but they are shrinking daily.)

    Perhaps the most painful to watch are those who wake up later in life thinking, “I could have or I should have.”

    Pushing the Human Race Forward
    Whether we have free will or whether our lives are predestined has been argued since humans first pondered their purpose in life. The truth is we won’t know until the second coming or the solution to the many-worlds theory.

    But what we know with certainty is that there is a small set of humans who don’t act like their lives are predestined. For better or worse, regardless of circumstances, country or culture they struggle their entire lives wanting to change the outcome. And a small percentage of these translate the “wanting to change” into acting on it. This small group is dissatisfied with waiting for life to hand them their path. They act, they do, they move, they change things.

    Those born into poverty actively strive to change their own lives and that of their children. Those who want to start a company or join one quit their job and do it, while others try to change their political system or fight for social or environmental justice.

    And the irony is while the individual stories are inspiring they are trying to tell a much bigger story. These misfits, rebels and troublemakers have been popping up in stories for thousands of years. Every culture has myths about larger than life heroes who rose from nothing. This archetype is a recessive gene common to all cultures. They are the ones that make things happen, they’re the ones that push the human race forward.

    This is what makes and drives Our heads are just wired differently.

    You Are Master of Your Own Fate
    The world is much different then when Glen and I were young and foolish. In the past, even if you did feel this spirit of adventure, you had no idea how and where to apply it. Barriers of race, gender or location threw up roadblocks that seemed insurmountable.

    The world is much smaller now. The obstacles aren’t gone but are greatly diminished. Everyone within reach of a smartphone, tablet or computer knows more about and opportunity and where to get it then all of Silicon Valley did 40 years ago. There’s no longer an excuse not to grab it with both hands.

    As far as we know, this life isn’t practice for the next one. For entrepreneurs the key to living this one to the fullest is the understanding that you can choose – that you do have a choice to effect the journey and change the rules, that you can decide to give it your best shot to do something, something extraordinary.

    If your passion is and , and your community, region or country doesn’t have an entrepreneurial culture and community – help start one. If there’s no funding for in your community - get up and move to where it is. If you’re in a company frustrated with the lack of opportunity - change jobs.

    You are master of your own fate. Act like it.

    Lessons Learned           

    • The same destiny overtakes us all
    • It’s what you choose to do with your life in between that makes the difference
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  • How Investors Make Better Decisions: The Investment Readiness Level

    Originally posted at www.steveblank.com

    By Steve Blank

    Steve BlankInvestors sitting through Incubator or Accelerator demo days have three metrics to judge fledgling – 1) great looking product demos, 2) compelling PowerPoint slides, and 3) a world-class team.  Other than “I’ll know it when I see it”, there’s no formal way for an investor to assess project maturity or quantify risks. Other than measuring engineering progress, there’s no standard language to communicate progress.

    What’s been missing for everyone is:

    1. a common language for investors to communicate objectives to startups
    2. a language corporate groups can use to communicate to business units and finance
    3. data that investors, accelerators and incubators can use to inform selection

    Teams can prove their competence and validate their ideas by showing investors evidence that there’s a repeatable and scalable business model. While it doesn’t eliminate great investor judgment, pattern recognition skills and mentoring, we’ve developed an Investment Readiness Level tool that fills in these missing pieces. Background about the Investment Readiness Level  here and here.

    While the posts were theory I was a bit surprised when John Selep, an early-stage investor, approached me and said he was actually using the Investment Readiness Level (IRL) in practice.

    Here’s John’s story.

    As Selections Committee chair for our Sacramento Angels investor group, I review applications from dozens of startup looking for investment.  I also mentor at our local university, and guest-lecture at a number of courses on how to pitch to investors, so the task of helping students and entrepreneurs visualize the process of investor decision-making has often been a challenge.

    When I first read about the Investment Readiness Level (IRL) on Steve’s blog, I was excited by Steve’s attempt to bridge the capital-efficient process for founders with the capital-raising process for funders. But the ‘ah-hah!’ moment for me was the realization that I could apply the IRL framework to dramatically improve the guidance and mentorship I was providing to startup company founders.

    Prior to having the Investment Readiness Level framework, this “how to get ready for an investor” discussion had been a “soft” conceptual discussion. The Investment Readiness Level makes the stages of development for the business very tangible. Achieving company milestones associated with the next level on the Investment Readiness Level framework is directly relevant to the capital-raising process.

    I use the Investment Readiness Level as part of my sessions to help the students understand that being ready for investment means that besides having a pretty PowerPoint, they need to do real work and show progress.

    Since I began incorporating the Investment Readiness Level framework I’ve made three observations. The Investment Readiness Level (IRL):

    1. Ties the Lean methodology (and capital efficiency) directly to the capital-raising process – closing the loop and tying these two processes together.
    2. Is Prescriptive – offers founders a “what-you-need-to-do-next” framework to reach a higher level of readiness.
    3. Enables better mentoring. The IRL provides a vocabulary and framework for shifting the conversation between investors and entrepreneurs from simply “No,” to the much-more-helpful “Not yet – but here’s what you can do. …”

    Selep IRLTying Fundraising to the Lean Startup
    The premise of the Lean Startup is that a startup’s initial vision is really just a series of untested hypotheses, and that the Customer Development process is a systematic approach to ‘getting out of the building’ and testing and validating each of those hypotheses to discover a repeatable, scalable business model. The Investment Readiness Level adds to this methodology by tying each phase of this discovery process or ‘hypothesis-validation’ to milestones representing a startup’s increasing readiness for investor support and capital investment.  For investors this is a big idea.

    I remind entrepreneurs that investors are implicitly seeking evidence of progress and milestones (but until the Investment Readiness Level never knew how to ask for it).  Entrepreneurs should always communicate their business’ very latest stage of customer development as part of their investor presentation. Given that a startup is continually learning weekly, the entrepreneur’s investor presentation will evolve on a weekly basis as well, reflecting their latest progress.

    In our Angel investor group, our Applicant Selections process ranks applicant companies relative to the other applicants.  In the past, the ranking process relied on our Selection Committee members having an intuitive “feel” for whether a startup was worth considering for investment.

    As part of our screening process, I’ve embraced the Investment Readiness Level (IRL)framework as a more-precise way to think through where applicant companies would rank. (BTW, this does not mean that the IRL framework has been embraced by rest of our Selections committee – organizational adoption is a lot more complicated than an individual adopting a framework.) I believe the IRL framework offers a more-precise method to discuss and describe ‘maturity’, and will likely become a more explicit part of our selections discussion in the year ahead.

    Investment Readiness Level is Prescriptive
    At first blush the Investment Readiness Level framework is a diagnostic tool – it can be used to gauge how far a business has progressed in its Customer Development process. A supposition is that startups that have validated hypotheses about key elements of their business have reduced the risks in launching their new business and are more ready for investment.

    But the IRL is more than a diagnostic. It enables a much richer investor -> founder dialog about exactly what milestones a startup has actually achieved, and ties that discussion to the stages of the business’ Customer Development and business development progress.  In the same way that Osterwalder’s Business Model Canvas provides a common vocabulary and enables a rich discussion and understanding of exactly what comprises the business’ design and business model, the IRL provides a common set of metrics and enables a rich discussion and understanding of just where the startup is in the maturity of its processes.

    This means the IRL is also a Prescriptive tool.  No matter where a startup is in its stage of development, the immediate next stage milestone – where the entrepreneurs should focus their attention next – is immediately clear.  Although every business is unique, and every business model emerges and evolves in its own unique way, the logical sequencing of incremental discovery and validation implicit in the IRL framework is very clear. No ambiguity. Clarity is good.

    Investment Readiness Level Enables Better Mentoring
    As you might imagine, our Angel group receives applications for funding from a wide, wide variety of businesses, with highly variable quality of the businesses and their applications, and highly variable levels of maturity of those businesses.  Some of our applicants are not scalable, high-growth businesses, and we tell them quickly if they don’t fit our profile. Others have the potential to be scalable, high-growth businesses, but simply aren’t as compelling or as mature as better candidates in our funnel. During every Selections cycle, as we refine our applicant funnel to select the entrepreneurs to present to our membership, I obviously have to say “No” to far more entrepreneurs than those to whom I can say “Yes.”

    The Investment Readiness Level adds a new dimension to those conversations, providing a vocabulary and framework for shifting the conversation from simply ‘No’, to the much-more-helpful “Not yet – but here’s what you can do. …”  It has completely changed the nature of the conversations I have with applicants. The prescriptive nature of the IRL means that wherever a business is in its current state of development, the next step on the ladder is nearly always pretty obvious. Of course, there should always be a little latitude for the unique nature of each business, but the IRL framework is a good guidepost. So the “here’s what you can do…” recommendations are clear, logical, and situationally relevant to the entrepreneur’s business.

    I would estimate that perhaps half of the applicants we see have heard of and use some form of Lean Startup or Customer Development methodology. The idea of a “Minimum Viable Product” is something that has entered the general vernacular, but I’m sure that not all of the businesses tossing the term around truly understand the Lean Startup teachings.

    So when I’m providing feedback to an entrepreneur applying to our group for funding, I leverage the IRL framework to guide the feedback that I give. I don’t refer to the framework explicitly, but I provide feedback based on where I assess the company to be in their development, and what steps they’d need to pursue to get another rung or two up the ladder.

    For example, I might say “The Sacramento Angels have decided that your firm isn’t quite ready for us to consider for potential investment at this point, but if you were able to discuss your prototype with 50-to-100 potential customers and get their feedback, this might help you identify the specific segments that care most-deeply about the advantages you’re offering over the existing alternative. We’d like to stay in touch with you and hear more from you once you’ve identified your initial target segment and how you are going to reach and service them …”

    I’ve almost universally found that the entrepreneurs I’m discussing these recommendations with are pleased to have the feedback, even if they’re disappointed that we may not be funding them. For an entrepreneur, receiving guidance of “Not now, but here’s what you can do…” is better than getting a flat, directionless “No”.  For me, the ability to articulate the concept of maturity, and investment readiness as a continuum, is extremely helpful. Being able to articulate that an applicant’s current stage of development, along that continuum, is not aligned with our group’s investment goals but that with further progress on their part, there may be alignment – this is a fundamentally superior message.

    The Investment Readiness Level has given me the tools to engage in a consultative, coaching and mentoring conversation that provides much more value to entrepreneurs, resulting in a much more-enjoyable conversation for all involved.

    Lessons Learned:

    • Investment Readiness ties capital-raising to the capital-efficient Lean Startup methodology
    • The Investment Readiness Level is Prescriptive
    • The Investment Readiness Level enables better mentoring
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