national governors association july 2012
TRANSCRIPT
![Page 1: National governors association july 2012](https://reader037.vdocuments.us/reader037/viewer/2022103021/55d5041cbb61ebec248b45b7/html5/thumbnails/1.jpg)
Growing The Next Big Idea
What We’ve Learned About Startups
![Page 2: National governors association july 2012](https://reader037.vdocuments.us/reader037/viewer/2022103021/55d5041cbb61ebec248b45b7/html5/thumbnails/2.jpg)
What Have We Learned?
![Page 3: National governors association july 2012](https://reader037.vdocuments.us/reader037/viewer/2022103021/55d5041cbb61ebec248b45b7/html5/thumbnails/3.jpg)
What Have We Learned?
Lesson 1: Types of Startups
Lesson 2: Ecosystem
Lesson 3: How to Fail Less
Lesson 4: Can we Teach Entrepreneurship?
![Page 4: National governors association july 2012](https://reader037.vdocuments.us/reader037/viewer/2022103021/55d5041cbb61ebec248b45b7/html5/thumbnails/4.jpg)
Lesson 1: Types of Startups
![Page 5: National governors association july 2012](https://reader037.vdocuments.us/reader037/viewer/2022103021/55d5041cbb61ebec248b45b7/html5/thumbnails/5.jpg)
Lifestyle Startups Work to Live their Passion
![Page 6: National governors association july 2012](https://reader037.vdocuments.us/reader037/viewer/2022103021/55d5041cbb61ebec248b45b7/html5/thumbnails/6.jpg)
Startup
Lifestyle Startups Work to Live their Passion
• Serve known customer with known product
• Work for their passion
![Page 7: National governors association july 2012](https://reader037.vdocuments.us/reader037/viewer/2022103021/55d5041cbb61ebec248b45b7/html5/thumbnails/7.jpg)
Social Entrepreneurship Startups
![Page 8: National governors association july 2012](https://reader037.vdocuments.us/reader037/viewer/2022103021/55d5041cbb61ebec248b45b7/html5/thumbnails/8.jpg)
Large Non-Profit
Social Startup
Social Entrepreneurship Startups
• Solve pressing social problems• Social Enterprise: Profitable• Social Innovation: New Strategies
![Page 9: National governors association july 2012](https://reader037.vdocuments.us/reader037/viewer/2022103021/55d5041cbb61ebec248b45b7/html5/thumbnails/9.jpg)
Small Business StartupsWork to Feed the Family
![Page 10: National governors association july 2012](https://reader037.vdocuments.us/reader037/viewer/2022103021/55d5041cbb61ebec248b45b7/html5/thumbnails/10.jpg)
Small BusinessStartup
Small Business StartupsWork to Feed the Family
• Serve known customer with known product
• Feed the family
![Page 11: National governors association july 2012](https://reader037.vdocuments.us/reader037/viewer/2022103021/55d5041cbb61ebec248b45b7/html5/thumbnails/11.jpg)
Small BusinessStartup
Exit Criteria- Business Model found- Profitable business- Existing team< $500K in revenue
Small Business StartupsWork to Feed the Family
• known customer known product
• Feed the family
![Page 12: National governors association july 2012](https://reader037.vdocuments.us/reader037/viewer/2022103021/55d5041cbb61ebec248b45b7/html5/thumbnails/12.jpg)
Small BusinessStartup
Small Business Startups
• 5.7 million small businesses in the U.S. <500 employees• 99.7% of all companies• ~ 50% of total U.S. workers
http://www.sba.gov/advo/stats/sbfaq.pdf
![Page 13: National governors association july 2012](https://reader037.vdocuments.us/reader037/viewer/2022103021/55d5041cbb61ebec248b45b7/html5/thumbnails/13.jpg)
Scalable Startup
![Page 14: National governors association july 2012](https://reader037.vdocuments.us/reader037/viewer/2022103021/55d5041cbb61ebec248b45b7/html5/thumbnails/14.jpg)
ScalableStartup
Large Company
Scalable Startup
• In contrast a scalable startup is designed to grow big• Typically needs risk capital• What Silicon Valley means when they say “Startup”
Search Execute
![Page 15: National governors association july 2012](https://reader037.vdocuments.us/reader037/viewer/2022103021/55d5041cbb61ebec248b45b7/html5/thumbnails/15.jpg)
ScalableStartup
Large Company
Scalable Startup
Goal is to solve for: unknown customer and
unknown features
Search
![Page 16: National governors association july 2012](https://reader037.vdocuments.us/reader037/viewer/2022103021/55d5041cbb61ebec248b45b7/html5/thumbnails/16.jpg)
ScalableStartup
Large Company
Exit Criteria- Business model found- Total Available Market > $500M- Can grow to $100M/year
Scalable StartupBorn to Be Big
Search Execute
![Page 17: National governors association july 2012](https://reader037.vdocuments.us/reader037/viewer/2022103021/55d5041cbb61ebec248b45b7/html5/thumbnails/17.jpg)
Buyable StartupBorn to Sell
![Page 18: National governors association july 2012](https://reader037.vdocuments.us/reader037/viewer/2022103021/55d5041cbb61ebec248b45b7/html5/thumbnails/18.jpg)
ScalableStartup
$5 to 50M Acquisition
Buyable StartupBorn to Sell
Typically: Internet, Mobile, Gaming Apps
Search Sell
![Page 19: National governors association july 2012](https://reader037.vdocuments.us/reader037/viewer/2022103021/55d5041cbb61ebec248b45b7/html5/thumbnails/19.jpg)
ScalableStartup
$5 to 50M Acquisition
Buyable Startup
Goal is to solve for: Internet and Mobile Apps
Search Sell
Sell to larger company
![Page 20: National governors association july 2012](https://reader037.vdocuments.us/reader037/viewer/2022103021/55d5041cbb61ebec248b45b7/html5/thumbnails/20.jpg)
Transition Large Company
ScalableStartup
Sustaining Innovation
• Existing Market / Known customer• Known product feature needs
Large Company Sustaining InnovationInnovate or Evaporate
![Page 21: National governors association july 2012](https://reader037.vdocuments.us/reader037/viewer/2022103021/55d5041cbb61ebec248b45b7/html5/thumbnails/21.jpg)
Large Company Disruptive Innovation
New Division Transition Large
Company
Disruptive Innovation• New Market• New tech, customers, channels
![Page 22: National governors association july 2012](https://reader037.vdocuments.us/reader037/viewer/2022103021/55d5041cbb61ebec248b45b7/html5/thumbnails/22.jpg)
Large Company Disruptive Innovation
New Division Transition Large
Company
Disruptive Innovation• Build• Partner• Acquire - IP - Talent - Product - Customers - Business
![Page 23: National governors association july 2012](https://reader037.vdocuments.us/reader037/viewer/2022103021/55d5041cbb61ebec248b45b7/html5/thumbnails/23.jpg)
Large Company Disruptive Innovation
New Division Transition Large
Company
Disruptive Innovation• Build• Partner• Acquire
= an internal corporate startup
![Page 24: National governors association july 2012](https://reader037.vdocuments.us/reader037/viewer/2022103021/55d5041cbb61ebec248b45b7/html5/thumbnails/24.jpg)
Summary Lesson 1: Multiple Types of Startups
Policies, Funding and Tactics DifferTechniques to build them are the same
![Page 25: National governors association july 2012](https://reader037.vdocuments.us/reader037/viewer/2022103021/55d5041cbb61ebec248b45b7/html5/thumbnails/25.jpg)
Lesson 2: History of a Startup Ecosystem
![Page 26: National governors association july 2012](https://reader037.vdocuments.us/reader037/viewer/2022103021/55d5041cbb61ebec248b45b7/html5/thumbnails/26.jpg)
Silicon Valley Was a Series of Unintended Consequences
![Page 27: National governors association july 2012](https://reader037.vdocuments.us/reader037/viewer/2022103021/55d5041cbb61ebec248b45b7/html5/thumbnails/27.jpg)
Outward-Facing Research University Building Weapons System
1946 – 1968 WWII/Cold War
![Page 28: National governors association july 2012](https://reader037.vdocuments.us/reader037/viewer/2022103021/55d5041cbb61ebec248b45b7/html5/thumbnails/28.jpg)
Massive Government R&D Investment in Weapons Systems
1956 – 1980’s Cold War
![Page 29: National governors association july 2012](https://reader037.vdocuments.us/reader037/viewer/2022103021/55d5041cbb61ebec248b45b7/html5/thumbnails/29.jpg)
One Professor Changes The System
1925 – 1965 University/Military/Industry
![Page 30: National governors association july 2012](https://reader037.vdocuments.us/reader037/viewer/2022103021/55d5041cbb61ebec248b45b7/html5/thumbnails/30.jpg)
Sputnik Launches Venture Investing
1958 – SBIC Program
![Page 31: National governors association july 2012](https://reader037.vdocuments.us/reader037/viewer/2022103021/55d5041cbb61ebec248b45b7/html5/thumbnails/31.jpg)
Regulatory Change Accelerates Venture Capital
1979 – Change in Employee Retirement Income Security Act
Pension Funds Pile In
![Page 32: National governors association july 2012](https://reader037.vdocuments.us/reader037/viewer/2022103021/55d5041cbb61ebec248b45b7/html5/thumbnails/32.jpg)
Culture Embraced Technology Risk
1958 – Today
Recognized that 90% of startups fail
![Page 33: National governors association july 2012](https://reader037.vdocuments.us/reader037/viewer/2022103021/55d5041cbb61ebec248b45b7/html5/thumbnails/33.jpg)
Culture Embraced Financial Risk
1968 – Today
Experienced Advice
Tolerance For Risk
Long Term Interest Aligned
![Page 34: National governors association july 2012](https://reader037.vdocuments.us/reader037/viewer/2022103021/55d5041cbb61ebec248b45b7/html5/thumbnails/34.jpg)
So What Lessons Can We Learn To Build Innovation?
Without Cold War Funding
![Page 35: National governors association july 2012](https://reader037.vdocuments.us/reader037/viewer/2022103021/55d5041cbb61ebec248b45b7/html5/thumbnails/35.jpg)
Technology Ecosystem: Infrastructure
Entrepreneurs VentureFinance
Crisis ProfitMotivation
24/7 UtilitiesPredictableEconomic System
Infrastructure StableLegal System
ResearchUniversities
Risk TakingCulture Entrepreneurial Outward-FacingTech Universities
Free flow ofPeople/Info
Customer Development
Management Tools
AgileDevelopment
Business ModelDesign
![Page 36: National governors association july 2012](https://reader037.vdocuments.us/reader037/viewer/2022103021/55d5041cbb61ebec248b45b7/html5/thumbnails/36.jpg)
Technology Ecosystem: Culture
Entrepreneurs VentureFinance
Crisis ProfitMotivation
24/7 UtilitiesPredictableEconomic System
Infrastructure StableLegal System
ResearchUniversities
Risk TakingCulture Accelerators, Incubators
Outward-FacingTech Universities
Free flow ofPeople/Info
Customer Development
Management Tools
AgileDevelopment
Business ModelDesign
![Page 37: National governors association july 2012](https://reader037.vdocuments.us/reader037/viewer/2022103021/55d5041cbb61ebec248b45b7/html5/thumbnails/37.jpg)
Technology Ecosystem: Tools
Entrepreneurs Risk Capital
Crisis ProfitMotivation
24/7 UtilitiesPredictableEconomic System
Infrastructure StableLegal System
ResearchUniversities
Risk TakingCulture Accelerators, Incubators
Outward-FacingTech Universities
Free flow ofPeople/Info
Customer Development
Management Tools
AgileDevelopment
Business ModelDesign
![Page 38: National governors association july 2012](https://reader037.vdocuments.us/reader037/viewer/2022103021/55d5041cbb61ebec248b45b7/html5/thumbnails/38.jpg)
Technology Ecosystem: Motivation
Entrepreneurs Risk Capital
Crisis ProfitMotivation
24/7 UtilitiesPredictableEconomic System
Infrastructure StableLegal System
ResearchUniversities
Risk TakingCulture Accelerators, Incubators
Outward-FacingTech Universities
Free flow ofPeople/Info
Customer Development
Management Tools
AgileDevelopment
Business ModelDesign
![Page 39: National governors association july 2012](https://reader037.vdocuments.us/reader037/viewer/2022103021/55d5041cbb61ebec248b45b7/html5/thumbnails/39.jpg)
Technology Ecosystem
Entrepreneurs Risk Capital
Crisis ProfitMotivation
24/7 UtilitiesPredictableEconomic System
Infrastructure StableLegal System
ResearchUniversities
Risk TakingCulture Accelerators, Incubators
Outward-FacingTech Universities
Free flow ofPeople/Info
Customer Development
Management Tools
AgileDevelopment
Business ModelDesign
![Page 40: National governors association july 2012](https://reader037.vdocuments.us/reader037/viewer/2022103021/55d5041cbb61ebec248b45b7/html5/thumbnails/40.jpg)
Lesson 3: Making Startups Fail Less
Lessons From Silicon Valley and the National Science
Foundation
![Page 41: National governors association july 2012](https://reader037.vdocuments.us/reader037/viewer/2022103021/55d5041cbb61ebec248b45b7/html5/thumbnails/41.jpg)
After 50 years of Silicon Valley
We Now Know How To Build Startups
![Page 42: National governors association july 2012](https://reader037.vdocuments.us/reader037/viewer/2022103021/55d5041cbb61ebec248b45b7/html5/thumbnails/42.jpg)
More startups fail from a lack of customers than from a failure of product development
![Page 43: National governors association july 2012](https://reader037.vdocuments.us/reader037/viewer/2022103021/55d5041cbb61ebec248b45b7/html5/thumbnails/43.jpg)
What We Used to Believe
![Page 44: National governors association july 2012](https://reader037.vdocuments.us/reader037/viewer/2022103021/55d5041cbb61ebec248b45b7/html5/thumbnails/44.jpg)
Startups are Smaller Versions of Large Companies
![Page 45: National governors association july 2012](https://reader037.vdocuments.us/reader037/viewer/2022103021/55d5041cbb61ebec248b45b7/html5/thumbnails/45.jpg)
What We Now Know
![Page 46: National governors association july 2012](https://reader037.vdocuments.us/reader037/viewer/2022103021/55d5041cbb61ebec248b45b7/html5/thumbnails/46.jpg)
Startups are Not Smaller Versions of Large Companies
![Page 47: National governors association july 2012](https://reader037.vdocuments.us/reader037/viewer/2022103021/55d5041cbb61ebec248b45b7/html5/thumbnails/47.jpg)
Startups SearchLarge Companies Execute
![Page 48: National governors association july 2012](https://reader037.vdocuments.us/reader037/viewer/2022103021/55d5041cbb61ebec248b45b7/html5/thumbnails/48.jpg)
What We Used to Believe
![Page 49: National governors association july 2012](https://reader037.vdocuments.us/reader037/viewer/2022103021/55d5041cbb61ebec248b45b7/html5/thumbnails/49.jpg)
All I Need to Do is Execute the Plan
![Page 50: National governors association july 2012](https://reader037.vdocuments.us/reader037/viewer/2022103021/55d5041cbb61ebec248b45b7/html5/thumbnails/50.jpg)
Actual Photo of What Happens When
Plan Meets
First Contact With Customers
![Page 51: National governors association july 2012](https://reader037.vdocuments.us/reader037/viewer/2022103021/55d5041cbb61ebec248b45b7/html5/thumbnails/51.jpg)
![Page 52: National governors association july 2012](https://reader037.vdocuments.us/reader037/viewer/2022103021/55d5041cbb61ebec248b45b7/html5/thumbnails/52.jpg)
All I Need is the 5- Year Forecast
![Page 53: National governors association july 2012](https://reader037.vdocuments.us/reader037/viewer/2022103021/55d5041cbb61ebec248b45b7/html5/thumbnails/53.jpg)
Previous 5-Year Plans
![Page 54: National governors association july 2012](https://reader037.vdocuments.us/reader037/viewer/2022103021/55d5041cbb61ebec248b45b7/html5/thumbnails/54.jpg)
What We Now Know
![Page 55: National governors association july 2012](https://reader037.vdocuments.us/reader037/viewer/2022103021/55d5041cbb61ebec248b45b7/html5/thumbnails/55.jpg)
No Business Plan Survives First Contact
With Customers
![Page 56: National governors association july 2012](https://reader037.vdocuments.us/reader037/viewer/2022103021/55d5041cbb61ebec248b45b7/html5/thumbnails/56.jpg)
Searching comes before the plan
![Page 57: National governors association july 2012](https://reader037.vdocuments.us/reader037/viewer/2022103021/55d5041cbb61ebec248b45b7/html5/thumbnails/57.jpg)
What’s A Startup?
![Page 58: National governors association july 2012](https://reader037.vdocuments.us/reader037/viewer/2022103021/55d5041cbb61ebec248b45b7/html5/thumbnails/58.jpg)
A temporary organization designed to search
for a repeatable and scalable business model
![Page 59: National governors association july 2012](https://reader037.vdocuments.us/reader037/viewer/2022103021/55d5041cbb61ebec248b45b7/html5/thumbnails/59.jpg)
A temporary organization designed to search
for a repeatable and scalable business model
![Page 60: National governors association july 2012](https://reader037.vdocuments.us/reader037/viewer/2022103021/55d5041cbb61ebec248b45b7/html5/thumbnails/60.jpg)
A temporary organization designed to search
for a repeatable and scalable business model
![Page 61: National governors association july 2012](https://reader037.vdocuments.us/reader037/viewer/2022103021/55d5041cbb61ebec248b45b7/html5/thumbnails/61.jpg)
A temporary organization designed to search
for a repeatable and scalable business model
![Page 62: National governors association july 2012](https://reader037.vdocuments.us/reader037/viewer/2022103021/55d5041cbb61ebec248b45b7/html5/thumbnails/62.jpg)
© 2012 Steve Blank
![Page 63: National governors association july 2012](https://reader037.vdocuments.us/reader037/viewer/2022103021/55d5041cbb61ebec248b45b7/html5/thumbnails/63.jpg)
But,Realize They’re Hypotheses
![Page 64: National governors association july 2012](https://reader037.vdocuments.us/reader037/viewer/2022103021/55d5041cbb61ebec248b45b7/html5/thumbnails/64.jpg)
![Page 65: National governors association july 2012](https://reader037.vdocuments.us/reader037/viewer/2022103021/55d5041cbb61ebec248b45b7/html5/thumbnails/65.jpg)
Customer Development is how you search for the model
![Page 66: National governors association july 2012](https://reader037.vdocuments.us/reader037/viewer/2022103021/55d5041cbb61ebec248b45b7/html5/thumbnails/66.jpg)
![Page 67: National governors association july 2012](https://reader037.vdocuments.us/reader037/viewer/2022103021/55d5041cbb61ebec248b45b7/html5/thumbnails/67.jpg)
Summary Lesson 3: Making Startups Fail Less
1. Startups Are Not Smaller Versions Of Large Companies
2. Customer Development & Business Models – Replace Business Plans
![Page 68: National governors association july 2012](https://reader037.vdocuments.us/reader037/viewer/2022103021/55d5041cbb61ebec248b45b7/html5/thumbnails/68.jpg)
Lesson 4: Can We Teach This?
![Page 69: National governors association july 2012](https://reader037.vdocuments.us/reader037/viewer/2022103021/55d5041cbb61ebec248b45b7/html5/thumbnails/69.jpg)
Can We Teach This?
Lean LaunchPad Class
8 Weeks, 100 Customer Calls
![Page 70: National governors association july 2012](https://reader037.vdocuments.us/reader037/viewer/2022103021/55d5041cbb61ebec248b45b7/html5/thumbnails/70.jpg)
Can We Teach This?
Lean LaunchPad Class
National Science Foundation
![Page 71: National governors association july 2012](https://reader037.vdocuments.us/reader037/viewer/2022103021/55d5041cbb61ebec248b45b7/html5/thumbnails/71.jpg)
The Data Says Yes You Can
![Page 72: National governors association july 2012](https://reader037.vdocuments.us/reader037/viewer/2022103021/55d5041cbb61ebec248b45b7/html5/thumbnails/72.jpg)
Knowledge about Startups?Coming Into the Class
![Page 73: National governors association july 2012](https://reader037.vdocuments.us/reader037/viewer/2022103021/55d5041cbb61ebec248b45b7/html5/thumbnails/73.jpg)
Knowledge About Startups?After the Class
![Page 74: National governors association july 2012](https://reader037.vdocuments.us/reader037/viewer/2022103021/55d5041cbb61ebec248b45b7/html5/thumbnails/74.jpg)
The Data Says It Will Create New Companies
![Page 75: National governors association july 2012](https://reader037.vdocuments.us/reader037/viewer/2022103021/55d5041cbb61ebec248b45b7/html5/thumbnails/75.jpg)
Knowledge About Building a CompanyComing Into the Class
![Page 76: National governors association july 2012](https://reader037.vdocuments.us/reader037/viewer/2022103021/55d5041cbb61ebec248b45b7/html5/thumbnails/76.jpg)
Knowledge About Building a CompanyAfter the Class
![Page 77: National governors association july 2012](https://reader037.vdocuments.us/reader037/viewer/2022103021/55d5041cbb61ebec248b45b7/html5/thumbnails/77.jpg)
What About the Other 99%
Will this Work on Main Street?
![Page 78: National governors association july 2012](https://reader037.vdocuments.us/reader037/viewer/2022103021/55d5041cbb61ebec248b45b7/html5/thumbnails/78.jpg)
Small businesses are being built with business tools from the 1950’s
![Page 79: National governors association july 2012](https://reader037.vdocuments.us/reader037/viewer/2022103021/55d5041cbb61ebec248b45b7/html5/thumbnails/79.jpg)
These Techniques Now Can Help Small Business Fail Less
![Page 80: National governors association july 2012](https://reader037.vdocuments.us/reader037/viewer/2022103021/55d5041cbb61ebec248b45b7/html5/thumbnails/80.jpg)
In Closing:
So What Can States Do?
![Page 81: National governors association july 2012](https://reader037.vdocuments.us/reader037/viewer/2022103021/55d5041cbb61ebec248b45b7/html5/thumbnails/81.jpg)
Recommendation 1
Encourage Fail Fast and Move Fast Culture
![Page 82: National governors association july 2012](https://reader037.vdocuments.us/reader037/viewer/2022103021/55d5041cbb61ebec248b45b7/html5/thumbnails/82.jpg)
Recommendation 2
Encourage Incubators / Accelerators
![Page 83: National governors association july 2012](https://reader037.vdocuments.us/reader037/viewer/2022103021/55d5041cbb61ebec248b45b7/html5/thumbnails/83.jpg)
Recommendation 3
Incent Risk Capital to Locate Next to Your Entrepreneurial Centers
![Page 84: National governors association july 2012](https://reader037.vdocuments.us/reader037/viewer/2022103021/55d5041cbb61ebec248b45b7/html5/thumbnails/84.jpg)
Recommendation 4
Encourage Your Universities to build 21st Century
Entrepreneurship Curriculum
+
![Page 85: National governors association july 2012](https://reader037.vdocuments.us/reader037/viewer/2022103021/55d5041cbb61ebec248b45b7/html5/thumbnails/85.jpg)
Recommendation 5
EncourageSmall Business Initiatives
to Adopt these Same Techniques
![Page 86: National governors association july 2012](https://reader037.vdocuments.us/reader037/viewer/2022103021/55d5041cbb61ebec248b45b7/html5/thumbnails/86.jpg)
I’ve open-sourced all this material
Happy to share it
Curriculum, Syllabus, Slides, Teaching Guide and On-line Courses all available for free www.steveblank.com