Steve Blank Podcast

Reading the NY Times article “Jeffrey Katzenberg Raises $1 Billion for Short-Form Video Venture,” I realized it was time for a new startup heuristic: the amount of customer discovery and product-market fit you need to find is inversely proportional to the amount and availability of risk capital. And while the “first mover advantage” was the rallying cry of the last bubble, today’s is: “Massive capital infusion can own the entire market.”

There’s no handbook on how to evaluate and process “suggestions” and “advice” from a boss or a mentor. But how you choose to act on these recommendations can speed up your learning and make or break your career. Here’s what to keep in mind...

We just finished our 3rd annual Hacking for Defense class at Stanford. Six teams presented their Lessons Learned presentations. Watching them I was left with wonder and awe about what they accomplished in 10 weeks. Six teams spoke to over 600 beneficiaries, stakeholders, requirements writers, program managers, warfighters, legal, security, customers, etc. By the end the class all of the teams realized that the problem as given by the sponsor had morphed into something bigger, deeper and much more interesting.

Is your organization full of Hackathons, Shark Tanks, Incubators and other innovation programs, but none have changed the trajectory of your company/agency? Over the last few years Pete Newell and I have helped build innovation programs inside large companies, across the U.S. federal science agencies and in the Department of Defense and Intelligence Community. But it is only recently that we realized why some programs succeed and others are failing.

Elon Musk, Alfred Sloan, and entrepreneurship in the automobile industry. The entrepreneur who founded and grew the largest startup in the world to $10 billion in revenue and got fired is someone you have probably never heard of. The guy who replaced him invented the idea of the modern corporation. If you want to understand the future of Tesla and Elon Musk’s role – something many want to do, given the constant stream of headlines about the company — you should start with a bit of automotive history from the 20th Century.

If you asked me why I gravitated to startups rather than work in a large company I would have answered at various times: “I want to be my own boss.” “I love risk.” “I want flexible work hours.” “I want to work on tough problems that matter.” “I have a vision and want to see it through.” “I saw a better opportunity and grabbed it. …”

I just received a thank-you note from a student who attended a fireside chat I held at the ranch. Something I said seemed to inspire her: “I always thought you needed to be innovative, original to be an entrepreneur. Now I have a different perception. Entrepreneurs are the ones that make things happen. (That) takes focus, diligence, discipline, flexibility and perseverance. They can take an innovative idea and make it impactful. … successful entrepreneurs are also ones who take challenges in stride, adapt and adjust plans to accommodate whatever problems do come up.”

Leadership is More Than a Memo by Steve Blank

It’s always fun to see what happens to my students after they leave class. Jeff Witten started CoinOut four years ago in my Columbia University 5-day Lean LaunchPad class. CoinOut eliminates the hassle of getting a pocket full of loose change from merchants by allowing you to put it in a digital wallet. Jeff just appeared on Shark Tank and the Sharks funded him. We just caught up and I got to do a bit of customer discovery on Jeff’s entrepreneurial journey to date.

Success no longer goes to the country that develops a new fighting technology first, but rather to the one that better integrates it and adapts its way of fighting…Our response will be to prioritize speed of delivery, continuous adaptation, and frequent modular upgrades. We must not accept cumbersome approval chains, wasteful applications of resources in uncompetitive space, or overly risk-averse thinking that impedes change. If you read these quotes, you’d think they were from a CEO who just took over a company facing disruption from agile startups and a changing environment. And you’d be right. Although in this case the CEO is the Secretary of Defense. And his company has 2 million employees.

I just read book – Janesville – that reminded me again of life outside the bubble. Janesville, tells the story of laid-off factory workers of a General Motors factory that’s never going to reopen. It’s a story about a Midwest town and the type of people I knew and worked alongside.

Jeff Immelt ran GE for 16 years. He radically transformed the company from a classic conglomerate that did everything to one that focused on its core industrial businesses. He sold off slower-growth, low-tech, and nonindustrial businesses — financial services, media, entertainment, plastics, and appliances. He doubled GE’s investment in R&D.

“…it takes all the running you can do to keep in the same place. ” - The Red Queen Alice in Wonderland Innovation, disruption, accelerators, have all become urgent buzzwords in the Department of Defense and Intelligence community. They are a reaction to the “red queen problem” but aren’t actually solving the problem. Here’s why.

The Office of Naval Research (ONR) has been one of the largest supporters of innovation in the U.S. Now they are starting to use the Lean Innovation process (see here and here) to turn ideas into solutions. The result will be defense innovation with speed and urgency.

Innovation theory and innovation in practice are radically different. Here are some simple tools to get your company’s innovation pipeline through the obstacles it will encounter.

I just watched a very smart company try to manage innovation by hiring a global consulting firm to offload engineering from “distractions.” They accomplished their goal, but at a huge, unanticipated cost: the processes and committees they designed ended up strangling innovation. There’s a much better way.

Annual note to self – most of the world exists outside the tech bubble. —– We have a summer home in New England in a semi-rural area, just ~10,000 people in town, with a potato farm across the street. Drive down the road and you can see the tall stalks of corn waving on other farms. Most people aren’t in tech or law or teaching in universities; they fall solidly in what is called working-class. They work as electricians, carpenters, plumbers, in hospitals, restaurants, as clerks, office managers, farmers, etc. They have solid middle-class values of work, family, education and country – work hard, own a home, have a secure job, and save for their kids’ college and their retirement.

Two good things just happened in Washington – these days that should be enough of a headline. First, someone ideal was just appointed to be Deputy Assistant Secretary of Defense. Second, funding to teach our Hacking for Defense class across the country just was added to the National Defense Authorization Act. Interestingly enough, both events are about how the best and brightest can serve their country – and are testament to the work of two dedicated men.

If you want to build a ship, don’t drum up the people to gather wood, divide the work, and give orders. Instead, teach them to yearn for the vast and endless sea. Antoine de Saint-Exupéry I was visiting with an ex-student who’s now the CFO of a large public tech company. The company is still one of the hottest places to work in tech. They make hardware with a large part of their innovation in embedded software and services. The CFO asked me to stay as one of the engineering directors came in for a meeting. I wish I hadn’t.

As more and more companies face disruption from globalization, new technology, and startups that have more capital than the incumbents, the continuing cry from Wall Street investors is, “Why can’t companies be as innovative as startups?” Here’s one reason why: Startups can do anything. Companies can only do what’s legal.