Steve Blank, Evidence-based Entrepreneurship, The Lean Startup Conference 2013 - 12/10/13

Summary

In this insightful talk, Steve Blank discusses the evolution of the Lean Startup methodology, its core principles, and its application across industries. He highlights how startups, as temporary organizations, benefit from evidence-based strategies like Customer Development and agile engineering. Blank showcases the impact of the Business Model Canvas and Launchpad Central software in accelerating entrepreneurial ventures. He also explores how these methods are transforming sectors such as life sciences, government, and education, emphasizing the importance of data-driven decisions and the growing significance of Investment Readiness Levels in evaluating startup maturity.

Takeaways

• 😀 Lean Startup is about finding the right business model, not just executing an existing one.
• 😀 Customer discovery is a critical process for testing assumptions and shaping the startup’s direction.
• 😀 Traditional business plans should be replaced with iterative, evidence-based approaches to finding a scalable model.
• 😀 Startups need to be considered as organizations designed to search for scalable, repeatable business models.
• 😀 Lean Startup principles have been widely applicable across multiple industries, including life sciences.
• 😀 Evidence-based entrepreneurship helps gather data from the field and adjust based on real customer insights.
• 😀 The National Science Foundation's Innovation Corps is using Lean Startup methods to commercialize government-funded science.
• 😀 Launchpad Central software is being used to track customer feedback and measure startup progress.
• 😀 The Investment Readiness Level (IRL) framework provides a systematic way to assess the maturity and potential of a startup.
• 😀 The life sciences industry, which was initially resistant, is now embracing Lean Startup principles to increase efficiency and reduce risks in product development.
• 😀 Real-world results from UCSF’s class demonstrated how startups can validate hypotheses, pivot, and refine their business models through customer feedback.

Q & A

What is the main message Steve Blank is trying to convey in his speech?

Steve Blank emphasizes the importance of the Lean Startup methodology in helping entrepreneurs and startups reduce risks by focusing on customer development, rapid experimentation, and data-driven decision-making. He explains how Lean Startup principles can be applied across industries, even in fields like life sciences, where traditional approaches have struggled.

How did Steve Blank initially view the application of Lean Startup in life sciences?

Initially, Steve Blank believed that Lean Startup methods would not work in life sciences due to the complexities of the industry. He was convinced that the traditional business models and plans were necessary for this field. However, after being challenged by Stephanie Mars and working with UCSF and leading life sciences venture capitalists, he changed his perspective.

What is the significance of the National Science Foundation’s Innovation Corps (I-Corps) program in Blank's speech?

The National Science Foundation's Innovation Corps program is highlighted as a successful application of Lean Startup principles to government-funded commercialization efforts. Steve Blank and his colleagues helped adapt Lean Startup methods to the I-Corps program, leading to better startup success rates by focusing on customer interviews and evidence-based entrepreneurship.

How does LaunchPad Central contribute to the Lean Startup methodology?

LaunchPad Central is a software tool developed by Steve Blank and his team to help incubators, accelerators, and organizations track the progress of startups applying Lean Startup principles. It tracks customer interviews, hypothesis testing, and other data-driven metrics, providing a structured way to measure startup progress and assess their readiness for investment.

What is the 'Investment Readiness Level' (IRL), and why is it important?

The Investment Readiness Level (IRL) is a framework introduced by Steve Blank to evaluate the maturity and risk of startups based on evidence and data. It is analogous to NASA's Technology Readiness Levels and helps investors make more informed decisions about which startups to fund by measuring their progress and reducing uncertainty.

How does the Lean Startup methodology differ from traditional business planning?

The Lean Startup methodology contrasts with traditional business planning by focusing on rapid experimentation, validating hypotheses through customer development, and pivoting based on data, rather than relying on long-term forecasts and assumptions. It emphasizes learning through real-world feedback rather than theoretical planning.

What was the outcome of the UCSF LaunchPad class mentioned in the speech?

The UCSF LaunchPad class resulted in 26 teams, 110 students, and the validation of nearly 1,000 hypotheses. These teams conducted 2,307 customer interviews and pivoted 436 times. This class demonstrated the power of applying Lean Startup methods to life sciences and other sectors, achieving substantial progress in a short period.

How did the venture capitalists in Silicon Valley respond to the Lean Startup approach?

The venture capitalists in Silicon Valley were initially skeptical but soon became enthusiastic about Lean Startup principles. They expressed that the life sciences venture capital industry was struggling due to inefficiencies in capital use. They were eager for a method that could improve the efficiency of startups, and Lean Startup was presented as a solution to these problems.

Why does Steve Blank consider customer development a crucial part of the Lean Startup methodology?

Steve Blank believes customer development is crucial because it helps startups understand real customer needs, validate their product hypotheses, and reduce the risk of failure. Instead of assuming what customers want, Lean Startup encourages founders to gather direct feedback, which leads to more effective solutions and a higher chance of success.

What role did Stephanie Mars play in changing Steve Blank's perspective on Lean Startup in life sciences?

Stephanie Mars played a pivotal role in challenging Steve Blank's initial belief that Lean Startup methods wouldn’t work in life sciences. She introduced him to key venture capitalists and scientists in the field, which led to a collaboration that demonstrated the effectiveness of Lean Startup principles in life sciences and helped him refine his thinking on the subject.