Steve Blank on Demystifying the Start-Up Culture

In his remarks yesterday at the closing session of the National Governors Association Annual Meeting, author, successful entrepreneur and educator Steve Blank did a great job of articulating in layman’s terms how the start-up ecosystem in Silicon Valley works, why start-ups are different and require specific expertise, and why embracing start-up culture and expertise is so critical.  I believe Steve's work is going to be a primary driver of innovation at scale for our country. It’s BRILLIANT.  

If you care about start-up/founder culture or start-ups, you should watch his talk in its entirety.  

Steve mentions the importance of researchers who focus not only on world-class research going on inside of their respective academic institutions, but also on the application of their research at scale in the public and private sectors.  Some of my favorite role-model researchers in Cambridge include:  

George Church 
Eric Lander
Bob Langer
Marvin Minsky
Mike Stonebraker

These innovators have done not just one or two start-ups each, but many dozens of start-ups. It's this combination of world-class academic research and commercial innovation that creates exponential value in our economy and in society.  

Here is a quick summary of Steve's talk and some highlights that really hit home with me.

A Quick Summary  

Four lessons: 

• Different types of start-ups
• What a start-up ecosystem looks like
• How to make start-ups fail less
• Can we actually teach what we now know?

Types of start-ups: 

• Lifestyle start-up - small businesses that serve known customers with known products and feed the family
• Scalable start-ups – which are designed to grow big (“We’re going to build a company that will take over the universe!”)
• Buyable start-ups – which have low capital requirements and can be very valuable very quickly
• Large companies that focus on “sustaining innovation.” They innovate on core products but cycle time is compressing, creating pressure for large companies to innovate faster

Important Highlights

Referring to the Nokia Board of Directors’ reaction to the iPhone on day of launch – “It's a toy. Why should we worry about this?” – Steve said: “To a big company, a disruptive innovation always looks like a toy on day 1.”

“The secret history of Silicon Valley” [another great video]

“The first venture capital was an unintended consequence of Sputnik”

“We want the engineering department at Stanford to face outward as well as inward”  

“Recognize that 90% of start-ups fail”

“Failure = Experience. We understand that these are the risks”

“Start-up culture is not just about the great entrepreneurs. It's about the ecosystem. Building this ecosystem is critical in getting any cluster off the ground.”

"Start-ups are not just small versions of big companies" - Steve Blank

“Embrace failure as part of the process”

“95% of start-ups fail because they didn't find customers or markets”

“We now know that start-ups search for something and large companies execute...The difference between search and execution are not just words...it's actually the difference in how we build these things”

“On day one, start-ups just have guesses...A start-up is a faith-based enterprise.. You want to turn the faith into facts as quickly as possible”

“What we now know is that no business plan survives first contact with customers”

“A start-up is a temporary organization”

“A start-up is designed to search for something that is repeatable and scalable”

“In the Customer Development Process, everything you know or think you know is a guess"

“In a start-up, it used to be when you failed you fired the VP of Sales, then fired the VP of Marketing, then the CEO.  We know now that start-ups go from failure to failure…Pivot says that this is going to happen all the time.”

And, I love the fact that he was the only dude not in a suit. Now there’s a lesson in itself :)