Over the last two months, the U.S. government has been running one of the most audacious experiments in entrepreneurship since World War II.
They launched an incubator for the top scientists and engineers in the U.S. This week we saw the results.
63 scientists and engineers in 21 teams made 2,000 customer calls in eight weeks, turning laboratory ideas into formidable startups. Nineteen of the 21 teams are moving forward in commercializing their technology.
It was an extraordinary effort.
Your Country Needs You
In July I got a call from Errol Arkilic, a program manager at the National Science Foundation (NSF) -- the $6.8-billion U.S. government agency that supports research in all the non-medical fields of science and engineering. "We've been reading your blog about your Lean Launchpad class." Wow, that's nice, I thought, a call from a fan. No, the conversation was about to get more interesting.
"Our country needs you." Say what?
"Part of the NSF charter is to commercialize the best of the science and engineering research we fund. We want to make a bet that your Lean Launchpad class can apply the scientific method to market-opportunity identification. We think your class can train scientists to start companies better than how we're doing it now."
Uh oh, where's this heading? "We want to select the best of our researchers, pay them $50,000 to take your class and see if we can change the outcome of their careers and their research."
"That's great, maybe I can set up a class for you next year," I replied. The answer shot back, "We want the class to start in 90 days."
I remember thinking, "Wow, whoever's on the other end of the phone sounds just like an entrepreneur, they were asking for the impossible." Just as I was computing whether this was possible, he added, "And we want to bring 25 new teams every quarter."
So of course, I said yes.
While they'll never admit it, the National Science Foundation was starting an incubator -- the Innovation Corps -- to take the most promising research projects in American university laboratories and turn them into startups.
The Innovation Corps -- Using the Lean LaunchPad as an Incubator for Scientists and Engineers
The Innovation Corps Startup Team
These weren't 22-year-olds who wanted to build a social shopping web site. Each of the teams selected by the NSF had a Principal Investigator -- a research scientist who was a University professor; an Entrepreneurial Lead -- a graduate student working in the Investigator's lab; and a mentor from their local area who had business and/or domain expertise. And they were hard at work at some real science.
The I-Corps Incubator Program
Unlike other incubators, our Lean LaunchPad Class had a specific curriculum. We taught them the business model/customer development/agile development solution stack. This methodology forces rapid hypothesis testing and Customer Development by getting out of the building while building the product. (The mentors in our program are there to support the methodology, but aren't there to tell stories.)
The gamble was that we could train Professors doing hard-core science, who had never been near a startup or Silicon Valley, to get out of the building and talk to customers and Pivot as easily as someone at a web startup.
The Scientists, the NSF and the teaching team were all going to go where no one had before. Given that Silicon Valley had started with scientists and engineers, not MBAs, I thought this was a bet worth making.
The Curriculum
Since the teams were in universities scattered across the U.S., we couldn't keep them in Silicon Valley for all eight weeks, so we tried an experiment in teaching remotely.
First, we brought all 21 teams to Stanford for three days of 10 hour-a-day classes in business model design and customer development. After returning to their schools, they got out of their labs while they built their products. Once a week, via Webex, they presented their Customer Development progress on line to the teaching team and the other teams. Then it was our turn, and we lectured all the teams remotely. After seven weeks they returned to Silicon Valley for their final presentations.
(The class syllabus is here. The class textbooks were The Four Steps to the Epiphany and Business Model Generation)."
Assembling the Teaching Team
We recruited two veteran Venture Capital partners to be part of the 10-week teaching team: Jon Feiber at Mohr Davidow and John Burke of True Ventures. Alexander Osterwalder joined us for the opening day, and Oren Jacob, ex-CTO of Pixar, joined us for a finale.
The First Class
As the first class settled into their seats at Stanford I wondered if we were going to be able to get them to act like startups. Most of the Principal Investigators were professors. Some had their own labs managing large groups of researchers. Their average age was in the mid-40s. Their mentors were at least that old. Only the Entrepreneurial Leads (the PI's assistants) were in their mid to late 20s.
Looking at them I wondered if: 1) hard-core science and engineering projects could rapidly pivot, 2) if the Principal Investigators would simply "assign" the work to their graduate students. I thought about the common wisdom that only 20-year-olds doing Internet startups could be agile. Some incubators would have labeled this group too old to be entrepreneurs. I smiled as I realized that I was older than most (but not all) of them.
The Stanford Lectures
Our first lecture was about 1) how to organize their thinking of what it takes to build a startup -- the business model canvas and 2) how to test their hypotheses -- the Customer Development Process.
Since the first part of the lecture was about Alexander Osterwalder's Business Model Canvas, Osterwalder flew in from Switzerland to teach slides 20 through 76. And since the rest of the slides were about Customer Development, I taught those.
Lecture 1: Business Model & Customer Development The homework for the 21 teams in the next 24 hours? Come up with a business model canvas for their startup. And tell us how they will test each of their business model hypotheses. Stay tuned for Part 2. Steve Blank's blog: www.steveblank.com
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View more presentations from Steve Blank.
As day one ended, I wondered what those canvases would look like.
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Without contributions to Political Campaign Chests, would the "Solyndra Company" have gotten that $535,000,000.00 taxpayer guaranteed loan?
Was this a “political donation for a government contract pay for play” deal.
Apparently most of our elected political leaders play that game of “government funds, loans, and contracts handed out to their campaign contributors”, in return for more and more campaign contributions.
The politicians call these taxpayer fund giveaways “Economic Stimulation and Jobs Creation”!
I would like to audit the contributors to various Billion Dollar re-election Campaign Chests to determine how much of those funds were "Pay to Play" money.
We could have had that and more if the NATIONAL WEALTH generated by private businesses was larger and of sufficient size for the US Government to confiscate enough to pay for re-building the infrastructure and other government activities without borrowing money from foreigners to pay for those things.
At least when it chooses to invest, it has some discretion. Solyandra is not a reason for the government to stop investing in selected nationally critical industries.
President Obama has provided (US government guaranteed) loans of venture capital to many risky start-up Green Energy businesses that private banks would not even consider, and then had some (probably non-technically educated and unqualified politically influenced) government bureaucrat approving US government loans for every hair brained start-up business scheme that is proposed, such as the “Solyndra Company”.
Those US government borrowed funds in the Solyndra bank accounts soon vaporized into executive paychecks, legal expenses, marketing expenses, lobbying expenses, entertainment expenses, jobs for friends and relatives, new automobiles, airplanes, first class business travel, and other unnecessary expenses because the entrepreneurs will normally bleed all of any borrowed capital assets out of each start-up company into their own pockets, their relatives pockets and their friends pockets until all of the "free government" start-up capital is gone, then the business can declare bankruptcy and not have to repay the US government loan, because the taxpayers will have to repay that loan.
If the funds are not the businessman's own personally owned funds at risk, then why not pay themselves and their family and their friends until the money from the government loan is all gone.
When businesses are started with borrowed money instead of using the entrepreneur's own (savings and assets) money, that entrepreneur will also be less careful about how he spends that borrowed money than that if the entrepreneur was spending his own money.
I sure would like to review the financial statements for the past few years for of each of the Solyndra Company’s officers, officer’s family members, officer’s friends, subcontractors, landlords, vendors, officer’s friends, and all of the others that received money from that government loan. I would like to determine the increase in Net Worth for each of these entities before the “Solyndra Company” began, and after the “Solyndra Company” went into bankruptcy.
This will probably document where most of the government loan money went.
Maybe their business plan included bankruptcy from the beginning!
Neither foreigners nor US citizens will pay any extra for the same product produced with US labor if that product is more expensive.
We must also somehow prevent foreign countries from pirating and/or copying our new innovative products.
We might need to use the force of law and/or the force of our military might to prevent any pirating of our technology, or the jobs to produce any new technology will be exported to foreign countries as all of the other jobs to produce US engineer invented products have been exported.
If the USA had technically innovative products that foreigners did not have, then we could get high prices for those products with excessive profits (until the foreigners copy our inventions and/or infringe upon our patents).
As the USA has purposefully reduced our human scientific and technology resource bases, the USA has stopped being the country that is creating any new inventions or products.
The US congress has also destroyed the US creative capabilities and the database of creative critical thinking technically oriented people that won WWII and created the economic power that the USA enjoyed for a few decades after WWII, because the technical innovation, product development and design capabilities and the associated jobs went overseas along with the manufacturing capability as economically required by FREE TRADE AGREEMENTS.
The USA is no longer the World Technology leader that the USA was until maybe the early 1970's. Asian countries are now are the technology leaders.
The best and brightest students in the USA have pursued the more financially rewarding non-scientific careers, instead of educations that might have created technically innovative products that people in foreign countries might purchase.
American students will generally not endure the hard work, critical thinking, and intense focus that is required for science and engineering degrees, especially since today there is such limited financial rewards and respect for that effort after graduation.
1. plant, grow and/or harvest something of commercial value from the earth;
2. extract something of commercial value from the earth;
3. manufacture something of commercial value that is consumable
4. construct a building that is permanently useful for rental income;
5. provide professional services (medical, legal, dental, engineering, architecture, land surveying, technology, accounting, etc.);
6. collect payment for patent and copyright uses;
and then trade, sell, lease or rent these items and/or services to parties outside of their family, in return for a net transfer of gold, currency or commodities from other parties outside of their family into their own family.
Members of that family (tribe, state, nation) can then reflect their real NATIONAL WEALTH and financial security with the net positive accumulation of privately owned grain, gold, cattle, jewels, land, buildings, hotels, casinos, factories, commodities and/or other marketable products that are then available to be used for economic security, or to raise the standard of living for the members of that family and also be assets redeemable as value for any printed currency that they might care to issue and/or any Treasury Bonds that they might care to print and sell.
The US manufacturers that used to hire millions of US citizens to make things in the USA cannot overcome those obstacles that the US government created with their FREE TRADE AGREEMENTS.
I do not have confidence that the USA citizens still have the scientific knowledge and technical capability to re-create our factories for manufacturing, innovating and designing any new products for export as required to reverse our trade balance and restore the value of the dollar, as the USA did to create the US industrial machine that won WWII and created a the excellent lifestyle that US citizens enjoyed for a few decades after WWII