Entrepreneur Steve Blank has served as a founder, investor and even in the air force. But there’s another title he is known for: professor.
Blank has earned a reputation among budding and veteran business leaders alike as the father of the Lean Startup movement, a business philosophy that popularized startup concepts like “pivoting” and “minimum viable product.” (Disclosure: Blank is an investor in EdSurge.) And he’s taught these ideas on business and innovation at Stanford, the University of California at Berkeley, Columbia and New York Universities. His course on the “lean” methodologies, called Lean Launchpad, is offered at more than 75 schools around the world and was one of the earliest to appear on the online course platform Udacity.
This week on the EdSurge On Air podcast, we talk to Steve about both his business and teaching careers, and how changes in the startup world are reflected in both the lean method and his courses. Listen below, or subscribe to the EdSurge On Air podcast on your favorite podcast app (like iTunes or Stitcher). Highlights from the conversation below have been lightly edited and condensed for clarity.
EdSurge: How did your ideas behind the Lean Startup come about?
Blank: As an entrepreneur in the 20th century, we were told in not so many words that startups were nothing more than smaller versions of large companies. You had an idea, you wrote a plan, you turn that into a set of slides, you raise money and then you executed for the plan. Then the VCs funded this idea you came up with. And there was very little notion that this plan was actually a set of hypotheses, and we were always surprised that startups didn't turn out the way we thought [would] in our business plan.
The big idea is that VCs simply assumed that any failure to execute the plan was a failure of the founders or the key people in the company. And so they tended to fire people, and each new person would come in with a slightly different idea. And so successful startups would eventually what we now call “pivot” by firing people rather than firing the business plan.
I kind of knew this in the back of my head, that there was something wrong. But you know what? I just did it like everybody else in Silicon Valley until I had time to retire and start thinking about the nature of innovation and entrepreneurship.
So what are the key tenants of the Lean Startup, and what does this model look like?
The big idea was that startups were trying to copy what large companies did. Well, large companies execute known business models. But startups aren't executing anything at all. Startups are actually searching for a business model. This difference between search and execution had never been articulated before.
I built a process called “customer development,” which kicked off the Lean Startup model, and that basically said, “Look, I don't care whether the VCs gave you money or not. All you have is a series of untested hypotheses. So why don't we get outside and validate those hypotheses?”
So the Lean Startup started with my customer-development process, but very quickly when I started actually talking about this and teaching it at Berkeley, one of my students observed that 21st-century people were building products using agile methodologies, which is a fancy word for saying they were building products incrementally and iteratively. [The student] and I said, “Why don't we combine agile engineering with this customer development process so we could put things in front of customers early and often.”
This allowed us to do something which was unheard of in the 20th century, this notion of a pivot. A pivot is defined as a substantive change to one or more of the components of the business model, meaning, “Gee, I thought my customers would be these types of people. Holy cow, they're over here,” or, “I thought the customers would love these features, but they actually love features two, nine and twelve. Why don't we just focus on that?” Pivot gives you permission to change some of the fundamental premises of what you're doing.
Parts of the Lean Startup model seem to echo that Silicon Valley mantra of ‘move fast and break things.’ Do you agree with that, and is that a good thing?
Move fast and break things is kind of something that sounds good at the surface but you really want to understand what the heck that means. Move fast, of course that's the differentiator between startups and large companies. Break things, I'm not sure I understand what that means. Break things on purpose? Well that's certainly not a goal for Lean. If it means you're allowed to make mistakes, I'll understand it.
The whole idea about Lean is that we expect that you're wrong. It's not that we like to fail fast, it's that in Lean, we're testing a series of guesses, and implicitly most of them are going to be wrong. Maybe the better mantra is, ‘move fast and test things.’
Can the Lean model be applied to all industries? I'm thinking about education in particular. Does the model work if the ‘user’ is a student or a school?
[Lean] is for a very specific set of circumstances, surprisingly which are mostly still valid today. But it's not a religion. Let me remind people what my intent was. It was designed in that post-dot com crash. It's hard to imagine now but venture capitalists were hiding under their desks, literally. They weren't writing checks, funds were underwater, so Lean was designed for a time when you needed to optimize your cash and make sure that everything had some evidence and probability of success. And do it at speed.
Now let's fast forward today: startups are raising hundreds of millions or billions of dollars, and revenue and profit are certainly not the key monitors. It might be user growth, it might be something else—it might be revenue growth and no profit. So you have to decide whether Lean is still appropriate or, "Gee, let's spend the cash as fast as we can because we want to become a unicorn."
Back to your question about how does it apply to education. Well, it certainly depends. Are we talking about an education startup? Are we talking about an existing school system? Are we talking about a large university or large existing program? Lean is appropriate in different ways, in different times, in different organizations. For example, Lean works great in startups that are cash constrained and resource constrained. Lean works poorly in large corporations unless you do a lot of other things around it, which we call an innovation pipeline. And that is even tougher inside of government agencies, which have even more constraints than companies and certainly a lot more than startups.
And by the way, the mistake for companies and government agencies is looking at all these startup tools and techniques we now have and saying, “Oh, all I need to do is run them inside of my large company and somehow magic will happen,” and it turns out what we end up there is with innovation theater not really innovation.
There's Lean and there's plenty of other models and ideas about how to make startups work. But we know that still today most startups fail. From your perspective as an educator, how much of this can actually be taught, and are early entrepreneurs going to listen?
One of the interesting things about entrepreneurial education is confusing teaching entrepreneurship with teaching accounting. It's not the same. Entrepreneurship and innovation is a experiential, hands-on activity. It's not a process you could teach out of the book. Entrepreneurs, and I mean founders, are as close to artists as any other profession, and that's a big idea for an educator. We've figured out over the last 500 years how to teach art. We realized that, yes, you want to teach some theory for artists, but essentially art is a set of apprenticeships and hands-on practice. It's an experiential type of activity for teaching.
The classes I build are experiential classes that teach theory but insist on practice. Can you imagine going to a brain surgeon who's never cracked a skull or a heart surgeon who’s never cracked a chest in a residency? You would run away fast.
What do you think that higher ed is doing right when it comes to teaching entrepreneurship, innovation or both?
We finally realized that we ought to be teaching. When I first started teaching innovation entrepreneurship at Berkeley at Stanford, I was trying to get this concept that we need a new way to think about how to teach. People would say, “Steve, no, we just need to teach them how to write a business plan and we need to teach them finance.” Those are nice but we were just not connecting. This is the problem for tenured educators, it's real easy to get stuck in your own structure. Great [educators] managed to pivot as well, to realize that something new has really come that's not a fad, that you really want to think about that maybe we ought to be changing how we look and do things, and that's tough.
Universities by design are not early adopters, let me underline that, universities are by design not early adopters. You don't want them to adopt the latest fad because by the time you get a syllabus approved or a new curriculum and whatever, if it's a fad you just wasted a ton of time and resources. But you also want to decide whether you want to be a late adopter, and that's usually not attractive for students. And so they figure out how to kind of constantly monitor what those changes are outside the building, and I give kudos to the ones who have figured out how to do that.
Are there any similarities between running a company and leading a classroom?
That's a great question. It's very funny, the first job I had in Silicon Valley was actually as a training instructor. I taught microprocessor design, and it was my first love. But I didn't realize that actually training to be an educator was actually training to be a leader. The ability to take complex systems, recognize patterns and explain it in a way that my mother could understand was actually a skill not only for an educator but was necessary for a VP of Marketing and eventually a CEO because you have to communicate to and motivate customers, investors and employees about what you're doing and why.
Educators are grappling with this rapidly-changing landscape of what to teach, how to teach. We are living in one of the most confusing and exciting times in the world, just trying to keep up with the changing shape of technology. What tech do I teach inside a classroom versus what's available outside? What methodologies do I teach? And how do I motivate students who are trying to decide whether innovation entrepreneurship is for them? I'm just impressed with the scale and the scope of the job, and I'm grateful for everybody who's engaged in it.
