Host - Monique Mills

[00:00]Welcome back everyone. We're now in Season Two of the Unpolished MBA podcast and today I have a special guest. This guest is one of the most influential entrepreneurs in the world. Having had created the customer development methodology, which is the foundation for the Lean Startup movement. Now, I know I just used some terms that are not common everyday language for most, but they are in the entrepreneurship and innovation ecosystems around the world.

You may have heard of his Lean Launchpad Class, which many may know as the National Science Foundation I-Corps program. Now, this class is the standard for commercialization for all federal research. Now on a personal level, the information I've learned over the years from this guest has fundamentally changed the way I approach entrepreneurship, as well as how I've influenced hundreds of others that I've worked with as clients or taught entrepreneurship to at the University.

You see, in my work, I mention his name or reference his work at least weekly. It's simply incredible the impact that he's had and continues to have on the world as innovation and entrepreneurship continues to drive economic development and growth. You are sure to take away many insights from my conversation with Mr. Steve Blank. I had the honor of being invited to have dinner at his home with other innovators from around the world and subsequently he agreed to this interview with me.

Throughout the conversation, you'll hear us reference the timeframe of 40 years. Now this is because I was speaking with him about the 40 year anniversary of ATDC at Georgia Tech, which is the oldest tech incubator in the country that's located in Atlanta, Georgia on Georgia Tech's campus. And I also have the pleasure of serving as a coach and connector for a portfolio of groundbreaking tech startups there.

In this first part of the interview, I asked Steve's opinion on the power and effectiveness of innovation hubs, how far things have come, and then an outlook on where it's going. Listen in to see what he says.

Guest - Steve Blank

[02:45]: So, one of the great things about an innovation cluster, innovation ecosystem is that it's a real melting pot of technology types of people. And more importantly, if you built an innovation ecosystem, it's not a jobs program for the local economy. It's actually a magnet for some of the best and the brightest and most interesting and innovative cultures that come from everywhere and converge on the region. Atlanta already has a rich tradition of people coming in from other places and making it home. But when you have a vibrant tech industry, whether it's life sciences, or hardware, or software, or anything else. This notion of as “attractor” actually is a magnet for jobs and innovation that will last forever, not just for one company.

Host - Monique Mills

[03:37]: What do you think are the most notable changes in building a business that has occurred over the last 40 years and what pillars have remained?

Guest - Steve Blank

[03:47]: Well, what's interesting is if you look back on innovation and entrepreneurship 40 years ago, it's almost like we were in the stone age. You know, we barely had invented the wheel about even the basic concepts of startups. We used to believe that startups were nothing more than smaller versions of large companies. Today we understand that startups are radically different. Startups search for business models while the large companies execute them. But more importantly, we developed tools that is a method for rapidly developing startups step by step.

The other thing that's happened is of course, is that the cost of starting a company has plummeted almost by a factor of a thousand if you're in the software business. Now computing as a utility, just like you plug into the wall for electricity, you plug into Amazon Web Services or Microsoft Azure or Google Cloud, and just buy computing rather than buying computers that sit in your company.

The third is, and I think this one embraces Atlanta, is that innovation and entrepreneurship is everywhere. It used to be that you had to be in Sand Hill Road or maybe Boston if you were doing life sciences to understand what's going on in innovation entrepreneurship. Now you could just sit on your computer and know more about innovation, how to build a company than ever existed in Silicon Valley 40 years ago. So, the changes have been dramatic. They didn't happen in one day, but if you look back, I think innovation has gone from a niche activity to now one that powers the entire economy in not only the U.S., but the world.

Host - Monique Mills

[05:32]: Oh Absolutely.

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Host - Monique Mills

[05:39]: In this next part, Steve tells us how Silicon Valley becoming the innovation powerhouse that it's become was actually an accident. You see it wasn't an engineered ecosystem. It evolved into what it is today from mostly one person's idea and the support of many others in the local area that were willing to step outside of their comfort zones and share ideas and resources. Keep listening.

Guest - Steve Blank

[06:11]: You know, one of the things that people forget is that the Silicon Valley, and that is the region between San Francisco and San Jose, was an accident. It wasn't an engineered ecosystem. The one Professor, at Stanford actually, had more to do with it than probably anybody else, someone named Fred Terman. Who turned Stanford from an inward facing University to an outward facing University, where he actually told professors and grad students that it was actually good for your career to interact with the commercial world than it was to just sit here and get your PhD.

While he encourages students to get their PhDs, he encouraged them and their faculties to sit on boards, to start companies, et cetera. So, step one is having an outward facing University where faculty and administration is actually supportive of commercial activities.

The second part, and this was very interesting in watching Mike Bloomberg in New York City engineer an ecosystem from scratch. It is the fact that if you have entrepreneurs and innovation but all you have is entrepreneurs and innovation, you just have one hand clapping. It really requires the addition of a financial ecosystem. That is without risk capital, you don't have an ecosystem.

Well, if you really think about it, nowadays almost every city, state, region has entrepreneurs and entrepreneurs all have access to entrepreneurial information on how to build a startup. And almost every region has angel capital or the beginnings of risk capital, but there's probably only 10 places in the world you could raise a hundred million dollars. And that's what makes an innovation cluster at scale. Not that innovation isn't occurring everywhere, but to have a cluster you need risk capital at scale. And I think that we could in the US kind of think about maybe three or four places in the US where that exists, a couple of places in China, maybe in North of Tel Aviv and London. And then you're kind of out of places where that exists. I think Atlanta is getting close but those are kind of my definition of an innovation cluster.

Host - Monique Mills

[08:32]: Never thought of it that way, but yeah, without risk capital...

Guest - Steve Blank

[08:37]: Right.

Host - Monique Mills

[08:37]: ...the innovation goes nowhere.

Guest - Steve Blank

[08:39]: Well, no, actually, without risk capital, it's not that innovation goes nowhere. Without risk capital innovation goes to Silicon Valley.

Host - Monique Mills

[08:49]: Wow. That hurts. But you're right. You're right.

Guest - Steve Blank

[08:54]: You start in Atlanta and then you will go where the money is.

Host - Monique Mills

[09:02]: That's exactly what’s happened. You're absolutely right.

Guest - Steve Blank

[09:04]: So, money fuels risk innovation clusters at least clusters at scale. And this takes nothing away from the innovators or the institutions that exist in that area, but if you can't attract capital in building a regional cluster ---and by capital, I mean, capital at scale, a vibrant risk capital business with a lot of pre-seed, seed, and Series "A" and "B," and follow-on investing, you don't have a clustered scale. And it's questionable about how many clusters at scale can the country actually support. But that seems to me to be the definition of why Silicon Valley, New York, maybe Boston, San Diego for the life sciences, kind of exists.

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Host - Monique Mills

[09:52]: In this final part. I asked Steve for words of wisdom for entrepreneurs to best serve their industries right now. Listen to the top three points that he shares.

Guest - Steve Blank

[10:08]: Well, I think some of the things that entrepreneurs can do to best serve their industries are the ones that are kind of timeless and that is you know, make sure if you're going to be a founder of a startup that you understand, it's the world's worst job, but the world's best calling. That is that founders are closer to artists than any other profession. It's that passion to create something that will take you through the inevitable ups and downs and disappointments, but your eye is always on the prize rather than the activity.

The second is do something that matters. You know, when you're young and passionate you think you have all the time in the world and unfortunately, it's not true. And you want to look back on the things you did and say “Were these things that made the world a better place?” and maybe you could make money along the way. But it's worth considering that.

The third is to remember that not all startups require venture capital or professional capital. There are some great businesses that could be bootstrapped, or it could be, capital could come from other places.

And I guess the last thing is to enjoy what you do. If you don't love it, find something else because it's one heck of a ride.

Host - Monique Mills

[11:37]: Thank you so much, Steve. It seems just normal to you I know, but for us, those words of wisdom are meaningful. We actually take actions based upon your insight. I took notes on things you were saying when I was there, bring it back to what they do at Georgia Tech to become more in alignment for us to see that kind of growth and kind of ecosystem that you all have there. And yeah, we still have a ways to go, but it's only through insights from those like you that we're able to make changes and adjustments, you know, that's still culturally appropriate for our area of region, but still, there's certain things that are kind of pillars. One that you mentioned funding is a huge deal. So, I appreciate you bringing that up.

Guest - Steve Blank

[12:23]: Thank you so much for your time.

Host - Monique Mills

[12:28]: Okay. That's it. So, what do you think? Steve Blank is a legend in the entrepreneurship and innovation community and it was an absolute honor to get to spend time with him.

Thank you for listening to the Unpolished MBA podcast. To hear more episodes or to request, to become a guest. Please visit unpolishedmba.com.