Steve Blank's Blog, page 55

The benefits of customer and agile development and minimum features set are continuous customer feedback, rapid iteration and little wasted code. But over time if developers aren't careful, code written to find early customers can become unwieldy, difficult to maintain and incapable of scaling. Ironically it becomes the antithesis of agile. And the magnitude of the problem increases exponentially with the success of the company. The logical solution? "Re-architect and re-write" the product.

For a company in a rapidly changing market, that's usually the beginning of the end.

It Seems Logical

I just had lunch (at my favorite Greek restaurant in Palo Alto forgetting it looked like a VC meetup) with a friend who was technical founder of his company and is now its chairman. He hired an operating exec as the CEO a few years ago. We caught up on how the company was doing ("very well, thank you, after five years, the company is now at a $50M run rate,") but he wanted to talk about a problem that was on his mind. "As we've grown we've become less and less responsive to changing market and customer needs. While our revenue is looking good, we can be out of business in two years if we can't keep up with our customer's rapid shifts in platforms. Our CEO doesn't have a technology background, but he's frustrated he can't get the new features and platforms he wants (Facebook, iPhone and Android, etc.) At the last board meeting our VP of engineering explained that the root of our problems was 'our code has accumulated a ton of "technical debt,' it's really ugly code, and it's not the way we would have done it today. He told the board that the only way to to deliver these changes is to re-write our product." My friend added, "It sounds logical to the CEO so he's about to approve the project."

Shooting Yourself in the Head

"Well didn't the board read him the riot act when they heard this?" I asked. "No," my friend replied, sadly shaking his head, "the rest of the board said it sounded like a good idea."

With a few more questions I learned that the code base, which had now grown large, still had vestiges of the original exploratory code written back in the early days when the company was in the discovery phase of Customer Development. Engineering designs made back then with the aim of figuring out the product were not the right designs for the company's current task of expanding to new platforms.

I reminded my friend that I've never been an engineering manager so any advice I could give him was just from someone who had seen the movie before.

The Siren Song to CEO's Who Aren't Technical

CEO's face the "rewrite" problem at least once in their tenure. If they're an operating exec brought in to replace a founding technical CEO, then it looks like an easy decision – just listen to your engineering VP compare the schedule for a rewrite (short) against the schedule of adapting the old code to the new purpose (long.) In reality this is a fools choice. The engineering team may know the difficulty and problems adapting the old code, but has no idea what difficulties and problems it will face writing a new code base.

A CEO who had lived through a debacle of a rewrite or understood the complexity of the code would know that with the original engineering team no longer there, the odds of making the old mistakes over again are high. Add to that introducing new mistakes that weren't there the first time, Murphy's law says that unbridled optimism will likely turn the 1-year rewrite into a multi-year project.

My observation was that the CEO and VP of Engineering were confusing cause and effect. The customers aren't asking for new code. They are asking for new features and platforms –now. Customers couldn't care less whether it was delivered via spaghetti code, alien spacecraft or a completely new product. While the code rewrite is going on, competitors who aren't enamored with architectural purity will be adding features, platforms, customers and market share. The difference between being able to add them now versus a year or more in the future might be the difference between growing revenue and going out of business.

Who Wants to Work on The Old Product

Perhaps the most dangerous side-effect of embarking on a code rewrite is that the decision condemns the old code before a viable alternative exists. Who is going to want to work on the old code with all its problems when the VP Engineering and CEO have declared the new code to be the future of the company?  The old code is as good as dead the moment management introduces the word "rewrite."  As a consequence, the CEO has no fallback. If the VP Engineering's schedule ends up taking four years instead of one year, there is no way to make incremental progress on the new features during that time.

What we have is a failure of imagination

I suggested that this looked like a failure of imagination in the VP of Engineering  - made worse by a CEO who's never lived through a code rewrite – and compounded by a board that also doesn't get it and hasn't challenged either of them for a creative solution.

My suggestion to my friend? Given how dynamic and competitive the market is, this move is a company-killer. The heuristic should be don't rewrite the code base in businesses where time to market is critical and customer needs shift rapidly." Rewrites may make sense in markets where the competitive cycle time is long.

I suggest that he lay down on the tracks in front of this train at the board meeting. Force the CEO to articulate what features and platforms he needs by when, and what measures he has in place to manage schedule risk. Figure out whether a completely different engineering approach was possible. (Refactor only the modules for the features that were needed now? Rewrite the new platforms on a different code-base? Start a separate skunk works team for the new platforms?  etc.)

Lessons Learned

Not all code rewrites are the same.  When the market is stable and changes are infrequent, you may have time to rewrite.
When markets/customers/competitors are shifting rapidly, you don't get to declare a "time-out" because your code is ugly.
This is when you need to understand 1) what problem are you solving (hint it's not the code) and 2) how to creatively fix what's needed.
Making the wrong choice can crater your company.
This is worth a brawl at the board meeting.

Filed under: Customer Development, Technology, Venture Capital

Over the last 40 years the U.S. has evolved an entrepreneurial ecosystem with two of the most unlikely partners – venture capital investors and technology entrepreneurs. This alliance has led to an explosion of technology innovation, scalable startups and job creation.

Tied at the hip, VC's and entrepreneurs take large risks together. VC's invest in startups with minimal tangible assets and no certainty about the product's viability, market size or customer adoption. Entrepreneurs face all that, and add one more risk to their list: the bad board member.

The Bad Board Member

I had coffee last week with one of my ex students. 30 months ago he raised a Series A venture round from two name brand Silicon Valley VC firms. It was early in the day, but he looked tired. "I need some advice about my board. I get along great with one of the VC's, but the other one, Bob, is making my life miserable. Nothing I do is right in his eyes." He looked pained as he continued. "We never had any personal chemistry, and it's gotten so bad in the last six months, our board meetings are just hell. They consist of Bob beating me up regardless of whether the results are good or bad. I can't tell if he's trying to get me to quit, fire me and bring on a new CEO or is just a miserable human being."

My antenna went up when I heard that Bob was his board member because the senior partner who led the investment said he was too busy to take another board seat (and right after the closing had assigned Bob to take the seat for his firm.)

Uh oh, I thought. I lived through this one. Admittedly, my ex student was quirky, bordering on eccentric, but he had a long and successful track record in Silicon Valley delivering complex products before he went back to get his MBA. He was a great engineering manager and recruited, hired and inspired a world-class team. This was his first CEO job. He said that Bob described him to others on the board as the "crazy aunt you hide in the closet when the guests come."

We went through the status of the company, and at least from the outside it sounded good. In fact it sounded great: three major versions of the product shipped, multiple iterations and a few pivots under their belt, revenue was growing even faster than plan.

"Well you just need to talk to your other board members and ask for their counsel," I offered.  "I did! I've talked to the other VC and he told me it's a problem that I just need to work out with Bob." Hmm, this wasn't sounding good. "Why don't you go back to the partner who led the deal and ask for his advice?"

The look on his face told me I knew what the answer would be. "Why do you think I'm having breakfast with you?  I did just that, and do you know what he said?" I sat there thinking I knew exactly what the senior VC said because I had heard it myself when I was an entrepreneur. "The senior partner at the firm said he wasn't going to get involved in "chemistry" issues." Sounding both sad and frustrated he said, "What do I do now? I built a great company, and I think I'm being set up to be fired."

The VC Lemon Law

Every Venture Capitalist I've heard talk about founder/board member problems treats them like they only happen in other funds. "Great VC's in brand name firms don't have these problems" is the line I hear.

The venture capital industry is in denial.

The problem is as bad in large brand name funds as in the smaller firms. While most board problems arise from founder performance issues, naiveté or disagreements about strategy, a number are created by bad behavior on the part of a board member. Yet while a VC can remove a founder who misbehaves, there is no corresponding recourse when a VC is the source of the problem.

Astonishingly, there's no professional standards in the venture capital industry that acknowledges this problem even exists. Not only does the industry lack a code of conduct, but individual venture firms lack avenues for founders/CEOs to bring these problems to light. There's no ombudsman or 3rd party in a firm to hear an objective review, and no remedy to deal with a partner's bad behavior. (And why would there be if the problems are only with the founders.)

The rationale seems to be rooted in both tradition and math. Like doctors VC's tend to bury their mistakes. If a partner screws up a single company in a portfolio it's not the end of the world since they have 20-30 companies in a fund.  If a single partner has a consistently terrible track record, he or she just won't be invited into the next fund.  But in the meantime this bad board member has left a trail of broken companies. When it comes time to understand individual partner performance, information asymmetry is at play – like bad doctors, knowledge about a partner's performance is limited—and entrepreneurs rarely have a say in the matter even if they do have some knowledge.

Finally, there's more than a whiff of noblesse oblige at play. If firms believe that VC's always act responsibly and the problems are always with the founders, they don't need to worry about bad board member behavior. They can continue to pretend it never occurs.

The reality is that the VC business has expanded from the clubby group of 20 or so firms that sat on Sand Hill Road 40 years ago into an industry of ~400.  My hope is that they realize that with that expansion comes a different set of responsibilities.

Lessons Learned

Most Entrepreneur/VC clashes arise from founder performance issues
Infrequently the cause is bad behavior from a board member
Currently founders have no recourse
After 40 years of growth the VC industry still operates with "small club" rules and mindset

Filed under: Venture Capital

In November 2010 as part of my interview about entrepreneurs and Customer Development, the Shoshin Project also asked me about my thoughts on investing in innovation. They wanted some words of wisdom for their investment bank and hedge fund customers.

This falls into the "Asking someone who was handy versus knowledgeable" category. (I was a entrepreneur who retired at the right time, not a VC or hedge fund manager.) But never one to miss an opportunity when the camera was rolling, I shared my thoughts for five minutes.

Fast forward to today. Given Goldman Sachs' $500 million investment in Facebook at a $50 billion valuation it appears someone might have been listening (particularly around 2:35 mark in the video.)

Oops.

http://bcove.me/70jvfjro

Filed under: Venture Capital

In a startup "Good news needs to travel fast, but bad news needs to travel faster."

There's something about the combination of human nature (rationalization and self deception) and large hierarchical organizations (corporations, military, government, etc.) that actively conspire to hide failure and errors. Institutional cover-up's are so ingrained that we take them for granted.

Yet for a startup a cover-up culture is death. In a startup founders and the board need to do exact the opposite of a large company – failures need to be shared, discussed and dissected to extract "lessons learned" so a new direction can be set.

Lie to My Face

The first time I saw a corporate cover-up was as a new board member of a medium size public company. The VP of an operating division had run into trouble in product development; the product was late and getting later. The revenue plan had the new product baked into the numbers and it was clear that this division General Manager was going to crater his forecast (happens all the time, nothing new here.) I knew this from talking to his people before the board meeting so none of this was a surprise. What was a surprise was the boldface lies the VP told us at the board meeting. "The product's on schedule. No problems. We'll make the numbers." The disconnect between reality and a senior executive's willingness to blatantly lie to his CEO and board just blew me away.

It would have been so much simpler for him to say, "We're screwed, and I need your help." Until I dug deeper and realized that the entire company had a "cover-up culture" – the CEO punished failure and bad news. Since only good news was rewarded (as defined by the revenue and product plan shared with Wall Street analysts,) I understood why avoiding bad news and covering mistakes was the general manager's rational choice in this company. Because earlier in my career I had a board that beat me senseless when I missed a milestone.

Cover-up Or Look Like an Idiot

In large companies executives are hired and compensated for pristine and efficient execution. If you screw up, there's an unspoken assumption that you've screwed up a known process – something that was repeatable and predictable. You cover up because your screw-ups not only make you look like a failure, but everyone up the line (your boss, their boss, etc.) look like an idiot. Further, the odds are that the information you hide won't immediately be discovered or damage the company.

I mention this not because this post is about cover-ups in large companies, (I'll leave that to the experts in organizational behavior and social theory) but to contrast it with the very different kind of culture that startups need to survive.

The Cover-Up Culture: The Role of the Board

As a founder I quickly learned how open I could be with my board. A few times I had not so great investors who believed that a startup should unfold like a Harvard case study. They ignored the reality that most startups are a chaotic set of events from which founders are trying to extract a repeatable and profitable pattern. The first time I delivered bad news I got my head handed to me. The lesson this chastened CEO took from that board meeting? Don't tell this board bad news.

In other startups I was lucky and had great investors who knew how to manage and deal with chaos. They realized that conditions change so rapidly that the original business plan hypotheses becomes irrelevant. These investors taught me metrics appropriate for searching for a business model, how to work with the board when I didn't make a milestone, and how we would figure out when it was time to change the strategy. I thought of these board members as partners and I shared everything with them; good, bad and ugly.

These board members encouraged me to instill the right culture in the company. They reminded me that failures in startups tell the founders which direction not to pursue – while teaching you how to succeed. This means covering up failure in a startup was like tossing their money in the street. So instead of a cover-up culture they encouraged a "Lessons Learned culture."

Startups: Good News Needs to Travel Fast, but Bad News Needs to Travel Faster

A key element of a "Lessons Learned" culture is rapid dissemination of information. All information, whether good or bad, must be shared rapidly. We taught our company that understanding sales losses were more important than understanding sales wins; understanding why a competitor's products were better was more important than rationalizing ways in which ours were superior. All news, but especially bad news, needed to be shared, dissected, understood, and acted on. At each weekly department and company meeting we discussed what worked and hadn't. And when we found employees who hoarded information or covered up problems we removed them. They were cultural poison for a startup.

The resulting conversations made us smarter, agile and relentless.

Lessons Learned

Startups are built around rapid iterations of hypotheses. Most of them turn out be wrong
Make sure your board is not beating up on the truth
Build a culture of rapid dissemination of all news; good or bad
Founders lead by example in sharing Lessons Learned
Collectively analyze failures,then iterate, pivot and try again
A cover-up culture is death to a startup
Fire employees who hoard information or hide bad news

Filed under: Big Companies versus Startups: Durant versus Sloan

Much like my career, in the last two years this blog has traveled a serendipitous path. I orignally wrote it with four goals in mind:

First, to explain to my kids, then just graduating from High School, stories about their dad's life when he was their age. And with the 30-year statute of limitations now passed, stories about who I worked for (and the names of agencies.)
Second, to share how my how my thinking about entrepreneurship as a distinct practice and how Customer Development as one of its central components has evolved over the last decade.
Third, to share both thinking and practice as I learned how to teach entrepreneurs (the way one teaches artists and musicians.)
Fourth, as a public official in the State of California, to offer a window on how public policy on California Coastal protection gets made. The Coastal stories are going to have to wait until I'm no longer a public official. (With Jerry Brown as our new governor I'm up for reappointment so you might get to hear the stories soon, or may have to wait a bit longer.)

On my first day as a blogger I got 20 views. Now I've had days with 20 viewers per minute. So Happy New Year to my 100,000-plus monthly readers throughout the world, and to many more who read my posts via some of the most important media in the startup/tech/entrepreneurship world, in more languages and places than I can keep track of.

Now Hear This

For 2011, I'm glad to announce that you can now hear my blog posts via a podcast that you can subscribe to, download or have emailed to you a few days after each blog post goes live. An innovative entrepreneur put his company to work delivering the podcasts with his compliments. Marcos Polanco, founder of Clearshore and himself a serial entrepreneur, "never found time to read the blog, no matter how much I loved it. "I told Steve" said Marcus, "in true hacker fashion, I was too lazy to read his blog, and I figured others must be in the same spot, so I proposed to turn the blog into a podcast instead."

Marcos has agreed that the list of podcast subscribers will never be rented, sold or traded to anyone (same goes with our own email list). His big payoff from this effort is the chance to put a few lines of copy about his latest venture, Clearshore, at the bottom of each podcast link email. Clearshore is a "matchmaker" that helps small businesses get their fair share of the $60-billion US government budget for R&D and innovation. Today, startups receive only 4% of those funds, something Clearshore–now in the customer discovery phase–is out to change.

To add your email to the free podcast alert service, click here.

Filed under: Air Force, Ardent, Audubon, Big Companies versus Startups: Durant versus Sloan, Business Model versus Business Plan, California Coastal Commission, Conservation, Convergent Technologies, Customer Development, Customer Development Manifesto, E.piphany, ESL, Family/Career, K and S Ranch, Market Types, Marketing, MIPS Computers, Peninsula Open Space Trust, Philanthropy, Rocket Science Games, Secret History of Silicon Valley, SuperMac, Teaching, Technology, Venture Capital, Vertical Markets, Zilog

I spent two weeks of December in Chile as a guest of Professor Cristóbal García, Director of EmprendeUC at the Catholic University of Chile, which just signed up a 3-year collaboration partnership with Stanford's Technology Ventures Program. I did a keynote on innovation hubs at the newly created DoFuture program, spoke at Santiago's Startup Weekend on Customer and Agile Development, and at a Conference in Patagonia supported by the Ministry of Economy's Innovation Division.

I got smarter about the world outside of Silicon Valley, met some wonderful people who made me feel part of their family and shared some thoughts about entrepreneurship.

This post is a personal view of what I saw in what I call "Chilecon Valley" — in no way does it represent the views of the fine institutions I teach at. Read this with all the usual caveats: visiting a place for a few weeks doesn't make you an expert (heck I've lived in Silicon Valley for over 30 years and I'm still surprised), I'm not an economist, and the odds are I misunderstood or misinterpreted what I saw or just didn't see enough.

Creating the Next Silicon Valley – The Chilean Experiment

Chile has decided that it wants to be an innovation hub in South America.

In my short time in Chile, I spent time meeting with:

Chilean entrepreneurs; as part of Santiago's Startup Weekend as well as EmprendeUC-DUOC New Ventures Contest Awards ceremony.
The government; the Innovation Division of the Ministry of Economy, the Chilean Economic Development Agency, (CORFO) which sponsored Start-Up Chile and Do Future in Patagonia as well as Fundacion Chile, the main R&D agency and the National Innovation Council.
Universities; including the business, design and engineering schools in the Catholic University of Chile who are hard at work teaching and encouraging their students to think big and to start companies.
Independent non profits such as the Innovation Forum, encouraging entrepreneurship and innovation in education.

The good news:

Entrepreneurship and innovation is being talked about continually in Chile. This isn't some small-time effort. The country is dead serious in all levels of government and universities about making this happen. They've been thinking hard and smart about the lessons to be learned not only from Silicon Valley, but with only 16 million people, they are also looking for lessons from other small innovation clusters such as Israel, Singapore and Finland. These countries are great models of countries too small to sustain startups of scale on just domestic consumption yet have managed to create innovation with a global reach.

What needs work:

As an outsider I was incredibly impressed with how far Chile has progressed in making the country an innovation hub. However I had questions about the challenges that still needed to be addressed.

Venture Capital

Perhaps it was just who I was meeting, but for a country so focused on innovation and startups the lack of venture capitalists was noticeable. Given the interesting things going on in the engineering labs I visited and the startups I met, one would have thought the place would have been crawling with VC's fighting over deals. Instead it felt like the government – through CORFO - was doing most of the risk capital investing. Given that great VC's are much, much more than just a bag of money, this means that startups lack experienced board members with practical experience. There seemed to be very few who knew how to coach entrepreneurs and to build companies. Finally, it wasn't clear if everyone was on the same page; that for a Chilean startup to scale it was going to have to reach past Chile and go global. There seemed to be few tools, techniques and strategies to do so.

A sign of progress will be when some of the CORFO guys leave the government and start their own VC firms.

Corporate Connections

Entrepreneurship in Chile seems to be disconnected from the country's largest industries and core resources. The clearest example is the country's copper mining industry, which contributes 20% of the Chilean Gross Domestic Product. (Chile produces 35% of the world's mined cooper.) The largest company, the state-run Chilean National Copper Corp CODELCO, has $23 billion in sales. Yet the copper companies import nearly 100% of the advanced technology they use. Interestingly, CODELCO is required to contribute 10% of its revenues to the armed forces, but the mining industry seems to have little or no connection with innovation and entrepreneurship efforts in universities and startups. (Perhaps it's because the Ministry responsible for Mining is separate from the Ministry responsible for the Economy and Innovation.)

I suggested that Chile's mining industry could contribute to building innovation leadership by funding a multi-tiered initiative in the country's leading universities:

Professional management training (obvious and immediate payback)
Applied engineering (top 10 annual challenges from the mining companies)
Basic research (copper based materials science, robotics, materials handling)

Small Business versus Scalable Startup versus Corporate Entrepreneurship

There's confusion in both the Government and Universities about the difference between small business entrepreneurship (startups designed to be family businesses,) scalable startup entrepreneurship (startups designed from day one to scale big inside Chile and then expand globally) and corporate entrepreneurship.

I suggested that they think about educating (and funding) each class of entrepreneurs differently and realize different regions of Chile have different needs.  In Santiago the concept that startups are not smaller versions of large companies and traditional business school classes and methods don't apply, is starting to take hold and will help shape how they educate entrepreneurs. In contrast, over lunch with the governor of Ultima Esperanza (the "Last Hope" province on the Southern tip of Chile,) it became clear that there's a pressing need for training and education in small business entrepreneurship, dramatically different then the scalable startup education wanted in Santiago.

These three types of entrepreneurship need to be explicitly recognized, encouraged and managed.

A Magnet For Talent

My sense is that Chile has not yet "declared a major." Saying that you support entrepreneurship and innovation is a start, but the sentence needs to be finished. Entrepreneurship and innovation in what field?  Where will Chile establish technical and innovative leadership?  Is the only way they will attract talent by paying entrepreneurs to come to the country? Or will students and entrepreneurs come to Chile because it is one of the best places in the world for innovation in certain specific industries (pick your favorite – alternative energy? materials science? food science? cellulose outputs? video games and film? South American web commerce hub? automated mining? UAV's? etc.)

Already there are multiple centers of excellence in the engineering schools in Santiago with strong entrepreneurial professors. Yet no dean, provost or government minister seems to want to issue a declarative sentence that says, "For the next five years we're going to focus on building world-class leadership in these three areas." (Perhaps because the cost of a public failure is so high in Chile. See below.)

I suggested that what seems to be missing is a stated goal for Chile to become a magnet for talent in specific domains. Why will people from South America stream to Chile, besides its magnificent geography?  In what fields will Chile's universities and entrepreneurial culture create such an irresistible pull?

A Culture that does not accept failure

Chileans I met were concerned that their culture was not accepting of business and/or personal failure. This is not the land of second chances where failure means you are an experienced entrepreneur. Partially due to a lack of bankruptcy or commercial courts, the bankruptcy process in Chile is draconian. In discussions with accounting and financial professionals, I learned that getting caught up in it feels like a Dickens's novel, it can take years to shut down a company.

In addition, in Chile the cost of personal failure is high. If you fail, you've failed your family, your community and your country. As a result, societal pressures favor people who avoid risky ventures. Because its entrepreneurs are unlikely to make commitments or definitive statements which they know might be risky, i.e. "we're going to be a leader in our market" or "our startup will be $100 million in five years," Chile can't foster the "reality distortion field" that underlies a dynamic entrepreneurial culture.

I suggested that perhaps using a science analogy could help change Chilean perspectives about the risk and experimentation it takes to build new ventures. Entrepreneurship and incubators could be described as an "Innovation Laboratory"  - similar to a scientific laboratory where entrepreneurs develop and test hypothesis (iterative guesses) about new business models. And like science, starting a new venture is not a linear process but one that involves failures, dead ends and changes in direction.

Lessons From the Valley

At one of my presentations the audience was a mix of deans of multiple schools at Catholic University, government officials from the Ministry of the Economy, active entrepreneurs and students. I offered that Silicon Valley's rise was serendipitous, that you can't reverse engineer an accidental Entrepreneurial Cluster formed in the Cold War. However, we can point out the elements that made our valley successful, and point out the ones that may be helpful in Chile; the role of Universities and defense-driven university R&D, the rise of venture capital, a failure-tolerant culture and the emerging science of entrepreneurial education. Slides 22, 36, 97 and 117 are the key points.

Come To Chilecon Valley

If you're serious about understanding centers of entrepreneurship outside the U.S., Chile is now one of the required stops. The progress in the last few years has been nothing short of outstanding.

I'll be back.

Lessons Learned

Chile is trying to engineer an entrepreneurial cluster as a National policy
They've gotten off to a good start with a committed Ministry of the Economy
The universities are on board with passionate faculty and excited students
The country needs to build a deeper Venture Capital industry
Chilean core industries need to view entrepreneurship as an asset, and technological innovation as an opportunity to leap forward
Second chances are hard to come by in current Chilean business climate and culture

Filed under: Teaching, Venture Capital

On Vacation until the New Year. Have have a happy holiday.

Penguin in Patagonia

 

Filed under: Uncategorized

While I was teaching at Columbia in New York in November I was interviewed for the Shoshin Project by my friend Christian Jorg.

Filed under: Customer Development

Filed under: Uncategorized

Teaching in Chile

I've spent the last week in Santiago, a guest of Professor Cristóbal García at the Catholic University of Chile as part of Stanford's Engineering Technology Venture Program.

Valaparaiso houses

Entrepreneurship and innovation in what I call "Chilecon Valley" is being talked about continually here.  In my next post I'll share a longer description of my impressions.  But to give you a sense of how fast they are moving, it's only been a week since I posted the syllabus for our new Stanford entrepreneurship class Engr245 (The Lean Launchpad.) This week the class has been adopted in the Computer Science department of the Catholic University of Chile. (Thanks to Professors Professor Felix Halcartegaray Vergara and Rosa Alarcon who will be teaching the class.)

Here's the course announcement from Professor Vergara (in English):

Customer Development Course in Chile – Lean Launchpad

Next semester on the Department of Computer Science of the Catholic University of Chile professor Rosa Alarcón (@ruyalarcon) and I (@felixcl) will be teaching a course based on the Customer Development Model developed by Steve Blank. The objective of this course is that groups of students finish with a completed software product that has real customers and an identified market. The idea of this course started on a trip to Stanford University during March 2010, where we realized that many of the great innovations in Silicon Valley are born from Computer Science students, so we said "We should give our computer science students an opportunity to develop a company". Then we saw the great alignment between the Customer Development Model and the Agile software development methodologies so we decided to create the course IIC3515 "Workshop of Entrepreneurship with Software" that applies both models to develop real software products with customers from the startup ideas of the students.

A few weeks ago, it was great to see that professor Steve Blank was developing a very similar course in Stanford called "The Lean Launchpad" (Engr245) that combines the customer development model with agile development with the business model canvas, and therefore we convinced ourserlves that we where not so crazy with this course, or at least we are as crazy as they are. The syllabus for the Stanford course can be seen here. This course brings to life in a very interesting way the idea we had with professor Rosa Alarcón, and it starts on January 2011 so when Steve Blank was visiting Chile this week, we told him about our course,  and he offered all his help and experience to help us, and so we are very grateful to him. Therefore we will leverage the experience in Stanford giving the course on January and February to have a very interesting proposal to our students on March when we start. The syllabus for our course (in Spanish) is here: Programa de curso IIC3515. In this blog post I will add more information about the development of this course when I have it. We are very excited on this project, and we think it will have an important impact on our university and our students so thank you very much Steve for making this happen.

The goal of course IIC3515 is that students get together in teams (probably of 4) and develop their business idea during the semester, developing the software that represents it. Unlike other courses on entrepreneurship, this one is NOT about developing a Business Plan (in fact, the idea is that they write little and spend the time programming and getting out of the building to talk to customers.)  The students must develop their initial hypothesis of who their customers are and what is their products (using the Business Model Canvas) , and then get out to test this Hypothesis and pivot as they start knowing their customers and "getting smarter about them".

With this methodology, once they finish the course they will have very important tools to continue developing their startup, and they will also have a product that they will feel confident about that there are customers that want to buy it, unlike what usually happens when the development of the product is completed and then you go out to the market to see if any customer wants it. In this case,  the customer will be considered since the first moment, and this results in a much more controlled market risk for the venture. The idea is also to have investors on the final stages of the course, and have mentors for the students that have real world experience in startups to support the students with their projects.

We look forward to your comments and suggestions! Any updates on this course in english will have the tag "Lean Launchpad course" to make it easier to search.

Here's the course announcement in Spanish

Filed under: Teaching