Educating Entrepreneurs Who? What? Why? Steve Blank Stanford Technology Ventures Program
Educating Entrepreneurs. Who? What? Why?
Oct 17, 2014
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Educating EntrepreneursWho? What? Why?
Steve BlankStanford Technology Ventures Program
News From Silicon Valley
Small VC Funds ($50-250M)
Union Square VenturesFirst Round Capital
Traditional VC Funds (>$250M)
BenchmarkSequoia
Angels & Incubators($0-10M)
Y-CombinatorTechStars
Seed Funds ($10-50M)
SoftTech (Clavier)Maples Investments
Felicis (Senkut)SV Angel (Conway)
Source: Dave McClure 500hats.com
News From Silicon Valley
Small VC Funds ($50-250M)
Traditional VC Funds (>$250M)
Angels & Incubators($0-10M)
Seed Funds ($10-50M)
Source: Dave McClure 500hats.com
Innovation is happening here
News From Silicon Valley
• Internet startups - $500K is the new $5M– Driven by the top of the pyramid
• Seed Funds providing entrepreneurial education– Ycombinator, TechStars, SeedCamp, LaunchBox, etc
• Customer Development/Lean Startup adoption– Methodology to test hypothesis and business model
Some Definitions
Small BusinessSmall BusinessStartupStartup
Small Business Startups
Small BusinessSmall BusinessStartupStartup
- Business Model found- Profitable business- Existing team< $10M in revenue
Small Business Startups
Small BusinessSmall BusinessStartupStartup
- Business Model found- Profitable business- Existing team< $10M in revenue
Small Business Startups
• 5.7 million small businesses in the U.S. <500 employees• They employ 99.5% of our workforce
ScalableStartupScalableStartup
Large Company
>$100M/year
Large Company
>$100M/year
Scalable Startup
ScalableStartupScalableStartup
Large Company
>$100M/year
Large Company
>$100M/year
- Total Available Market > $500m- Company can grow to $100m/year- Known business model- Focused on execution and process
Scalable Startup
ScalableStartupScalableStartup
Large Company
>$100M/year
Large Company
>$100M/year
- Total Available Market > $500m- Company can grow to $100m/year- Known business model- Focused on execution and process
Scalable Startup
• In contrast a scalable startup is designed to grow big• It typically needs risk capital• These are what Silicon Valley means when they say “Startup”
Small BusinessSmall BusinessStartupStartup
- Business Model found- Profitable business- Existing team< $10M
ScalableStartupScalableStartup
Large Company
>$100M/year
Large Company
>$100M/year
- Total Available Market > $500m- Company can grow to $100m/year- Known business model- Focused on execution and process
Very Different Startup Curriculums
Small BusinessSmall BusinessStartupStartup
- Business Model found- Profitable business- Existing team< $10M
ScalableStartupScalableStartup
Large Company
>$100M/year
Large Company
>$100M/year
- Total Available Market > $500m- Company can grow to $100m/year- Known business model- Focused on execution and process
Silicon Valley Startup Curriculum
X XX
ScalableStartupScalableStartup
Large Company
Large CompanyTransitionTransition
- Founders depart- Professional Mgmt- Process- Beginning of scale
The Transition
ScalableStartupScalableStartup
Large Company
Large CompanyTransitionTransition
- Business Model found- Product/Market fit- Repeatable sales model- Managers hired
- Cash-flow breakeven- Profitable- Rapid scale- New Senior Mgmt~ 150 people
The Search for the Business Model The Execution of the Business Model
Startups Search, Companies Execute
E-School instead of B-School
ScalableStartupScalableStartup
Large Company
Large CompanyTransitionTransition
- Business Model found- Product/Market fit- Repeatable sales model- Managers hired
What’s A Startup?
A Startup is the organization used to search for a scalable business model
Teach the Business Model Not the Plan
• No Business Plan survives first contact with customers
• A Business Model diagrams how a company creates, delivers and captures value
• Or in English: How a company makes money
Emphasis On Hypotheses Testing
How Do Startups Search For A Business Model?
• The Search is called Customer Development• The Implementation is called Agile Development
ScalableStartupScalableStartup
Large Company
Large CompanyTransitionTransition
- Business Model found- Product/Market fit- Repeatable sales model- Managers hired
- Cash-flow breakeven- Profitable- Rapid scale- New Senior Mgmt~ 150 people
Startups Don’t Last Forever
You fail if you remain a startup!
ScalableStartupScalableStartup
Large Company
Large CompanyTransitionTransition
Durant Versus Sloan
ScalableStartupScalableStartup
Large Company
Large CompanyTransitionTransition
Entrepreneurship School
Entrepreneurship School
- Hypothesis testing- Business Model testing- Customer Development- Agile Development- Metrics- Venture Finance- Hands-on
ScalableStartupScalableStartup
Large Company
Large CompanyTransitionTransition
- Hypothesis testing- Business Model testing- Customer Development- Agile Development- Metrics- Venture Finance- Hands-on
- Execution- Accounting- Products- Engineering- Management- Administrative
Business School
Business School Versus Entrepreneurship School
Entrepreneurship School
ScalableStartupScalableStartup
Large Company
Large CompanyTransitionTransition
Courses- Entrepreneurial Management- Creativity and Innovation- Technology Entrepreneurship- Patent Law for Entrepreneurs- Global Entrepreneurial Marketing- Entrepreneurial Finance
Business School
Business School Versus Entrepreneurship School
Entrepreneurship School
Courses- Managerial Finance/Accounting- Managing Groups and Teams- Financial Accounting- Operations- Modeling for Optimization- Global Value Chain Strategies
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