Steve Blank, lecturer Haas School of Business UCB. He has been a entrepreneur in Silicon Valley since the 1970s. He has been teaching and developing curriculum for entrepreneurship training. Built a method for high tech startups, the Lean LaunchPad.

Transcript

Speaker 1:        Spectrum's next. 

Speaker 2:        Okay. 

Speaker 3:        [inaudible].

Speaker 1:        Welcome to spectrum the science and technology show on k a [00:00:30 ] l x Berkeley, a biweekly 30 minute program bringing you interviews, featuring bay area scientists and technologists as well as a calendar of local events and news [inaudible]. 

Speaker 4:        Hi, and good afternoon. My name is Brad Swift. I'm the host of today's show. Today we present part one of two interviews with Steve Blank, a lecturer at the Haas School of business at UC Berkeley. Steve has been a serial entrepreneur in silicon valley since the late 1970s [00:01:00 ] see if you recognize any of these companies. He was involved with Xylog convergent technologies, MIPS, computer, ardent, super Mack, rocket science games and epiphany. In 1999 Steve Retired from day to day involvement in running a company since 2002 he has been teaching and developing curriculum for entrepreneurship training. By 2011 he was said to have devised [00:01:30 ] the scientific method for launching high tech startups, dubbed the Lean launch pad. In part one Steve Talks about his beginnings, the culture of Silicon Valley, the intersection of science, technology, finance, and business. Steve Blank, welcome to spectrum. Oh, thanks for having me. I wanted to find out from you how it is you got started as an entrepreneur. What attracted you to that? 

Speaker 5:        He's probably the military. I, uh, spent four years in the air [00:02:00 ] force during Vietnam and a year and a half in Southeast Asia. And then when I came back to the United States, I worked on a B, 52 bombers in the strategic air command. And I finally years later understood the difference between working in a crisis organization, which was in a war zone where almost anything was acceptable to get the job done versus an execution organization that was dealing with mistakes. Men dropping a 20 megaton nuclear weapon where you process and procedure was actually imperative. And it turned [00:02:30 ] out I was much better in the organizations that required creativity and agility and tenacity and resilience. And I never understood that I was getting the world's best training for entrepreneurship. I went back to school in Ann Arbor and managed to get thrown out the second time in my life out of University of Michigan. 

Speaker 5:        I call that the best school I was ever thrown out of a Michigan state was the next best school where it was a premed. And then, um, I was sent out to silicon valley. I was working as a field service engineer and what I didn't realize two years later was 16% [00:03:00 ] startup to bring up a computer system in a place called San Jose. And San Jose was so unknown that my admin got us tickets for San Jose, Puerto Rico until I said, I think it's not out of the country. I came out there to do a job to install a process control system. I thought it was some kind of joke is that there were 45 pages of advertisements in the newspaper at the time for scientists, engineers, et cetera. And I flew back and quit, got a job at my first startup in Silicon Valley [00:03:30 ] and subsequently I did eight of them in 21 years. 

Speaker 5:        What were some of the ones that stand out out of the eight? You know, I had some great successes. There were four IPOs out of the eight, I'd say one or two. I had something to do with the others. I was just kinda standing there when the safe fell on the guy in front of me and the money dropped down and I got to pick it up. But honestly, in hindsight, and I can now say this only in hindsight, I learned the most from some of the failures though I wouldn't tell you why I wanted to learn that at the time, but failing [00:04:00 ] and failing hard when it was absolutely clear it was your fault and no one else's forced me to go through the stages of denial and then blame others and then whatever. And then acceptance and then ultimately kind of some real learning about how to build early stage ventures. 

Speaker 5:        You know, I blew my Nixon last company, I was on the cover of wired magazine and 90 days after the cover I realized my company was going out of business and eventually did. And I called my mother who was a Russian immigrant and every time I spoke to my mother I [00:04:30 ] had to pause because English wasn't her first language. And you know, I'd say something and pause and then she'd say something back and pause. And whenever I said, mom, I lost 35 million hours, pause. And then she said, where'd you put it? I said, no, no, no mom, I'm calling you to tell you none of them was 30 I didn't even get the next sentence out. Cause then she went, oh my gosh, she wants $35 million. We can't even change your name. It's already plank. And then she started thinking about it and she said, and the country we came from [00:05:00 ] is gone. 

Speaker 5:        There's no fast to go. I said, no, no mom though. What I'm trying to tell you is that the people gave me $35 million, just give me another $12 million to do the next startup. And it was in comprehensible because what I find when I talked to foreign visitors to silicon valley or to any entrepreneurial cluster, you know, we have a special name for failed entrepreneur in Silicon Valley. Do you know what it is? Experienced? It's a big idea in the u s around entrepreneurial clusters, failure equals experience. [00:05:30 ] People don't ask you if you change your name or have to leave town or you're going to go bankrupt, et cetera. The first thing your best friend will ask you is, so what's your next startup? That's an amazing part of this culture that we've built here and that's what happened to me. My last startup, I returned $1 billion each to those two investors and it's not a story about me, it's a story about the ecosystem that we live in that's both supremely American and supremely capitalists, but also Sir Pulliam clustered in just [00:06:00 ] a few locations in the United States where there are clear reasons why one succeeded to some fail. 

Speaker 5:        You know, when I retired from my last one, I decided that after eight startups in 21 years, my company was about to go public and my kids were seven and eight years old at the time and luckily we had children when I was in my late thirties and so therefore I got to watch people I admired incredibly at work, watch how they dealt with their families. And what was surprising [00:06:30 ] is that most of them had feet of clay when it came to home. They basically focused 100% of their efforts at work and as their kids grew up, their kids hated them. I kind of remember that in the back of my head, and so when I had the opportunity to retire, I said, I want to watch my kids grow up. And so I did. And that's a preambled answer your question. That's at the end. 

Speaker 5:        For the first time in my life, my head wasn't down completely inside trying to execute in a single company. I had a chance to reflect on [00:07:00 ] the 21 years and believe it or not, I started to write my memoirs and I got, you know what I realize now in hindsight, it was actually an emotional catharsis of kind of purging. What did I learn? And I asked, it was 80 pages into it writing. He was a vignette and I would write lessons learned from each of those experiences and what I realized truly the hair was standing up and back of my neck. On page 80 there was a pattern I had never recognized in my career and I realized no one else had recognized [00:07:30 ] it either and either I was very wrong or there might be some truth and here was the pattern in silicon valley since the beginning we had treated startups like they were smaller versions of large companies. 

Speaker 5:        Everything a large company did. The investment wisdom was, well they write business plans, you write business plans, they organize sales, marketing and Bizdev and you do that. They write our income statement, balance sheet and cashflow and do five year plans and then you do that too. Never noticing that. In fact that distinction, and no one had ever said this [00:08:00 ] before, what large companies do is execute known business models and the emphasis is on execution, on process. What a known business model means is we know who our customer is, we know how to sell it, we know who competitors are. We know what pride in an existing company it's existing cause somebody in the dim past figured that stuff out. But what a startup is doing is not executing. You think you're executing. That's what they told you to go do, but reality you failed most of the time because you were actually searching [00:08:30 ] for something. 

Speaker 5:        You were just guessing in front of my students here at Berkeley and at Stanford I used the word, you have a series of hypotheses that are untested, but that's a fancy word for you're just guessing. And so the real insight was somebody needed to come up with a set of tools for startups that were different than the tools that were being taught on how to run and manage existing corporations. And that tool set in distinction at the turn of the century didn't exist. That is 1999 [00:09:00 ] there was not even a language to describe what I just said and I decided to embark on building the equivalent of t