Startups and public policy 090811

Startups and Public Policy

Steve Blank

www.steveblank.com

Twitter: sgblank

Slides: www.slideshare.net/sblank

Corporate Lifecycle,

Innovation, Startups,

Founders, Ecosystem

Corporate Lifecycle,

Innovation, Startups,

Founders, Ecosystem

Why Should I Care?

Why Start New Companies in Finland?

Because Old Ones Die

Corporate Lifecyclesare Getting Shorter

Disruption

Technology, Globalization, Regulation, Consumer Taste

Disruption

Technology, Globalization, Regulation, Consumer Taste,

Competition, etc.

Job Growth From Existing Companies will decline

Job Growth Will Come From New Companies

Job Growth Will Come From New Companies

Startups

First -

What’s A Startup?

Six Types of Startups

Startup

Lifestyle Startups Work to Live their Passion

• Serve known customer with

known product

• Get paid for their passion

Small Business

Startup

Small Business StartupsWork to Feed the Family

• Serve known customer with

known product

• Feed the family

Small Business

Startup

Exit Criteria

- Business Model found

- Profitable business

- Existing team

< €100K in revenue

Small Business StartupsWork to Feed the Family

• known customer

known product

• Feed the family

Scalable

Startup

Large Company

Scalable StartupBorn to Be Big

Goal is to solve for:

unknown customer and

unknown features

Search

Scalable

Startup

Large Company

Exit Criteria

- Business model found

- Total Available Market > €300m

- Can grow to €50/year

Scalable StartupBorn to Be Big

Search Execute

Scalable

Startup

Large Company

Scalable StartupBorn to Be Big

• A scalable startup is designed to grow big

•Needs “Risk capital”

•What Silicon Valley means when they say “Startup”

Search Execute

Scalable

Startup

€3 to 30M Acquisition

Buyable StartupBorn to Be Sold

Goal is to solve for:

Internet, Mobile, Gaming Apps

Search Sell

Scalable

Startup

€3 to e0M Acquisition

Buyable Startup

Goal is to solve for:

Internet and Mobile Apps

Search Sell

Sell to larger company

TransitionLarge

Company

Scalable

Startup

Sustaining Innovation

• Existing Market / Known customer

•Known product feature needs

Large Company Sustaining InnovationInnovate or Evaporate

Large Company

Sustaining Innovation

Large Company Sustaining InnovationInnovate or Evaporate

•Build

•Partner

•Acquire

- IP

- Talent

- Product

- Customers

- Business

TransitionScalable

Startup

Large Company Disruptive Innovation

New Division

Large Company

Disruptive Innovation

•New Market

•New tech, customers, channels

Transition

Large Company Disruptive Innovation

New Division

Large Company

Disruptive Innovation•Build

•Partner

•Acquire

- IP

- Talent

- Product

- Customers

- Business

Transition

Large Non-Profit

Social Startup

Social Entrepreneurship Startups

• Solve pressing social problems

• Social Enterprise: Profitable

• Social Innovation: New Strategies

Each of these startups

require different skills

They Can Not Be Taught the Same Way

Each of these startups

require different

Government Policies

They Can Not Be Built the Same Way

Scalable Startups Will Provide the

Highest Job Growth

Scalable Startups Will Provide the

Highest Job Growth

They Require an Ecosystem You Do Not Have

Entrepreneurs

Scalable Startup Ecosystem

• Take risk

•No funding

• Building product

• Thinking through business model

Incubators

Entrepreneurs

Scalable Startup Ecosystem

• skills training

• mentoring = experience

• networking

• shared office

•small funding ~ €30K

•limited time ~ 6 months

Incubators

Angel Funds Entrepreneurs

Scalable Startup Ecosystem

• it’s now a company

•searching for a business model

•limited funding ~ €300K

•mentoring

Incubators

Venture

Capital Funds Entrepreneurs

Scalable Startup Ecosystem

• Large funding > €2000K

• Found a business Model

• Scale

• Multiple rounds of money

• Startup Experience outside of Finland

Scalable Startup Ecosystem

• Current policies in:

-Capital Gains

- Immigration

• Cultural view of Risk and Failure

All actively discourage Scalable

Startups

Each of These Steps

Must Require Risk

Each of These Steps

Must Require Risk

For the Entrepreneur and

For the Investor

Public Funding of Private Capital

Does Not Work

Public Funding of Private Capital

Does Not Work

Each Party Needs to Have

Equal Risk

The Goal of Public Funding Should be

to Create a Private Capital Ecosystem

The Goal of Public Funding Should be

to Create a Private Capital Ecosystem

Fund and attract experienced

Incubators & Venture Capital

And Put Yourself Out of Business

Thank You