Lean launchpad educators teaching handbook

The Lean LaunchPad Educators Teaching HandbookSteve Blank & Jerry EngelJuly 2012

The Lean LaunchPad EducatorsTeaching HandbookSteve Blank & Jerry EngelJuly 2012

PAGE5

© 2012 Steve Blank

PrefacePURPOSE This goal of this document is to give you the theory of why we created the Lean LaunchPad class and the practice of how we have run it. However, it is neither a guide nor a cookbook for a class. As educators we expect you to adopt and adapt the class to your own school and curriculum as appropriate.

SCOPE The Lean LaunchPad class was developed based on experience mostly at the graduate level of several of the nation’s leading universities. It’s been taught both in engineering and business schools, as well as to post-graduate teams under the NSF program. However, we believe the methodology has broader applicability, and it is being adapted to undergraduate programs.

FOCUS The focus of the Lean LaunchPad class has mostly been on scalable startups, often tech-based; however, initial indications are that the approach is generalizable and can embrace the chal-lenges faced by small and medium-sized businesses, as well as new ventures in large corpora-tions.

ACKNOWLEDGEMENTS 8LI�0IER�0EYRGL4EH�[EW�½VWX�XEYKLX�EX�7XERJSVH�9RMZIVWMX]�EW�TEVX�SJ�XLI�7XERJSVH�8IGLRSP-ogy Ventures Program. Hats off to Kathy Eisenhardt and Tom Byers who gave us the freedom to invent and teach the class.

The class would not have been possible without the two VCs who volunteered their time to teach this Stanford class with me: Jon Feiber of Mohr Davidow Ventures and Ann Miura-Ko of Floodgate. Lisa Forssell taught the “how to present class,” and Thomas Haymore was our inde-fatigable Teaching Assistant. We also owe much to our team of mentors.

%X�9�'��&IVOIPI]�,EEW�&YWMRIWW�7GLSSP��%RHVI�1EVUYMW�EPPS[IH�YW�XS�XIWX�XLI�GPEWW�MR�LMW�HI-partment, and Jerry Engel and Jim Hornthal of CMEA Capital joined the teaching team.

8LMW�WEQI�KVSYT�XEYKLX�XLI�½VWX�2EXMSREP�7GMIRGI�*SYRHEXMSR�-RRSZEXMSR�'SVTW�GPEWWIW��NSMRIH�by John Burke from True Ventures and Oren Jacobs of Toytalk. They were joined by teaching XIEQW�JVSQ�XLI�9RMZIVWMX]�SJ�1MGLMKER��.IJJ�&SGER��.SREXLER�*E]��%MPIIR�,YERK�7EEH�ERH�(SYK�2IEP �ERH�+ISVKME�8IGL��.SLR�&EGSR��4EYP�*VIIX��1IVVMGO�*YVWX�ERH�/IMXL�1G+VIKKSV ��&LEZMO�.SWLM�[EW�XLI�8%�JSV�FSXL�XLI�&IVOIPI]�ERH�½VWX�27*�'PEWWIW�

%X�'SPYQFME��1YVVE]�0S[�ERH�Q]�GS�EYXLSV�&SF�(SVJ�XEYKLX�XLI�½VWX��HE]�ZIVWMSR�SJ�XLI�class.

7TIGMEP�VIGSKRMXMSR�KSIW�XS�XLI�2EXMSREP�'SPPIKMEXI�-RZIRXSVW�ERH�-RRSZEXSVW�%PPMERGI��2'--% ��and their Executive Director, Phil Weilerstein. Their support and assistance has facilitated two key deployments of the Lean LaunchPad method, namely the NSF I-Corps Program and the Lean LaunchPad Educators Program. Their contribution is accelerating dissemination and fostering best practices by supporting faculty education and collaborative peer to peer ex-changes.

None of this would have been possible without Jerry Engel’s persistence and guidance.

—Steve Blank

0)%2�0%92',4%(�)(9'%8367�8)%',-2+�,%2(&33/

PAGE7

© 2012 Steve Blank

Table of Contents

1. The Lean LaunchPad Manifesto ......................................................................... 9Strategy ...............................................................................................................................9Process ..............................................................................................................................9Organization ................................................................................................................. 10Education ........................................................................................................................11Instructional Strategy ...................................................................................................12Lessons Learned .............................................................................................................13

2. E-School: The New Entrepreneurship Curriculum .....................................14

3. The Lean LaunchPad Class–Goals ..................................................................17Helping Startups Fail Less ............................................................................................17Lean LaunchPad Pedagogy—Experiential Learning ..............................................17The Flipped Classroom ................................................................................................ 18The Business Model Canvas ...................................................................................... 18Customer Development ............................................................................................ 20

4. Teaching Team ......................................................................................................21Faculty ...............................................................................................................................21Teaching Assistant ......................................................................................................... 22

Pre-class ........................................................................................................................................................ 22During Class................................................................................................................................................ 22

Mentors & Advisors .................................................................................................... 22The Role of Mentors .............................................................................................................................. 22How Mentors Help Teams ................................................................................................................ 23

Mentors and Web-based Startups ........................................................................... 23The Role of Advisors .............................................................................................................................. 23Recruiting Mentors/Advisors ............................................................................................................ 23

5. Student Teams .....................................................................................................24Team Formation—strategy ........................................................................................ 24Team Formation—mixers/ information sessions .................................................. 24Team Formation—admission ..................................................................................... 24

Admission By Interview ..........................................................................................................................24Admission By Teams, Not Individuals .......................................................................................... 25

Team Formation—Application Forms ..................................................................... 25

6. Class Organization .............................................................................................28Team Projects ................................................................................................................ 28Team Deliverables ........................................................................................................ 28Student Team Coursework and Support Tools ..................................................... 28Class Culture.................................................................................................................. 29Amount of Work .......................................................................................................... 29Team Dynamics ............................................................................................................. 30Sharing Policy ................................................................................................................. 30Student/Instructor Success Criteria ......................................................................... 30

Process ........................................................................................................................................................... 30Culture ............................................................................................................................................................31

0)%2�0%92',4%(�)(9'%8367�8)%',-2+�,%2(&33/

7. The 10-Week Course, 12-Week Course, 5-Day Course ..........................3210-Week Course Logistics.......................................................................................... 32Teaching Team Role and Tools .................................................................................. 33Best Practices ................................................................................................................. 33Lectures ........................................................................................................................... 34LaunchPad Central ........................................................................................................ 34Textbooks ...................................................................................................................... 36Grading ........................................................................................................................... 36Guidelines for team presentations .......................................................................... 37

8. Instructor Pre-Course Preparation ...............................................................38

9. Detailed Class Curriculum ..............................................................................39Student assignment—Before the Teams Show Up in Class ............................... 39Class 1: Intro & Business Models and Customer Development ............................................................................................. 41Class 1 through 8: Presentation Agenda & Teaching Assistant Activities ...................................................................................... 45Class 2: Value Proposition .......................................................................................... 48Class 3: Customer Segments ..................................................................................... 53Class 4: Distribution Channels .................................................................................. 58Class 5: Customer Relationships (Get/Keep/Grow) ............................................ 63Class 6: Revenue Streams .......................................................................................... 69Class 7: Partners .......................................................................................................... 72Class 8: Resources, Activities and Costs ............................................................... 75Workshop 3: Presentation Skills Training ............................................................... 78Class 9 & 10: Lessons Learned Presentation ........................................................ 82

10. Collaborative Google Documents ...............................................................83

Appendix

11. 10-Week Syllabus—Sample ...........................................................................87Lessons Learned—Demo Day Presentation Format ........................................... 96Engineering 245: Frequently Asked Questions (FAQ) ......................................... 98

12. 5-Day Syllabus—Example .............................................................................104

13. Mentor Handbook—Sample .......................................................................114

PAGE9

© 2012 Steve Blank

1. The Lean LaunchPad Manifesto3RI�SJ�XLI�XLMRKW�WXEVXYTW�LEZI�PEGOIH�MW�E�HI½RMXMSR�SJ�[LEX�XLI]�EVI��*SV�]IEVW�[I´ZI�XVIEXIH�startups like they are just smaller versions of large companies.

However, we now know that a startup is a temporary organization designed to search for a VITIEXEFPI�ERH�WGEPEFPI�FYWMRIWW�QSHIP��;MXLMR�XLMW�HI½RMXMSR��E�WXEVXYT�GER�FI�E�RI[�ZIR-ture, or it may be a new division or business unit in an existing company.

If your business model is unknown—that is, just a set of untested hypotheses—you are a start-YT�WIEVGLMRK�JSV�E�VITIEXEFPI�FYWMRIWW�QSHIP��3RGI�]SYV�FYWMRIWW�QSHIP��QEVOIX��GYWXSQIVW��features, channels, pricing, Get/Keep/Grow strategy, etc.) is known, you will be executing it. Search versus execution is what differentiates a new venture from an existing business unit.

STRATEGY

8LI�XIVQ�±FYWMRIWW�QSHIP²�½VWX�ETTIEVIH�EVSYRH�½JX]�]IEVW�EKS��FYX�XLI�GSRGITX�HMHR´X�GEXGL�on until the 1990s. A business model describes how a company creates, delivers and captures value. It became common vernacular to discuss business models, but without a standard framework and vernacular, confusion reigned. In 2010, when Alexander Osterwalder pub-lished his book Business Model Generation, he provided a visual ontology and a clear vernacular that was sorely needed, and it became clear that this was the tool to organize startup hypoth-eses.

The primary objective of a startup is to validate its business model hypotheses�YRXMP�MX�½RHW�SRI�XLEX�MW�VITIEXEFPI�ERH�WGEPEFPI��MX�GSRXMRYIW�XS�MXIVEXI�ERH�TMZSX�YRXMP�MX�HSIW ��8LIR�MX�QSZIW�MRXS�I\IGYXMSR�QSHI��-X´W�EX�XLMW�TSMRX�XLI�FYWMRIWW�RIIHW�ER�STIVEXMRK�TPER��½RERGMEP�JSVIGEWXW�and other well-understood management tools.

PROCESS

Yet as powerful as the Business Model Canvas��E�XIQTPEXI�[MXL�XLI�RMRI�FPSGOW�SJ�E�FYWMRIWW�model) is, at the end of the day it was a tool for brainstorming hypotheses without a formal way of testing them.

1

2

0)%2�0%92',4%(�)(9'%8367�8)%',-2+�,%2(&33/

The processes used to organize and implement the search for the business model are Cus-tomer Development and Agile Development. A search for a business model can occur in any new business—in a brand new startup or in a new division of an existing company.

The Customer Development model breaks out all the customer-related activities of an early-WXEKI�GSQTER]�MRXS�JSYV�IEW]�XS�YRHIVWXERH�WXITW��8LI�½VWX�X[S�WXITW�SJ�XLI�TVSGIWW�SYXPMRI�the “search” for the business model. Steps three and four “execute” the business model that’s been developed, tested, and proven in steps one and two.

The steps:

�� Customer discovery�½VWX�GETXYVIW�XLI�JSYRHIVW´�ZMWMSR�ERH�XYVRW�MX�MRXS�E�WIVMIW�SJ�FYWMRIWW�model hypotheses. Then it develops a plan to test customer reactions to those hypoth-eses and turn them into facts.

�� Customer validation tests whether the resulting business model is repeatable and scal-able. If not, you return to customer discovery.

�� Customer creation is the start of execution. It builds end-user demand and drives it into the sales channel to scale the business.

�� Company-building transitions the organization from a startup to a company focused on executing a validated model.

In the “search” steps, you want a process designed to be dynamic, so you work with a rough business model description knowing it will change. The business model changes because start-ups use customer development to run experiments to test the hypotheses that make up the QSHIP��½VWX�XIWXMRK�XLIMV�YRHIVWXERHMRK�SJ�XLI�GYWXSQIV�TVSFPIQ�ERH�XLIR�WSPYXMSRW��1SWX�SJ�the time these experiments fail. Search embraces failure as a natural part of the startup pro-GIWW��9RPMOI�I\MWXMRK�GSQTERMIW�XLEX�½VI�I\IGYXMZIW�[LIR�XLI]�JEMP�XS�QEXGL�E�TPER��[I�OIIT�the founders and change the model.

3RGI�E�GSQTER]�LEW�JSYRH�E�FYWMRIWW�QSHIP��MX�ORS[W�MXW�QEVOIX��GYWXSQIVW��TVSHYGX�WIV-vice, channel, pricing, etc.), the organization moves from search to execution.

The product execution process—managing the lifecycle of existing products and the launch of follow-on products—is the job of the product management and engineering organizations. -X�VIWYPXW�MR�E�PMRIEV�TVSGIWW�[LIVI�]SY�QEOI�STIVEXMRK�TPERW�ERH�VI½RI�XLIQ�MRXS�HIXEMP��8LI�QSVI�KVERYPEVMX]�]SY�EHH�XS�E�TPER��XLI�FIXXIV�TISTPI�GER�I\IGYXI�MX��E�&YWMRIWW�6IUYMVIQIRX�(SGYQIRX��&6( �PIEHW�XS�E�1EVOIX�6IUYMVIQIRXW�(SGYQIRX��16( �ERH�XLIR�KIXW�LERHIH�SJJ�XS�IRKMRIIVMRK�EW�E�*YRGXMSREP�7TIGM½GEXMSRW�(SGYQIRX��*7( �MQTPIQIRXIH�ZME�%KMPI�SV�Waterfall development.

ORGANIZATION Searching for a business model requires a different organization than the one used to execute a plan. Searching�VIUYMVIW�XLI�GSQTER]�XS�FI�SVKERMÎH�EVSYRH�E�customer development team led F]�XLI�JSYRHIVW��-X´W�SRP]�XLI�JSYRHIVW�[LS�GER�QEOI�XLI�WXVEXIKMG�HIGMWMSRW�XS�MXIVEXI�ERH�or pivot the business model, and to do that they need to hear customer feedback directly. In GSRXVEWX��I\IGYXMSR��[LMGL�JSPPS[W�WIEVGL �EWWYQIW�XLEX�XLI�NSF�WTIGM½GEXMSRW�JSV�IEGL�SJ�XLI�WIRMSV�VSPIW�MR�XLI�GSQTER]�GER�FI�XMKLXP]�EYXLSVIH��)\IGYXMSR�VIUYMVIW�XLI�GSQTER]�XS�FI�SVKERMÎH�F]�JYRGXMSR��TVSHYGX�QEREKIQIRX��WEPIW��QEVOIXMRK��FYWMRIWW�HIZIPSTQIRX��IXG�

PAGE11

© 2012 Steve Blank

Companies in execution suffer from a “fear of failure culture�²�UYMXI�YRHIVWXERHEFPI�WMRGI�XLI]�were hired to execute a known job spec. Startups with Customer Development Teams have a “learning and discovery” culture for search. The fear of making a move before the last detail is nailed down is one of the biggest problems existing companies have when they need to learn how to search.

The idea of not having a functional organization until the organization has found a proven busi-ness model is one of the hardest things for new startups to grasp. There are no sales, market-ing or business development departments when you are searching for a business model. If you’ve organized your startup with those departments, you are not really doing customer HIZIPSTQIRX��-X´W�PMOI�XV]MRK�XS�MQTPIQIRX�E�WXEVXYT�YWMRK�;EXIVJEPP�IRKMRIIVMRK�

EDUCATION )RXVITVIRIYVWLMT�GYVVMGYPE�EVI�SRP]�E�JI[�HIGEHIW�SPH��½VWX�XEYKLX�EW�IPIGXMZIW�ERH�RS[�TEVX�SJ�GSVI�FYWMRIWW�WGLSSP�GYVVMGYPE��8LI�½IPH�MW�WXMPP�WXVYKKPMRK�XS�IWGETI�JVSQ�XLI�FSYRHW�SJ�XLI�business plan-centric view that startups are “smaller versions of a large company.” Venture capitalists who’ve watched as RS�WXEVXYT�FYWMRIWW�TPER�WYVZMZIH�½VWX�GSRXEGX�[MXL�GYWXSQIVW con-tinue to insist that startups write business plans as the price of entry to venture funding. This

3

4

0)%2�0%92',4%(�)(9'%8367�8)%',-2+�,%2(&33/

continues to be the case even as many of the best VCs understand that business “planning,” and not the “plan” itself, is what is important.

The trouble is that over time, this key message has gotten lost. As business school professors, many of whom lack venture experience, studied how VCs made decisions, they observed the apparently central role of the business plan and proceeded to make the plan, not the planning, the central framework for teaching entrepreneurship. As new generations of VCs with MBAs GEQI�MRXS�XLI�FYWMRIWW��XLI]�GSQTSYRHIH�XLI�TVSFPIQ��±XLEX´W�LS[�[I´ZI�EP[E]W�HSRI�MX²�SV�“that’s what I learned—or the senior partners learned—in business school.”)

Entrepreneurship educators have realized that a plan-centric curriculum may get by for teaching incremental innovation, but won’t turn out students prepared for the realities of building new ventures. Educators are now beginning to build their own E-School curriculum with a new class of management tools built around “search and discovery.” Business Model (IWMKR��4VSHYGX�7IVZMGI�(IZIPSTQIRX��'YWXSQIV�(IZIPSTQIRX��7XEVXYT�8IEQ�&YMPHMRK��)R-XVITVIRIYVMEP�*MRERGI��1EVOIXMRK��*SYRHIV�8VERWMXMSR��IXG��EPP�TVSZMHI�XLI�WXEVXYT�IUYMZEPIRX�SJ�the management tools MBAs learn for execution.

INSTRUCTIONAL STRATEGY

Entrepreneurial education is also changing the focus of the class experience from case method to hands-on experience. Invented at Harvard, the case method approach assumes that knowl-edge is gained when students actively participate in a discussion of a situation that may be faced by decision makers.

But the search for a repeatable business model for a new product or service is not a predict-able pattern. An entrepreneur must start with the belief that all her assumptions are simply hypotheses that will undoubtedly be challenged by what she learns from customers. Analyzing E�GEWI�MR�XLI�GPEWWVSSQ�VIQSZIH�JVSQ�XLI�VIEPMXMIW�SJ�GLESW�ERH�GSR¾MGXMRK�GYWXSQIV�VIWTSRW-

5

PAGE13

© 2012 Steve Blank

es adds little to an entrepreneur’s knowledge. Cases can’t be replicated, because the world of a startup is too chaotic and complicated. The case method is the antithesis of how entrepre-neurs build startups—it teaches pattern recognition tools for the wrong patterns, and there-fore has limited value as a tool for teaching entrepreneurship.

The replacement for the case method is not better cases written for startups. Instead, it would be business model design: using the business model canvas as a way to 1) capture and visualize the evolution of business learning in a company, and 2) see what patterns match real-world iterations and pivots. It is a tool that better matches the real-world search for the business model.

-R�EHHMXMSR��XIEGLMRK�JSV�XLI�0IER�0EYRGL4EH�GPEWW�MW�X]TMGEPP]�HSRI�[MXL�E�±¾MTTIH�GPEWWVSSQ�²�,IVI��XLI�PIGXYVIW�EVI�LSQI[SVO��EW�MRXIVEGXMZI�ZMHISW �ERH�XLI�LSQI[SVO��XIWXMRK�L]TSXL-eses in front of customers) is the classroom discussion, as all teams present. To keep track of XLI�WXYHIRXW´�GYWXSQIV�HMWGSZIV]�TVSKVIWW��[I�YWI�ER�SR�PMRI�XSSP��0EYRGL4EH�'IRXVEP �XS�record the week-by-week narrative of their journey.

An entrepreneurial curriculum obviously will have some core classes based on theory, lecture and mentorship. There’s embarrassingly little research on entrepreneurship education and outcomes, but we do know that students learn best when they can connect with the material in a hands-on way, personally making the mistakes and learning from them directly.

%W�QYGL�EW�TSWWMFPI��XLI�IQTLEWMW�SYKLX�XS�FI�SR�I\TIVMIRXMEP��PIEVRIV�GIRXVMG�ERH�MRUYMV]�FEWIH�GPEWWIW�XLEX�LIPT�XS�HIZIPST�XLI�QMRHWIX��VI¾I\IW��EKMPMX]�ERH�VIWMPMIRGI�ER�IRXVITVIRIYV�needs to search for certainty in a chaotic world.

LESSONS LEARNED

�� The search for the business model is the front end of the startup process

�� This is true in the smallest startup or largest company

�� 8LI�KSEP�MW�XS�½RH�E�VITIEXEFPI�WGEPEFPI�FYWMRIWW�QSHIP��ERH�XLIR�I\IGYXI

�� Customer and Agile Development are the processes to search and build the model

�� Searching for the business model comes before executing it

�� )\IGYXMSR�VIUYMVIW�STIVEXMRK�TPERW�ERH�½RERGMEP�JSVIGEWXW

�� Product management is the process for executing the model

�� Entrepreneurial education is developing its own management stack

�� Start with how to design and search for a business model

�� Add all the other skills startups needs

�� The case method is the antithesis of an entrepreneurial teaching method

0)%2�0%92',4%(�)(9'%8367�8)%',-2+�,%2(&33/

2. E-School: The New Entrepreneurship CurriculumWhile the Lean LaunchPad class can be inserted and taught as part of an existing curriculum in a business or engineering school, it is a harbinger of a completely new entrepreneurship GYVVMGYPYQ��-X�MW�E�GYVVMGYPYQ�XLEX�VIGSKRMÎW�XLEX�WXEVXYTW�VIUYMVI�E�RI[�GPEWW�SJ�QEREKIQIRX�tools built around “search and discovery” of the business model.

The diagram below illustrates a notional curriculum built around these ideas. The sum of all XLIWI�GPEWWIW�[MPP�TVSZMHI�XLI�WXEVXYT�IUYMZEPIRX�SJ�XLI�QEREKIQIRX�XSSPW�1&%W�PIEVR�JSV�execution. Think of it as E-School versus B-school. Brief summaries of each of the classes are below.

ENTREPRENEURSHIP COURSE SUMMARIES

ENTR 100: Introduction to Startups This course is designed to give students a basic introduction to startups and entrepreneurship. What is a startup? What are the types of startups? Why is a startup different from an existing company? Who can be an entrepreneur? Why are founders different then employees?

4IHEKSK]°'ER�FI�XEYKLX�EW�E�WYVZI]�GPEWW��PIGXYVI��KYIWXW �SV�EW�E�¾MTTIH�GPEWWVSSQ�[MXL�small team-based experiential projects

4VIVIUYMWMXIW°RSRI

ENTR 101: Innovation and CreativityWhere do ideas come from? How to recognize opportunities

Pedagogy—Lecture with small team-based experiential projects

PAGE15

© 2012 Steve Blank

4VIVIUYMWMXIW°RSRI

ENTR 102: Business Model DesignBased around Osterwalders Business Model Generation text, this class gives students practice in deconstructing existing business models as well as creating new ones.

Pedagogy—Lecture with business model cases

4VIVIUYMWMXIW°RSRI

ENTR 103: Customer Discovery—Markets and Opportunities,S[�XS�ZEPMHEXI�FYWMRIWW�QSHIP�L]TSXLIWIW��TVSFPIQ�VIGSKRMXMSR�MR�XLI�VIEP�[SVPH��-�LEZI�technology…Is there a market? I have a market…Is there technology?); and market sizing.

Pedagogy—Lecture with small experiential projects

4VIVIUYMWMXIW°)286��&YWMRIWW�1SHIP�(IWMKR

ENTR 104: Metrics that Matter—Startup FinanceFinance before the Income Statement, Balance Sheet and Cash Flow. How to test Customer %GUYMWMXMSR�'SWX��0MJIXMQI�:EPYI��%ZIVEKI�7IPPMRK�4VMGI��8MQI�XS�'PSWI��7EPIW�*SVGI�TVSHYGXMZ-MX]��&YVR�6EXI

Pedagogy—Lecture with business model and customer discovery cases

4VIVIUYMWMXIW°)286��'YWXSQIV�(MWGSZIV]

ENTR 105: Startup Patent LawPatents, trademarks, copyright, trade secrets, NDAs and contract. Which one to use and when? What to patent? Why? When? What matters in a startup? What matters later? Differ-ences by country. How to build a patent portfolio.


4VIVIUYMWMXIW°2SRI

ENTR 106: Building the Team—Startup Culture and HRWhat is a Startup Culture? Why is it different? Culture versus management style. Founders, early employees, mission, intent, values. Managing the growing startup.

Pedagogy—Lecture with business model and customer discovery cases, optional simulations

4VIVIUYMWMXIW°2SRI

ENTR 107: Get, Keep and Grow—Sales and MarketingHow does a startup get, keep and grow customers? How does this differ for web, mobile and TL]WMGEP�GLERRIPW#�(IXEMPW�EFSYX�EGUYMWMXMSR��EGXMZEXMSR��VIXIRXMSR��YTWIPP��GVSWW�WIPP��ZMVEP�GSQ-ponents, etc.

Pedagogy—Lecture with simulations and experiential projects

4VIVIUYMWMXIW°)286��1IXVMGW�XLEX�1EXXIV

ENTR 108: Agile Development%KMPI�TVSKVEQQMRK�ERH�IRKMRIIVMRK�JSV�FSXL�LEVH[EVI�ERH�WSJX[EVI��[IF�QSFMPI�GPSYH ��

0)%2�0%92',4%(�)(9'%8367�8)%',-2+�,%2(&33/

Pedagogy—Lecture with small team-based projects

4VIVIUYMWMXIW°.EZE#�4,4#

ENTR 109: User Interface Design9WIV�MRXIVJEGI�HIWMKR�ERH�MRXIVEGXMSR�MW�E�GVMXMGEP�TEVX�SJ�[IF�QSFMPI�ETTW��,S[�ERH�[LIR�XS�iterate and what to optimize.

Pedagogy—Lecture with small team-based projects

4VIVIUYMWMXIW°;IF�1SFMPI�XSSPW

ENTR 150: From Founder to Operating ExecutiveMost founders don’t make the transition to operating exec. Yet the most successful large tech-nology companies are still run by their founders. What skills are needed? Why is the transition WS�HMJ½GYPX#


4VIVIUYMWMXIW°2SRI

ENTR 200/202: The Lean LaunchPadExperiential Business Model Design and Customer Development

4IHEKSK]°'ER�FI�XEYKLX�[MXL�PIGXYVIW�SV�STXMSREP�¾MTTIH�GPEWWVSSQ��8IEQ�FEWIH��MQQIV-sive and experiential.

4VIVIUYMWMXIW°'ER�IMXLIV�FI�RSRI��SV�LEZI�XEOIR�)286��

PAGE17

© 2012 Steve Blank

3. The Lean LaunchPad Class–GoalsThe Lean LaunchPad class is currently taught in colleges, universities, accelerators, incuba-tors and for the National Science Foundation. It has also been taught inside of Fortune 1000 companies as a template for building new businesses. The class has different goals depending where it’s taught and who the audience is.

In a graduate engineering or business school university class, the goal of the Lean LaunchPad is to impart a methodology for scalable startups students can use for the rest of their careers. When taught in an accelerator or incubator, the goal of the Lean LaunchPad is a series of investor-funded startups.

When taught as part of corporate entrepreneurship, the Lean LaunchPad helps existing com-TERMIW�PIEVR�LS[�XS�IJ½GMIRXP]�WXEVX�±RI[²�FYWMRIWWIW�

Finally, the same Lean LaunchPad methodology, by emphasizing small business tactics, can be YWIH�XS�XIEGL�LS[�XS�IJ½GMIRXP]�WXEVX�±QEMR�WXVIIX²�FYWMRIWWIW�

HELPING STARTUPS FAIL LESS

The Lean LaunchPad doesn’t guarantee that startups will succeed more. It does guarantee that if they follow this process they will likely fail less.

We do this by rapidly helping the Lean LaunchPad student teams to personally discover that their idea is just a small part of what makes up a successful company.

Here’s how we do it.

LEAN LAUNCHPAD PEDAGOGY—EXPERIENTIAL LEARNING

The Lean LaunchPad is a hands-on program that immerses student teams in testing their busi-ness model hypotheses outside the classroom. Inside the classroom, it deliberately trades off PIGXYVI�XMQI�JSV�WXYHIRX�XIEGLMRK�XIEQ�MRXIVEGXMSR�

The Lean LaunchPad uses the customer development process and the business model canvas XS�GSPPETWI�XLI�MR½RMXI�TSWWMFMPMXMIW�SJ�E�WXEVXYT�MRXS�E�WSPZEFPI�TVSFPIQ�

Experiential learning has been around forever. Think of the guilds, apprentices, etc. Mentors were the master craftsmen. That’s the core idea of this class.

This class uses experiential learning as the paradigm for engaging the participants in discovery ERH�L]TSXLIWMW�XIWXMRK�SJ�XLIMV�FYWMRIWW�QSHIPW��*VSQ�XLI�½VWX�HE]�[I�QIIX��XLI�XIEQW�KIX�SYX�of the classroom and learn by doing.

This is very different from how a business school-based “how to write a business plan” class works. There, it assumes a priori a valid business model. In this Lean LaunchPad class, the XIEQW�EVI�RSX�FYMPHMRK�E�FYWMRIWW��]IX ��-RJSVQEXMSR�XLI]�PIEVR�JVSQ�GYWXSQIVW�[MPP�ZEPMHEXI�MRZEPMHEXI�XLIMV�L]TSXLIWIW��XLIWIW ��ERH�XLI�XIEQW�[MPP�QSHMJ]�XLI�FYWMRIWW�QSHIP��MXIVEXI�SV�pivot). This results in the teams bringing market needs forward. Then they can decide if there’s a business to be built.

What this class does not include is execution of the business model. In this course, implemen-tation is all about discovery outside of the classroom. Once discovery has resulted in a high HIKVII�SJ�GSR½HIRGI�XLEX�E�ZMEFPI�FYWMRIWW�QSHIP�I\MWXW��MX�MW�XMQI�XS�GVIEXI�ER�I\IGYXMSR�TPER��

0)%2�0%92',4%(�)(9'%8367�8)%',-2+�,%2(&33/

If the student teams continue with their companies, they will assemble the appropriate oper-EXMRK�TPERW��½RERGMEP�QSHIPW��VIZIRYI�TPERW��IXG�

THE FLIPPED CLASSROOM

-RWXVYGXSVW�LEZI�XLI�STXMSR�SJ�VYRRMRK�E�±¾MTTIH�GPEWWVSSQ�²�6EXLIV�XLER�GPEWWVSSQ�PIGXYVIW�by a live instructor, the lectures can now become homework. Steve Blank has recorded eight XLMVX]�QMRYXI�GPEWW�PIGXYVIW��IEGL�[MXL�UYM^ÎW��7XYHIRXW�GER�[EXGL�E�PIGXYVI�SR�IEGL�GSQ-TSRIRX�SJ�XLI�FYWMRIWW�QSHIP�GERZEW��XEOI�E�WLSVX�UYM^��ERH�LEZI�EGGIWW�XS�E�GPEWW�JSVYQ�JSV�UYIWXMSRW��8LIMV�LSQI[SVO�JSV�XLEX�[IIO�EWWYQIW�XLI]�[MPP�YWI�XLEX�RI[�ORS[PIHKI�XS�XIWX�XLEX�WTIGM½G�TEVX�SJ�XLI�FYWMRIWW�QSHIP��3J�GSYVWI�MJ�XLI]�TVIJIV��MRWXVYGXSVW�GER�HIPMZIV�XLI�lectures in person.

THE BUSINESS MODEL CANVAS

Often there’s a lack of a shared and clear understanding of how a startup creates, delivers and GETXYVIW�ZEPYI��8LMW�GPEWW�YWIW�%PI\ERHIV�3WXIV[EPHIV´W�FYWMRIWW�QSHIP�GERZEW��ERH�XI\X �XS�diagrammatically illustrate how that happens.

The canvas represents any company in nine boxes, depicting the details of a company’s prod-uct, customers, channels, demand creation, revenue models, partners, resources, activities and cost structure.

;LIR�XIEQW�½VWX�HVEJX�XLIMV�MRMXMEP�L]TSXLIWIW��XLIMV�GERZEW�FIKMRW�XS�½PP�YT��PSSOMRK�PMOI�XLMW�

PAGE19

© 2012 Steve Blank

But in addition to using the business model canvas as a static snapshot of the business at a single moment, frozen in time, Customer Development—and this class—extends the canvas and uses it as a “scorecard” to track progress in searching for a business model.

)ZIV]�[IIO�XLI�XIEQW�YTHEXI�XLIMV�GERZEW�XS�VI¾IGX�ER]�TMZSXW�SV�MXIVEXMSRW��LMKLPMKLXMRK�MR�VIH�the changes from the last week.

0)%2�0%92',4%(�)(9'%8367�8)%',-2+�,%2(&33/

Then, after the team agrees to the business model changes, they integrate them into what FIGSQIW�XLI�RI[�GERZEW�JSV�XLI�[IIO��XLI�EGGITXIH�GLERKIW�MR�VIH�EVI�XLIR�WLS[R�MR�FPEGO ��During the next week any new changes are again shown in red. Then the process repeats each week, with new changes showing up in red. Then a new canvas used for the week.

By the end of the class, teams will have at least 8 canvases. When clicked through one at a time they show something never captured before: the entrepreneurial process in motion.

CUSTOMER DEVELOPMENT

The Business Model Canvas is, at the end of the day, a tool for brainstorming hypotheses with-out a formal way of testing them.

The process used to organize and implement the search for the business model is Customer Development. And that search occurs outside the classroom.

The Customer Development model breaks out the customer-related activities into four steps. 8LI�½VWX�X[S�WXITW�SJ�XLI�TVSGIWW�SYXPMRI�XLI�±WIEVGL²�JSV�XLI�FYWMRIWW�QSHIP��7XITW�XLVII�and four “execute” the business model that’s been developed, tested, and proven in steps one and two.

The Business Model Canvas as a Weekly Scorecard

PAGE21

© 2012 Steve Blank

The Lean LaunchPad class focuses on the two “search” steps.

�� Customer discovery�½VWX�GETXYVIW�XLI�JSYRHIVW´�ZMWMSR�ERH�XYVRW�MX�MRXS�E�WIVMIW�SJ�FYWMRIWW�model hypotheses. Then it develops a plan to test customer reactions to those hypoth-eses and turn them into facts.

�� Customer validation tests whether the resulting business model is repeatable and scal-able. If not, you return to customer discovery.

;I�YWI�7XIZI�&PERO�&SF�(SVJ ´W�Startup Owners Manual as the text to teach Customer Devel-opment concepts.

4. Teaching Team While a single instructor and a part time teaching assistant can teach this class, the optimal teaching team has a minimum of:

�� Two instructors

�� A teaching assistant

�� One Mentor per team

FACULTY

On its surface the class can be taught by anyone. The canvas and customer development do RSX�ETTIEV�SZIVP]�GSQTPI\��ERH�[MXL�E�¾MTTIH�GPEWWVSSQ�XLI�WXYHIRXW�ETTIEV�XS�FI�HSMRK�EPP�XLI�[SVO��%PP�]SY�HS�MW�GVMXMUYI�ERH�KVEHI�XLIMV�[IIOP]�TVIWIRXEXMSR��

,S[IZIV��XLI�UYEPMX]��HITXL�ERH�MRWMKLX�]SY�FVMRK�XS�XLI�GVMXMUYIW�SJ�XLI�XIEQW�EVI�XLI�GSVI�SJ�XLI�GPEWW��-J�]SY´ZI�LEH�WXEVXYT��RSX�NYWX�KIRIVEP�FYWMRIWW �I\TIVXMWI�XLIR�XLI�GVMXMUYIW�]SY�offer to your students are the painful lessons you’ve learned building businesses. If you haven’t, ]SY�GER�WXMPP�HS�E�½RI�NSF�MR�XIEGLMRK��NYWX�FI[EVI�XLEX�XLIVI�EVI�WSQI�SPH�LEFMXW�XS�FVIEO�

In a perfect world at least one of the instructors would be an adjunct with startup experi-IRGI��ERH�MJ�EZEMPEFPI��ERSXLIV�[SYPH�FI�E�PSGEP�MRZIWXSV�ZIRXYVI�GETMXEPMWX��,EZMRK�ER�EHNYRGX�EPPS[W�XLI�GPEWW�GVMXMUYIW�XS�FI�FEWIH�SR�TEXXIVR�VIGSKRMXMSR�ERH�FVMRKW�GVIHMFMPMX]�XS�XLI�teaching team comments.

,EZMRK�E�PSGEP�MRZIWXSV�:'�SR�XLI�XIEGLMRK�XIEQ�FVMRKW�GVIHMFMPMX]�ERH�XLIMV�MRZIWXMRK�I\TI-VMIRGI�EPSRK�[MXL�SRI�YRI\TIGXIH�FIRI½X°XMQI�EJXIV�XMQI�[I´ZI�WIIR�XLEX�XLI�GPEWW�[MPP�change the perception of the investor on the teaching team. VCs will stop believing that a business plan or a standard investor pitch deck is useful. They will understand that a customer

0)%2�0%92',4%(�)(9'%8367�8)%',-2+�,%2(&33/

discovery narrative and the business model canvas is a more effective tool to judge early stage ventures.

TEACHING ASSISTANT

Given all the moving parts of the class, a teaching assistant keeps the trains running on time. Here’s what they do.

Pre-class�� 3VKERMÎ�XLI�QM\IVW�MRJSVQEXMSR�WIWWMSRW

�� Keep track of the student applications

�� %RW[IV�FEWMG�UYIWXMSRW�EFSYX�XLI�GPEWW�ERH�ETTPMGEXMSR�TVSGIWW

During Class�� 1EREKI�0EYRGL4EH�'IRXVEP��WII�7IGXMSR��

�� Communicate in-class information to course participants

�� Collect weekly team presentations and manage the order of presentation timing

�� Create and manage three Google documents:

1. The instructor-grading sheet—used by the teaching team for grading and real-time collaboration for instructors

2. The student-feedback grading sheet used by the students to offer feedback to their TIIVW��%GXYEPP]�HIWMKRIH�XS�OIIT�WXYHIRXW�EGXMZIP]�IRKEKIH�MR�[EXGLMRK�XLI�TVSK-ress of other teams rather than reading their email.)

�� The startup wisdom document which the TA uses to capture and post teaching XIEQ�GVMXMUYIW�

�� 1EREKI�3J½GI�,SYVW�WMKRYT�WLIIX

MENTORS & ADVISORS

1IRXSVW�TPE]�ER�EGXMZI�VSPI�MR�[IIOP]�GSEGLMRK�SJ�E�WTIGM½G�XIEQ��

Advisors are on-call resources for the entire class.

The Role of MentorsMentors are an extension of the teaching team, responsible for the success or failure of a team with four students. The role of the mentors is to help the teams test their business model hypotheses. Here’s what they do:

Offer teams strategic guidance and wisdom:

�� Offer business model suggestions

�� Identify and correct gaps in the teams business knowledge

Provide teams with tactical guidance every week:

�� 6IZMI[�XIEQW´�weekly presentation before they present

�� Comment weekly on teams’ LaunchPad Central Customer Discovery progress

�� 6IWTSRH�XS�XLI�XIEGLMRK�XIEQ´W�GVMXMUYI�SJ�XLI�XIEQ�

�� 3JJIV�6SPSHI\�LIPT°±;L]�HSR´X�]SY�GEPP�<#�0IX�QI�GSRRIGX�]SY�²�

�� 4YWL�XLI�XIEQW�XS�QEOI��GYWXSQIV�GSRXEGXW�[IIO

PAGE23

© 2012 Steve Blank

�� Meet one-on-one with teams at least twice during the class

�� 'LIGO�MR�[MXL�XIEGLMRK�XIEQ�EX�GPEWW��ERH��XS�HMWGYWW�WXYHIRX�TVSKVIWW

If mentors can’t commit to the time to be a mentor, have them consider being an advisor.

How Mentors Help Teams Team Mentors are involved on a regular basis with their teams throughout the course. Weekly interaction and comments via the LaunchPad Central is the minimum expectation. Bi-monthly face-to-face meetings are also expected. These should be scheduled at the mentors’ conve-nience. Questions from mentors to their teams that are helpful are, “Have you considered x?” “Why don’t you look at company z and see what their business model is and compare it XS�]SYVW�²�SV�±,IVI�EVI�WSQI�REQIW�SJ�HSQEMR�I\TIVXW�MR�XLI�½IPH��]SY�WLSYPH�XEPO�XS�XLIQ�²�8V]�XS�EZSMH�WTIGM½GEPP]�XIPPMRK�XLIQ�[LEX�XS�HS�

6IQIQFIV��8LI�GPEWW�MW�RSX�XV]MRK�XS�FI�='SQFMREXSV��;I�EVI�XV]MRK�XS�KMZI�WXYHIRXW�QSHIPW��heuristics and experience they can apply when they leave the class. The class is about what they learned on the journey.

MENTORS AND WEB-BASED STARTUPS

If a team is building a web-based business they need to get the site up and running during the WIQIWXIV��8LI�KSEP�MW�RSX�E�½RMWLIH�SV�TSPMWLIH�WMXI�FYX�E�ZILMGPI�WS�XLI]�GER�XIWX�XLIMV�EW-sumptions about minimum feature set, demand creation, virality, stickiness, etc.

The Role of AdvisorsAdvisors are a resource to the class and any of its teams for your particular domain expertise.

Advisors commit to:

�� 6IWTSRH�XS�WXYHIRX�IQEMPW�TLSRI�GEPPW�[MXLMR� twenty-four hours

�� 7O]TI�GEPPW�[MXL�SRI�X[S�XIEQW�E�[IIO��EW�RIIHIH

Recruiting Mentors/Advisors This class has no guest lectures. Getting mentors involved is not about having them come in and tell war stories, nor is it having them teach students how to write a business plan or put XSKIXLIV�ER�MRGSQI�WXEXIQIRX��FEPERGI�WLIIX�SV�GEWL�¾S[�

A core tenet of the course is that the nine building blocks of a business model are simply hypotheses until they are validated with customers and partners; and since there are “no facts inside the building, they need to get outside.” This means as part of this class they need to talk to customers, channel partners, and domain experts and gather real-world data—for each part of their plan.

You’re looking for experienced local entrepreneurs and investors who are willing to learn as much as they will teach.

-R�VIGVYMXMRK�QIRXSVW��MX�MW�MQTSVXERX�XS�WIPIGX�JSV�MRHMZMHYEPW�[MXL�WMKRM½GERX�MRXIPPIGXYEP�GYVMSW-ity, relevant business experience, a generous spirit, and who understand the value of the busi-ness model canvas and customer discovery. If you picked the right one, by the end of the class they will understand that a customer discovery narrative and the business model canvas is an important tool to build early stage ventures.

0)%2�0%92',4%(�)(9'%8367�8)%',-2+�,%2(&33/

5. Student TeamsThrough trial and error we’ve learned that the class is best when:

�� it is team-based

�� it is interdisciplinary

�� admission is based on team composition

When taught as a graduate class, this means having a mix of students in each team from a va-riety of academic backgrounds—business school, engineers, medical school, etc. When taught as an undergrad class, it means having students across a diverse set of majors.

TEAM FORMATION—STRATEGY

We insist that the Lean LaunchPad class is open to students from all departments; engineer-ing, business school, etc. The best teams are a mix of engineers and MBAs.

8LI�XIEQW�[MPP�WIPJ�SVKERMÎ�ERH�IWXEFPMWL�MRHMZMHYEP�VSPIW�SR�XLIMV�S[R��;I´ZI�JSYRH�XLEX�having the teaching team try to form teams creates zero team cohesion—“I didn’t do well because you assigned me to people I didn’t like.”).

;MXLMR�XIEQW�XLIVI�EVI�RS�JSVQEP�')3�:4W°NYWX�XLI�GSRWXERX�TEVWMRK�ERH�EPPSGEXMRK�SJ�XLI�XEWOW�XLEX�RIIH�XS�FI�HSRI��&]�HIWMKR��XLI�XIEQW�XS�RIIH�½KYVI�SYX�LS[�XS�GSPPEFSVEXI�

TEAM FORMATION—MIXERS/ INFORMATION SESSIONS

&IKMRRMRK�WM\�[IIOW�FIJSVI�GPEWW�WXEVXW��[I�LEZI�JSYRH�MX�LIPTJYP�XS�WTSRWSV�XLI�½VWX�SJ�XLVII�WXYHIRX�QM\IVW�MRJSVQEXMSR�WIWWMSRW�EFSYX�XLI�GPEWW��;I�LSPH�SRI�IZIV]�X[S�[IIOW�

We have our teaching assistant organize an evening session, provide pizza, and create demand by widely broadcasting how exciting the class is and provide the info session location with posters over campus, emails to department lists, etc.

In the mixer, the teaching team introduces themselves and provides a short, ten-minute over-ZMI[�SJ�XLI�GPEWW��2I\X��[I�XEOI�UYIWXMSRW�JVSQ�XLI�TSXIRXMEP�WXYHIRXW��8LIR�[I�EWO��±;LS�has an idea for a team?” We go around the room and let each of those students introduce XLIQWIPZIW��XIGLRMGEP�[SVO�FEGOKVSYRH �ERH�XLIMV�MHIE��QE\MQYQ�X[S�QMRYXIW�IEGL� �

Finally, we ask, “Who’s looking for a team to join?” We have those students introduce them-WIPZIW��FEGOKVSYRH�ERH�MRXIVIWXW� �8LI�XIEGLMRK�XIEQ�XLIR�PIEZIW�XLI�WXYHIRXW�XS�QM\�ERH�WII�if they can form teams.

TEAM FORMATION—ADMISSION

Admission By Interview8LI�GSYVWI��EW�GSRWXVYGXIH�MR�XLMW�KYMHI��VIUYMVIW�MRWXVYGXSV�TIVQMWWMSR�JSV�EHQMWWMSR��8LI�teaching team selects the best student teams for admission, as opposed to the best projects.

=SYV�HITEVXQIRX�QE]�LEZI�E�FMHHMRK�TVSGIWWIW�SV�½VWX�GSQI�½VWX�WIVZI�VYPIW�JSV�GPEWW�EHQMW-sion. We’ve taught the class using those rules and found that they greatly diminish the experi-IRGI�JSV�XLI�WXYHIRXW�ERH�XLI�XIEGLMRK�XIEQ��3FZMSYWP]�MJ�XLSWI�EVI�XLI�VYPIW��]SY�GER�QEOI�do.)

In the past we’d select the best ideas for admission. The irony is what we already knew that almost every one of those ideas would substantively change by the end of the class.

PAGE25

© 2012 Steve Blank

Now we select for the best teams. What we look for is a balanced team with passion. Is there a visionary, hacker and hustler on the team? Teams that just have great ideas but no ability to implement them typically fail. When taught in a university we want the students to focus on a scalable idea, i.e. one that can grow to 10s or 100s of millions of dollars.

When taught in colleges, the exact small class can be used to teach small business startups.

Admission By Teams, Not IndividualsAdmission to the class is by team. We do not accept individual applications.

We found that having the students come in with a formed team accomplishes three things:

�� It saves weeks of class time. Students have met, gotten to know each other, have brain-stormed their idea and are ready to hit the ground running.

�� -X�IPMQMREXIW�XLI�QSWX�IKVIKMSYW�XIEQ�H]REQMGW�MWWYIW�SJ�½RHMRK�SYX�[LEX�WXYHIRXW�GER´X�[SVO�[MXL�IEGL�SXLIV��1SWX��XLSYKL�RSX�EPP �SJ�XLIWI�MWWYIW�KIX�[SVOIH�SYX�TVI�GPEWW�SR�their time, not yours.

�� Most importantly we get to select for passion, interest, curiosity and the ability to learn on their own

As teams are formed in the mixers. the Teaching Assistant schedules team interviews during XLI��RH�ERH��VH�QM\IV��ERH�ERSXLIV�PEXIV�MJ�RIIHIH �

7XYHIRXW�LEZI�XS�ETTP]�YWMRK�X[S�WPMHIW�� %�WYQQEV]�SJ�[LS�MW�SR�XLIMV�XIEQ��ERH�� %�½PPIH�SYX�FYWMRIWW�QSHIP�GERZEW��7II�I\EQTPIW�SR�JSPPS[MRK�TEKIW�

Admission by cross-disciplinary team can be a challenge in the bureaucracy of the siloed academic world. Depending on where the course is situated in your college or university, you may run into the traditional “you can’t do that” attitude and rules. The business school may want you to admit its own students regardless of skill or passion. Some may want to control class admission by class bidding or some other system. Depending on sponsorship, depart-QIRXW�QE]�[ERX�]SY�XS�EHQMX�E�UYSXE�JVSQ�XLIMV�S[R�HITEVXQIRXW�

8V]�LEVH�RSX�HS�MX��8S�WYGGIWWJYPP]�VYR�XLMW�GPEWW��]SY�RIIH�WXYHIRXW�[LS�½KLX�XS�KIX�MR�XS�MX��RSX�XLSWI�[LS�XLMRO�MX´W�NYWX�ERSXLIV�IPIGXMZI��8LMW�GPEWW�VIUYMVIW�E�XSR�SJ�[SVO��=SY�EVI�KSMRK�to push these students really hard.

TEAM FORMATION—APPLICATION FORMS

Students apply as teams. They tell us about themselves and their team using the “Team Infor-QEXMSR²�XIQTPEXI�MR�½KYVI��8LI]�EPWS�WYFQMX�E�FYWMRIWW�QSHIP�GERZEW�YWMRK�XLI�±&YWMRIWW�1SHIP�-RJSVQEXMSR²�XIQTPEXI�MR�½KYVI��

The teaching team interviews all teams.

0)%2�0%92',4%(�)(9'%8367�8)%',-2+�,%2(&33/

Figure 1: Lean LaunchPad Application—Team Information

Figure 2: Lean LaunchPad Application—Business Model Information

PAGE27

© 2012 Steve Blank

The business model canvas as an application form starts the teams thinking long before the GPEWW�WXEVXW�WSQI�SJ�XLI�JYRHEQIRXEP�UYIWXMSRW�EFSYX�XLIMV�XIEQ�TVSNIGX��±;LEX�MW�E�FYWMRIWW�model? What product or service am I offering? Who are my customers? Etc.”

We set the pace and tempo of the class by having the teams present the business model GERZEW�XLI]�YWIH�EW�ER�ETTPMGEXMSR�SR�XLI�½VWX�HE]�SJ�XLI�GPEWW��8LMW�LIPTW�XLIQ�LMX�XLI�KVSYRH�running.

0)%2�0%92',4%(�)(9'%8367�8)%',-2+�,%2(&33/

6. Class OrganizationTEAM PROJECTS

Team projects can be a product or service of any kind. This can include software, physical TVSHYGXW��[IF�FEWIH�WIVZMGIW��IXG��*SV�QER]�WXYHIRXW��XLIMV�½VWX�MRWXMRGX�QE]�FI�E�[IF�FEWIH�startup. We suggest that they consider a subject in which they are a domain expert, such as something related to their personal interests or academic research. In all cases, they should choose something for which they have passion, enthusiasm, and hopefully some expertise.

TEAM DELIVERABLES

Teams are accountable for the following deliverables:

�� Get outside the classroom and test all their business model hypotheses

�� Present a weekly in-class PowerPoint summary of their customer discovery progress ��GYWXSQIV�QIIXMRKW�E�[IIO

�� 9WI�0EYRGL4EH�'IRXVEP�XS�FPSK�E�HMWGSZIV]�REVVEXMZI��-X´W�LS[�XLI�XIEGLMRK�XIEQ�QIE-sures their progress

�� Build a physical product showing a costed bill of materials and a prototype

�� Teams building a web product build the site, create demand and have customers using it. See LXXT��WXIZIFPERO�GSQ��LS[�XS�FYMPH�E�[IF�WXEVXYT�PIER�PEYRGLTEH�IHMXMSR�

�� 'EVIJYPP]�GSRWMHIV�XLI�IJJSVX�XLIMV�TVSNIGX�[MPP�VIUYMVI�FIJSVI�XLI]�WXEVX��8LI]�WLSYPH�RSX�undertake a project they are not prepared to see through to completion.

STUDENT TEAM COURSEWORK AND SUPPORT TOOLS

The student teams have both in-class work and between-class assignments. In class, each team presents their lessons learned presentation, summarizing their out-of-classroom customer discovery. When they are not presenting, all teams peer-grade the presenting teams using a shared Google Doc.

3YXWMHI�XLI�GPEWWVSSQ��XIEQW�EVI�I\TIGXIH�XS�WTIRH�XIR�XS�½JXIIR�LSYVW�E�[IIO�XEPOMRK�XS��GYWXSQIVW�IEGL�[IIO��8IEQW�WYQQEVMÎ�XLIMV�HIXEMPIH�½RHMRKW�MR�XLI�JSVQ�SJ�E�GYWXSQIV�discovery narrative and an updated business model canvas using the LaunchPad Central tool �HIWGVMFIH�PEXIV� �-J�XLI�XIEGLMRK�XIEQ�±¾MTW�XLI�GPEWWVSSQ²�ERH�YWIW�XLI�STXMSREP�SR�PMRI�PIG-XYVIW��IEGL�WXYHIRX�MW�VIUYMVIH�XS�[EXGL�XLI�GYVVIRX�[IIO´W�PIGXYVI�ERH�XEOI�XLI�UYM^ÎW�

PAGE29

© 2012 Steve Blank

CLASS CULTURE

Here’s what we tell the students:

Startups communicate much differently than inside a university or a large company. It is dra-matically different from the university culture most of you are familiar with. At times it can feel FVYWUYI�ERH�MQTIVWSREP��FYX�MR�VIEPMX]�MX�MW�JSGYWIH�ERH�SVMIRXIH�XS�GVIEXI�MQQIHMEXI�EGXMSR�in time- and cash-constrained environments. We have limited time and we push, challenge, ERH�UYIWXMSR�XLI�WXYHIRXW�MR�XLI�LSTI�XLI]�[MPP�UYMGOP]�PIEVR��;I�[MPP�FI�HMVIGX��STIR��ERH�tough—just like the real world. We hope they can recognize that these comments aren’t personal, but part of the process.

;I�EPWS�I\TIGX�XLIQ�XS�UYIWXMSR�]SY��GLEPPIRKI�]SYV�TSMRX�SJ�ZMI[�MJ�]SY�XLI]�HMWEKVII��ERH�engage in a real dialog with the teaching team. This approach may seem harsh or abrupt, but MX�MW�EPP�TEVX�SJ�XLI�XIEGLMRK�XIEQ�[ERXMRK�XLI�WXYHIRXW�XS�PIEVR�XS�GLEPPIRKI�XLIQWIPZIW�UYMGOP]�and objectively, and to appreciate that as entrepreneurs they need to learn and evolve faster than they ever imagined possible.

AMOUNT OF WORK

Here’s what else we tell the students:

8LMW�GPEWW�VIUYMVIW�E�TLIRSQIREP�EQSYRX�SJ�[SVO�SJ�WXYHIRXW��GIVXEMRP]�GSQTEVIH�XS�QER]�other classes. Projects are treated as real start-ups, so the workload will be intense. Teams have reported up to twenty hours of work per week. Getting out of the classroom is what XLI�IJJSVX�MW�EFSYX��-X´W�RSX�EFSYX�XLI�PIGXYVIW��7XYHIRXW�[MPP�FI�WTIRHMRK�E�WMKRM½GERX�EQSYRX�of time in between each of the lectures outside the class talking to customers. If they can’t commit the time to talk to customers, this class is not for them.

This class is a simulation of what startups and entrepreneurship are like in the real world: GLESW��YRGIVXEMRP]��MQTSWWMFPI�HIEHPMRIW�MR�MRWYJ½GMIRX�XMQI��GSR¾MGXMRK�MRTYX��IXG��

Figure 3; Student Assignments and Tools

0)%2�0%92',4%(�)(9'%8367�8)%',-2+�,%2(&33/

This class pushes many people past their comfort zone. It’s not about them, but it’s also not EFSYX�XLI�GPEWW�SV�XLI�XIEGLMRK�XIEQ��8LMW�MW�[LEX�WXEVXYTW�EVI�PMOI��ERH�XLI�GPEWW�MW�NYWX�WQEPP�part of what it is really like.) The pace and the uncertainty pick up as the class proceeds.

TEAM DYNAMICS

.YWX�PMOI�MR�E�WXEVXYT��XLI�HIQERHW�ERH�TVIWWYVI�SJ�XLI�GPEWW�GER�EX�XMQIW�GVIEXI�GSR¾MGXW�[MXLMR�teams. At times we’ve seen:

�� Students will enroll for the course but have overcommitted to other curricular or extra-curricular activities

�� 7XYHIRXW�PSWI�MRXIVIWX�[LIR�XLI]�½RH�SYX�XLIMV�MHIE�MW�RSX�WYTTSVXIH�F]�GYWXSQIV� interest

�� Teams can’t agree on level of effort by each team member

�� Other team tensions

-X�MW�XLI�XIEGLMRK�XIEQ´W�VIWTSRWMFMPMX]�XS�LIPT��FYX�RSX�WSPZI�XLI�XIEQW´�TVSFPIQW��6EXLIV��XLI�teaching team can help them diagnose issues and facilitate solutions. At times, all it takes is a conversation about roles, expectations and desired outcomes from the class. If the problem is more serious, make sure you document all conversations.

SHARING POLICY

We tell the students that one of the key elements of the Lean LaunchPad is that we get smarter collectively. We learn from each other—from other teams in your class as well as from teams that came before you.

This means that as part of the class, the teams will be sharing your customer discovery jour-ney—the narrative of how their business model evolved as they got out of the building and the details of the customers they talked to. At times they will learn by seeing how previous classes solved the same class of problem by looking at their slides, notes and blogs. And they will share your presentations and business model canvas, blogs and slides with their peers and the public.

Just to be clear, this doesn’t mean sharing Intellectual Property, but it does mean sharing de-tails of what you learned outside the building.

STUDENT/INSTRUCTOR SUCCESS CRITERIA

The success of this curriculum is dependent on a consistent set of beliefs and culture by the students and instructors. The fundamental principles of the course are:

Process 1. There are no facts inside your lab or building, so get the heck outside.

2. =SYV�MHIE�MRZIRXMSR�MW�RSX�E�GSQTER]��MX´W�SRI�SJ�XLI�RMRI�FYMPHMRK�FPSGOW�

�� We use the business model canvas to articulate our hypotheses.

�� We use customer development to test those hypotheses.

�� We use the business model canvas to keep track of what we learned.

6. We expect that many of our initial hypotheses are wrong.

�� Iterations and pivots are the expectation.

PAGE31

© 2012 Steve Blank

Culture 1. A mindset of hypotheses-testing, not execution

2. Active participation by all team members

�� All are held accountable for team performance

�� High-speed pace and tempo

�� 8IEQW�EZIVEKI��GYWXSQIV�GSRXEGXW��RSX�MRGPYHMRK�JSGYW�KVSYTW�ERH�WYVZI]W �

6. Bring your sense of humor—without it, you will suffer

0)%2�0%92',4%(�)(9'%8367�8)%',-2+�,%2(&33/

7. The 10-Week Course, 12-Week Course, 5-Day Course8LI�FEPERGI�SJ�XLMW�MRWXVYGXSV´W�KYMHI�TVSZMHIW�WTIGM½G�ERH�HIXEMPIH�KYMHERGI�JSV�SJJIVMRK�XLI�0IER�0EYRGL4EH�'SYVWI�MR�E�UYEVXIV��XIR�[IIOW �SV�E�WIQIWXIV�SZIV�X[IPZI�[IIOW��[MXL�SRI�three-hour meeting per week. Each has been a very successful format, but the course material can be adapted an applied in various ways. In fact, in the Appendix we have included a syl-PEFYW�JSV�E�½ZI�HE]�WLSVX�GSYVWI�XLEX�LEW�EPWS�FIIR�WYGGIWWJYPP]�XEYKLX�EX�'SPYQFME�9RMZIVWMX]�and Caltech. For the sake of convenience and cogency, this document describes the ten-week JSVQEX��LS[IZIV��[I�IRGSYVEKI�]SY�XS�I\TIVMQIRX�ERH�EHETX�MX�XS�WYMX�]SYV�VIUYMVIQIRXW�

10-WEEK COURSE LOGISTICS

�� -RJS�WIWWMSRW�QM\IVW�prior to the class for team formation

�� The class is offered once a week

�� Each class is three hours

�� 8LIVI�EVI�IMKLX�[IIOP]�PIGXYVIW��TPYW�E�RMRXL�ERH�XIRXL�[IIO�JSV�XLI�½REP�XIEQ�TVIWIR-XEXMSRW��8LI�GPEWW�MW�IEWMP]�GSR½KYVEFPI�JVSQ�ER][LIVI�JVSQ�IMKLX�XS�X[IPZI�[IIOW�

�� Three workshops are offered outside of normal class hours for Customer Discovery TVEGXMGI��HIXEMPW�SR�GYWXSQIV�EGUYMWMXMSR�ERH�EGXMZEXMSR��ERH�TVIWIRXEXMSR�WOMPPW�XVEMRMRK�

Week Lecture Topic6 weeks prior -RJS�WIWWMSR�1M\IV� 'SYVWI�5�%��WXYHIRXW�JSVQ�XIEQW��[IIOW�TVMSV -RJS�WIWWMSR�1M\IV� 'SYVWI�5�%��WXYHIRXW�JSVQ�XIEQW��st interviews2 weeks prior -RJS�WIWWMSR�1M\IV� 'SYVWI�5�%��WXYHIRXW�JSVQ�XIEQW��½REP�MRXIVZMI[WWeek 1 Lecture 1 Intro, Business Models, and Customer

DevelopmentWeek 1 Workshop 1 Customer Discovery practice for the real worldWeek 2 Lecture 2 Value Proposition;IIO�� Lecture �� Customer Segments;IIO�� Lecture �� ChannelsWeek 4 Workshop 2 Customer acquisition and activation;IIO�� Lecture �� 'YWXSQIV�6IPEXMSRWLMTW�+IX�/IIT�+VS[Week 6 Lecture 6 6IZIRYI�1SHIP;IIO�� Lecture �� PartnersWeek 8 Lecture 8 6IWSYVGIW�ERH�'SWXWWeek 8 Workshop 3 Presentation Skills Training;IIO�� Lessons Learned Lessons Learned Presentations teams 1-6Week 10 Lessons Learned 0IWWSRW�0IEVRIH�4VIWIRXEXMSRW�XIEQW��

8LI�STXMSREP�SR�PMRI�PIGXYVIW�EVI�EZEMPEFPI�ZME�XLI�9HEGMX]�;IF�WMXI��EX�LXXT��[[[�YHEGMX]�GSQ�ZMI[�'SYVWI�RW¾PT

8LI�4S[IV4SMRX�ZIVWMSRW�SJ�XLI�PIGXYVIW�EVI�EZEMPEFPI�EX�LXXT��[[[�WPMHIWLEVI�RIX�WFPERO�XEKKIH�W]PPEFYW

PAGE33

© 2012 Steve Blank

TEACHING TEAM ROLE AND TOOLS

For each weekly class session, students are assigned:

�� Pre-class readings

�� -R�GPEWW�PIGXYVIW��SV�MRWXVYGXSVW�GER�GLSSWI�optional pre-recorded on-line lecture with UYM^ÎW

�� An in-class, ten-minute presentation for each team presenting their “lessons learned” from talking with customers

�� Weekly assignment to get out of the building and test one of the business model com-TSRIRXW�[MXL��GYWXSQIVW

�� The last weekly sessions are “Lessons Learned” presentations from each team. They consist of a two-minute video plus an eight-minute PowerPoint presentation

In class, the role of the instructor is to:

1. %RW[IV�UYIWXMSRW�EFSYX�XLI�SR�PIGXYVI�WYFNIGX�QEXXIV�

2. 'VMXMUYI�XLI�XIEQ�TVIWIRXEXMSRW�ERH�SJJIV�KYMHERGI�SR�GYWXSQIV�HMWGSZIV]�WXVEXIK]�ERH�tactics

�� Grade the student presentations and share private comments with the rest of teaching team

BEST PRACTICES

Some of the best practices we’ve seen work well:

�� 9WMRK�GWVMXMUYIW�SJ�WTIGM½G�XIEQW�XS�QEOI�E�KIRIVEP�TSMRX�JSV�XLI�IRXMVI�GPEWW�

�� Trying hard not to offer students prescriptive advice. Instead, trying to teach the students to see the patterns, not give them answers.

�� Adjuncts telling “war stories” with a WTIGM½G lesson for the class.

�� Keeping in mind, that everything you’re hearing from students are hypotheses—guess-es—that you want them to turn into facts.

�� 2YQFIVW�SJ�GYWXSQIV�ZMWMXW�QEXXIV��8LI�QSVI�UYERXMX]�XLI�QSVI�XLER�I\XVEGXIH�MR-sights.

�� But the goal is to get them to extract learning from the customer interactions.

0)%2�0%92',4%(�)(9'%8367�8)%',-2+�,%2(&33/

LECTURES

Lectures take the students through each of the business model canvas components, while teaching them the basics of customer development. The lecture slides are available in Pow-IV4SMRX�MJ�]SY�HIGMHI�XS�YWI�XLIQ�MR�GPEWW��8LI�PIGXYVIW�LEZI�EPWS�FIIR�TYX�SR�PMRI�EX�9HEGMX]�MJ�]SY�HIGMHI�XS�±¾MT�XLI�GPEWWVSSQ²�ERH�SJJIV�XLIQ�EW�LSQI[SVO��-J�]SY�HS�WS��]SY�JVII�YT�QSVI�GPEWW�XMQI�JSV�5%�EFSYX�XLI�PIGXYVI�QEXIVMEP�

LAUNCHPAD CENTRAL

3RI�SJ�XLI�TVSFPIQW�MR�QEREKMRK�QYPXMTPI�XIEQW�MW�XLEX�MX�MW�HMJ½GYPX�XS�OIIT�XVEGO�SJ�XLIMV�TVSKVIWW�[LMPI�QEMRXEMRMRK�E�LMKL�PIZIP�SJ�MRWXVYGXSV�XS�XIEQ�IRKEKIQIRX��-X�GER�FI�HMJ½GYPX�XS�keep track of their progress. Without some way of keeping detailed track of all teams’ prog-

Figure 4: Teaching Team Responsibilities and Tools

PAGE35

© 2012 Steve Blank

VIWW�HYVMRK�XLI�[IIO��]SYV�MR�GPEWW�GVMXMUYIW�[SYPH�SRP]�FI�FEWIH�SR�XLIMV�XIR�QMRYXI�TVIWIR-tations.

To solve this problem, we insist that each team blog their customer discovery progress. We force them to write a narrative each of week of customers they’ve visited, hypotheses they’ve tested, results they’ve found, photos of their meetings, and changes in their business model GERZEW��;I�LEZI�XLIQ�HS�MX�EPP�SR�PMRI��:EVMSYW�SR�PMRI�WSPYXMSRW�GER�FI�GSFFPIH�XSKIXLIV��ER�on-line mash-up of blogging tools); however, we favor using an integrated purpose built tool called LaunchPad Central.

9WMRK�0EYRGL4EH�'IRXVEP�WSJX[EVI��[I�LEZI�QEREKIH�X[S�WMQYPXERISYW�GPEWWIW��IEGL�[MXL�twenty-seven teams.

This tool allows the teaching team to comment on each of the teams’ progress posts and interactively follow their progress in between class sessions.

This means that during the time between each class session, the teaching team needs to go online and read and comment on each of the teams. You must do this each week. Then, when IEGL�XIEQ�TVIWIRXW��]SYV�GSQQIRXW�ERH�GVMXMUYIW�EVI�MRJSVQIH�F]�XLIMV�TVSKVIWW�

LaunchPad Central Main Admin Page

0)%2�0%92',4%(�)(9'%8367�8)%',-2+�,%2(&33/

TEXTBOOKS

8LIVI�EVI��VIUYMVIH�XI\XFSSOW�JSV�XLMW�GSYVWI�

The Startup Owner’s Manual, The Step-by-Step Guide for Building a Great Company��7XIZI�&PERO�and Bob Dorf, 2012)

Business Model Generation: A Handbook for Visionaries, Game Changers and Challengers��%PI\ER-der Osterwalder, Yves Pigneur, 2010)

0IGXYVI�7PMHIW�GER�FI�JSYRH�LIVI��LXXT��[[[�WPMHIWLEVI�RIX�WFPERO�XEKKIH�W]PPEFYW

3RPMRI�PIGXYVIW�GER�FI�JSYRH�LIVI�LXXT��[[[�YHEGMX]�GSQ�SZIVZMI[�'SYVWI�RW¾PT�'SYVW-I6IZ��

7XYHIRX�4VIWIRXEXMSR�)\EQTPIW��LXXT��[[[�WPMHIWLEVI�RIX�WFPERO�XEKKIH�M�GSVTW�JSV�I\EQTPIW�of what’s needed in team presentations

GRADING

8LI�GSYVWI�MW�XIEQ�FEWIH�ERH��SJ�XLI�KVEHI�[MPP�GSQI�JVSQ�E�XIEQ�TVSKVIWW�ERH�XLI�½REP�lessons learned presentation. The grading criteria are as follows:

��-RHMZMHYEP�TEVXMGMTEXMSR�MR�TIIV�KVEHMRK�MR�GPEWW

��3YX�SJ�XLI�FYMPHMRK�TVSKVIWW�EW�QIEWYVIH�F]�0EYRGL4EH�'IRXVEP�[VMXI�YTW�ERH�TVI-sentations each week. Team members must 1) update business model canvas weekly, and 2) provide detailed narrative on customer conversations weekly.

��8LI�XIEQ�MR�GPEWW�[IIOP]�±PIWWSRW�PIEVRIH²�TVIWIRXEXMSR�

��8LI�XIEQ�½REP�±PIWWSRW�PIEVRIH²�TVIWIRXEXMSR�ERH�ZMHIS

LaunchPad Central Team Admin Page

PAGE37

© 2012 Steve Blank

GUIDELINES FOR TEAM PRESENTATIONS

)EGL�XIEQ�MW�I\TIGXIH�XS�WTIEO�XS�EX�PIEWX�XIR��GYWXSQIVW�IZIV]�[IIO��8LI�XIR�QMRYXI�[IIOP]�XIEQ�TVIWIRXEXMSRW�EVI�WYQQEVMIW�SJ�XLI�XIEQ´W�½RHMRKW�HYVMRK�XLEX�[IIO��

Slide 1 'SZIV�WPMHI��XIEQ�REQI��XIEQ�QIQFIVW�VSPIW��RYQFIV�SJ�GYWXSQIVW�WTSOIR�with, what the team does)

Slide 2 9THEXIH�FYWMRIWW�QSHIP�GERZEW7PMHI��R ;LEX�HMH�]SY�PIEVR�EFSYX�±XSTMG�SJ�XLI�HE]²��'ERZEW�FPSGO�\ #

Hypothesis: Here is what we thought

Experiments: So here’s what we did

6IWYPXW��7S�LIVI´W�[LEX�[I�JSYRH

Iterate: So here’s what we are going to do next7PMHI�� (MEKVEQ��MJ�ETTVSTVMEXI �SJ�[LEX�]SY�PIEVRIH�XLMW�[IIO��I�K��GYWXSQIV�

[SVO¾S[��TE]QIRX�¾S[W��HMWXVMFYXMSR�GLERRIP�HMEKVEQ �

Feedback from the teaching team during oral presentations is where the most learning occurs. Due to the pace and tempo of the course, participants must be held accountable to the mate-VMEP�JSV�XLI�WTIGM½G�GPEWW�

0)%2�0%92',4%(�)(9'%8367�8)%',-2+�,%2(&33/

8. Instructor Pre-Course PreparationObjective: Have a basic understanding of:

�� The Lean LaunchPad class

�� Business Model Canvas

�� Customer Development

-RWXVYGXSV�6IEHMRK�1EXIVMEP�

1. Textbooks

�� %PI\ERHIV�3WXIV[EPHIV��=ZIW�4MKRIYV��Business Model Generation��&1+ �LXXT��[[[�FYWMRIWWQSHIPKIRIVEXMSR�GSQ�SVHIV�TLT

�� Steven Blank, The Startup Owners Manual��731 �LXXT��[[[�WXIZIRFPERO�GSQ�WXEVXYTCMRHI\CUX]�LXQP

�� ;EXGL�XLI�3WXIV[EPHIV�ZMHIS�EX��LXXT��WXIZIFPERO�½PIW�[SVHTVIWW�GSQ��SWXIV[EPHIV�KYIWX�XEPO��QSZ

2. 6IZMI[�XLI�PIGXYVIW

�� %PP�4S[IV4SMRX�HIGOW�LIVI��LXXTW��[[[�HVSTFS\�GSQ�WL�KOVJ�E�E\J[TSH��NEX/^�]

�� 3RPMRI�0IGXYVIW��

�� 6IZMI[�XLI�0IER�0EYRGL�4EH�GPEWW�FEGOKVSYRH

�� LXXT��WXIZIFPERO�GSQ�GEXIKSV]�PIER�PEYRGLTEH��

�� LXXT��WXIZIFPERO�GSQ��XLI�PIER�PEYRGLTEH�¯�XIEGLMRK�IRXVITVIRIYV-WLMT�EW�E�QEREKIQIRX�WGMIRGI�

�� LXXT��WXIZIFPERO�GSQ��XLI�PIER�PEYRGLTEH�EX�WXERJSVH�¯�XLI�½REP�TVIWIRXEXMSRW�

�� LXXT��WXIZIFPERO�GSQ��[LS�HEVIW�[MRW�XLI��nd-annual-international-FYWMRIWW�QSHIP�GSQTIXMXMSR�

�� 0SSO�EX�&YWMRIWW�1SHIP�'ERZEW�EX�LXXT��[[[�FYWMRIWWQSHIPKIRIVEXMSR�GSQ�HS[RPSEHW�FYWMRIWWQSHIPKIRIVEXMSRCTVIZMI[�THJ

�� 6IEH�'YWXSQIV�(IZIPSTQIRX�1ERMJIWXS��'LETXIV��731

�� 4VIZMSYW�-�'SVT�;IIOP]�ERH�*MREP�4VIWIRXEXMSRW�EX�LXXT��[[[�WPMHIWLEVI�RIX�WFPERO�XEKKIH�M�GSVTW

�� 3J½GMEP�0IGXYVI�7PMHIW�LXXTW��[[[�HVSTFS\�GSQ�WL�\��FHWLM�KSVFZ��;&*^,\-L1tF

PAGE39

© 2012 Steve Blank

9. Detailed Class CurriculumSTUDENT ASSIGNMENT—BEFORE THE TEAMS SHOW UP IN CLASS

Learning Objectives

7XYHIRXW�WLSYPH�GSQI�XS�GPEWW�EFPI�XS�ERW[IV�XLI�JSPPS[MRK�UYIWXMSRW�

�� What’s the difference between search and execution?�� What is a business model versus business plan?�� What is the business model canvas?�� What are the nine components of the business model canvas?�� What is a hypothesis?�� What is Customer Development?�� What are the key tenets of Customer Development?

Why? These are the fundamental principles of the course. Having the students prep on their own time allows us to go into full-immersion on day one, ½VWX�PIGXYVI��

How? Assign readings before the class starts. Inform students that knowing these GSRGITXW�MW�VIUYMVIH�

8S�XIWX�XLIMV�ORS[PIHKI��[I�LEZI�IEGL�XIEQ�TVITEVI�MXW�½VWX�TEWW�SJ�MXW�FYWMRIWW�QSHIP�GERZEW�TVMSV�XS�XLI�½VWX�GPEWW��WII�WIGXMSR��JSV�HIWGVMTXMSR�ERH�½KYVIW �

Teams present their canvas as the introduction to their cohort. But more MQTSVXERXP]��WS�XLEX�XLI�XIEGLMRK�XIEQ�GER�EWWIWW�LS[�EHIUYEXIP]�XLI]�prepared for the course.

Reading Assignment for day 1 of the class

;EXGL�XLI�3WXIV[EPHIV�ZMHIS�EX��LXXT��WXIZIFPERO�½PIW�[SVHTVIWW�GSQ��SWXIV[EPHIV�KYIWX�XEPO��QSZ

6IEH��Business Model Generation��TT��

Startup Owners Manual��-RXVS�XS�'YWXSQIV�(IZIPSTQIRX

'SYVWI�7XVEXIK]��LXXT��WXIZIFPERO�GSQ�GEXIKSV]�PIER�PEYRGLTEH�

-�'SVTW�XIEQ�TVIWIRXEXMSRW��LXXT��[[[�WPMHIWLEVI�RIX�WFPERO�XEKKIH�M�GSVTW�Team Assignment for day 1

Prepare your team’s business model using the business model canvas

'SQI�TVITEVIH�[MXL�E�GYWXSQIV�GSRXEGX�ZMWMX�PMWX�XLEX�[MPP�PEWX��HE]W

Assignment Objective

We don’t expect teams to get the canvas right. We just want them thinking hard about what it means. They will be living with the canvas for the next few months.

Get the teams accustomed to a cover slide that provides us with a one-page summary of who they are, number of customers talked to that week, what their team does.

Presentation Guidelines

Prepare a two-slide presentation to present your team to the cohort:

Slide 1: Title SlideSlide 2: Business Model Canvas

See below for the presentation formatHold Mentor &VMI½RK

;I�WYKKIWX�LSPHMRK�E�QIRXSV�FVMI½RK�ER�LSYV�FIJSVI�XLI�GPEWW�WXEVXW��+S�over the Mentor Handbook��WII�XLI�%TTIRHM\� �-RZMXI�XLI�QIRXSVW�XS�XLI�½VWX�GPEWW�

0)%2�0%92',4%(�)(9'%8367�8)%',-2+�,%2(&33/

PAGE41

© 2012 Steve Blank

CLASS 1: INTRO & BUSINESS MODELS AND CUSTOMER DEVELOPMENT

�� 1st Team Presentation based on pre-class reading

�� In Person Lecture 0: Class Introduction

�� In Person Lecture 1: Business Models and Customer Development

Teaching Objective

Student Presentations

Instructor Critiques

�� Assess each team’s level of preparation and understanding.�� Introduce the business model canvas development principles. �� ±7LSGO�ERH�%[I²�MQQIVWMSR�MR�XLI�±TVIWIRX�GVMXMUYI²�XIEGLMRK�

method.�� *EWX�TEGIH��MR�HITXL�MRWXVYGXSV�GVMXMUYI�ERH�EREP]WMW�SJ�IEGL�XIEQ´W�

initial business models is critical during this session to emphasize the level of preparation necessary by the students.

�� Have students understand that there is no such thing as “spare time,” and they need to be out of the building talking to customers.

Why? These are the fundamental principles of the course.

�� The format of all the classes will be: � Teams present in front of their peers � 8IEGLMRK�XIEQ�GVMXMUYIW�IEGL�XIEQ � Instructors lecture on a component of the business model canvas

�� Having the students present on day one gives them full-immersion on HE]�SRI��½VWX�PIGXYVI��

�� It also gives the teaching team the ability to provide remedial help for ER]�XIEQ�EJXIV�XLI�½VWX�HE]�SJ�GPEWW

� In almost every class, one or two need coachingHow? �� Have teams start by presenting their business model canvases as their

introduction to the class1. ,EZI�XLI�XIEGLMRK�XIEQ�MQQIHMEXIP]�WXEVX�SJJIVMRK�GVMXMUYIW�SJ�XLI�

models and team members. An interactive dialogue is encouraged.2. 8LIWI�½VWX�GVMXMUYIW�WLSYPH�JSGYW�SR�ZEPYI�TVST��GYWXSQIVW��

channels, customer relations and revenue model. a. They’re usually wrong.b. Don’t go deep on one team. It’s the sum of the comments

across the teams that is important.c. When you see a common error, announce, “This is a big idea.

It’s one you will all encounter.”d. ,EZI�XIEGLMRK�XIEQ��8�%�WXEVX�F]�KVEHMRK�ERH�SJJIVMRK�½VWX�

impressions of each team’s business model. e. Have the students grade and comment their peers on the

student Google Doc grading sheet.�� ,EZI�XIEGLMRK�XIEQ�TVIWIRX�PIGXYVIW��JEGI�XS�JEGI�XS�KIX�GSQQERH�SJ�XLI�GPEWW��PIGXYVIW��EVI�VIGSVHIH

0)%2�0%92',4%(�)(9'%8367�8)%',-2+�,%2(&33/

Common student errors on their 1st presentation

1. Business Model ignorance2. Not understanding the difference between a value prop and features��Not understanding any detail about their customers��No understanding of a channel�� Fantasy revenue model6. Business Model canvas looks like a business plan�� Thinking that they’re in the class to “execute” their plan, not search

for oneLecture Learning Objectives

�� Start with Lecture 0, Introduction to the class and teaching team.�� Next have the teams present their business model canvases.�� *MRMWL�[MXL�0IGXYVI��&YWMRIWW�1SHIPW�'YWXSQIV�(IZIPSTQIRX��

Students will understand the level of hypotheses testing their business QSHIP�[MPP�VIUYMVI

�� 0IGXYVI�WPMHIW�GER�FI�JSYRH�LIVI��LXXTW��[[[�HVSTFS\�GSQ�WL�\��FHWLM�KSVFZ��;&*^,\0�X*

Students should understand the concepts of:

�� Nine parts of a Business Model�� Hypotheses versus facts�� Getting out of the building�� ;IF�1SFMPI�ZIVWYW�4L]WMGEP�� 4VSFPIQ�7SPYXMSR�� 4VSHYGX�1EVOIX�*MX�� ,]TSXLIWIW�)\TIVMQIRX�HIWMKR�8IWX�-RWMKLX�� Iteration versus Pivot

Focus on the right half of the canvas

Students should understand the relationship between canvas components:�� :EPYI�TVSTSWMXMSR�GYWXSQIV�WIKQIRXW°TVSHYGX�QEVOIX�½X�� 'YWXSQIV�VIPEXMSRWLMTW��KIX�OIIT�KVS[�� 6IZIRYI�GSWXW°QEOMRK�QSRI]

�� Many startups spend years attacking a small market. Having them think about size of the opportunity early helps them keep asking, “How big can this really be? Is it worth doing?”

�� See key lecture concept diagrams below.

PAGE43

© 2012 Steve Blank

Lecture 0

Class Introduction

Introduce the teaching team. Key concepts:�� Start by saying the students are or will become domain experts in XLIMV�½IPHW��;I�[MPP�RSX�FI�UYIWXMSRMRK�XLIMV�I\TIVXMWI�

�� But we are the domain experts in building companies. We have a model that works, is intensive and will make all of you work extremely hard. It’s nothing personal.

Key Points

�� The class is all about “getting out of the building.”�� The program is intensive and fast-paced.�� The importance of actively grading their peers�� Your technology is ONE of the many critical pieces necessary to build

a company and is part of the value proposition—customers do not care about your technology; they are trying to solve a problem.

(MJJIVIRGI�MR�GYWXSQIV�HIZIPSTQIRX�FIX[IIR�[IF�QSFMPI�ZW�TL]WMGEP�channels

Lecture 1

Business Model Canvas & Customer Development

�� Intro of the business model canvas and customer development�� (I½RMXMSR�SJ�L]TSXLIWIW�� (I½RMXMSR�SJ�QMRMQYQ�JIEXYVI�WIX�� Description of experiments�� (I½RMXMSR�SJ�±KIXXMRK�SYX�SJ�XLI�FYMPHMRK²�� (I½RMXMSR�SJ�QEVOIX�WMÎ�� How do you determine whether a business model is worth doing?�� -R�4EVX��SJ�XLI�PIGXYVI��TMGO�ER]�SRI�½REP�XIEQ�TVIWIRXEXMSRW�]SY�JIIP�QSWX�GSQJSVXEFPI�[MXL�JVSQ�LXXT��[[[�WPMHIWLEVI�RIX�WFPERO

Reading for next week

�� BMG,�TT�� SOM, TT��QEVOIX�WMÎ��ZEPYI�TVSTSWMXMSR�ERH�1:4�TKW��KIXXMRK�SYX�SJ�XLI�FYMPHMRK��QEVOIX�X]TI

�� What’s a Startup? First Principles �� 1EOI�2S�0MXXPI�4PERW°(I½RMRK�XLI�7GEPEFPI�7XEVXYT�� A Startup is Not a Smaller Version of a Large Company �� Twelve Tips for Early Customer Development Interviews

Assignment for next week

�� Lecture�� ;EXGL�0IGXYVI��:EPYI�4VSTSWMXMSR°XEOI�XLI�UYM^�� Presentation�� Identify your market size�� -HIRXMJ]�]SYV�X]TI�SJ�FYWMRIWW��-4�PMGIRWMRK�WXEVXYT�YRORS[R �� Propose experiments to test your value proposition, customer

segment, channel and revenue model of your business model�� ;LEX�GSRWXMXYXIW�E�TEWW�JEMP�WMKREP�JSV�IEGL�XIWX#�� 7II�LXXT��[[[�WPMHIWLEVI�RIX�WFPERO�XEKKIH�M�GSVTW�JSV�I\EQTPIW�SJ�

what’s needed in tomorrow’s presentation�� Talk to at least 5 potential customers�� +IX�XIEQ�FPSK�YT�ERH�TSWX�½VWX�HMWGSZIV]�REVVEXMZIW

0)%2�0%92',4%(�)(9'%8367�8)%',-2+�,%2(&33/

Tomorrow’s Presentation Guidelines

�� Slide 1: Cover slide �� Slide 2: Current business model canvas with any changes marked�� 7PMHI��1EVOIX�WMÎ��8%1�7%1�8EVKIX �� 7PMHI��;LEX�X]TI�SJ�FYWMRIWW�EVI�]SY�FYMPHMRK#��-4��PMGIRWMRK��WXEVXYT��

unknown�� 7PMHI��;LEX�EVI�]SYV�TVSTSWIH�I\TIVMQIRXW�XS�XIWX�GYWXSQIV�

segment, value proposition, channel and revenue model of the hypotheses

�� ;LEX�GSRWXMXYXIW�E�TEWW�JEMP�WMKREP�JSV�IEGL�XIWX��I�K��EX�[LEX�TSMRX�would you say that your hypothesis wasn’t even close to correct)?

Typical Class 1 Student Business Model Canvas—A business plan in small type

PAGE45

© 2012 Steve Blank

CLASS 1 THROUGH 8: PRESENTATION AGENDA & TEACHING ASSISTANT ACTIVITIES

Teaching Assistant Activities for Classes 1-8

Before Each Class

�� Communicate with students: � Topic to be addressed for class � Presentation Assignment � When presentations should be uploaded to DropBox � Team Presentation order � Allotted time for presentation � Location of presentation

�� 4VI¾MKLX�PSKMWXMGW°TVSNIGXSVW��WGVIIRW��[M½��FVIEO�VSSQW��IXG�� Collect student slides beforehand so no individual computer setup is

necessary. � Then load them on a single presentation computer � 8�%�XS�IQEMP�XIEQ�TVIWIRXEXMSR�SVHIV � 8�%�XS�OIIT�XLI�GPSGO�SR�XIEQ�TVIWIRXEXMSR�XMQI°ERRSYRGI��

minute to go

�� ,EZI�XLI�8�%�TVITEVI�XLI�shared Google Doc grading sheets � One for the teaching team � A separate one for the students

�� 8�%�WLSYPH�capture the verbal teaching team critiques in a separate Google Doc—this should be shared with all the teams.

�� This should be repeated for all classes

During Each Class

�� Time all presentations�� Give students 1 minute warning

0)%2�0%92',4%(�)(9'%8367�8)%',-2+�,%2(&33/

Lecture 1: Key Concept Diagrams

Ensure students understand all the parts of the Business Model Canvas

PAGE47

© 2012 Steve Blank

Ensure students understand the four steps of Customer Development

Ensure students understand all the Hypothesis>Design>Test>Insight Loop

0)%2�0%92',4%(�)(9'%8367�8)%',-2+�,%2(&33/

CLASS 2: VALUE PROPOSITION

�� Team Presentation based on Business Model Canvas and Customer Development Lecture

�� Lecture 2: Value Proposition (watched online before class or presented in person)

Teaching Objective



Set expectations for:�� 'YWXSQIV�HMWGSZIV]��UYERXMX]��WTIIH�ERH�MRWMKLX�� Annotation of the business model canvas updates�� Their blog as “a customer discovery narrative”

6IQMRH�XLIQ�� Customer calls are not optional. They need to be continuous.�� Hypotheses need to be turned into facts. There are no facts inside XLIMV�YRMZIVWMX]�PEF�

�� This class is not about the execution of their original idea.How? �� The teams have spoken to EX�PIEWX�½ZI�GYWXSQIVW after class

yesterday. They were supposed to set up meetings before they arrived.

�� ,ERK�E�XIEQ�TYFPMGP]�[LS�HMH�RSX�GEPP�SR�ER]SRI��8LIVI´W�EP[E]W�one.)

� Stop their presentation. Have them leave to make phone calls. � Tell them if they have something to add before the rest of the

presentations are over, they can present. � Make the point clearly that this is what the class is about.

�� In today’s presentations, teams explain what they learned in those calls.

� Have them annotate the canvas with new learning each week.

�� Make comments to show you’ve read their blog and it’s critical to update.

�� Make sure they are articulating their hypotheses of what they expected to learn versus what they found. Without that it’s just a bunch of random customer interviews

� This “hypothesis>experiment>data>insight” loop is the core of the process and class.

Common student errors on their 2nd presentation

�� Not enough customer calls�� Vague data from the calls�� Little to no insight from the data�� No clue about market size or overly optimistic�� 2SX�GPIEV�[LIXLIV�XLI]´VI�-4�PMGIRWMRK�WXEVXYT�YRORS[R�� Did not articulate experiments to test their hypotheses�� (MH�RSX�EVXMGYPEXI�TEWW�JEMP�XIWXW�JSV�IEGL�L]TSXLIWMW

Optionally lecture is on-line. All students need to watch it before class.

PAGE49

© 2012 Steve Blank

Lecture 2

Value Proposition

Learning Objectives

Students should understand:

�� The smartest teams believe “it’s all about my invention.” �� Your goal is to teach them “it’s all about the business model.”�� The majority of product features are never used by customers.�� 8LI�1:4�ERH�GYWXSQIV�HIZIPSTQIRX�IPMQMREXI�[EWXI�MR�XMQI�GEWL�� Engineers love to add features.�� 8LI�KSEP�SJ�XLI�1:4�MW�XS�½RH�XLI�minimum feature set.�� The difference in an MVP for a physical product versus the Low and ,MKL�*MHIPMX]�1:4W�JSV�E�[IF�QSFMPI�TVSHYGX�

�� Explain why customer development can’t be done with Waterfall engineering but needs an Agile Development process.

�� 0IGXYVI�WPMHIW�GER�FI�JSYRH�LIVI��LXXTW��[[[�HVSTFS\�GSQ�WL�\��FHWLM�KSVFZ��;&*^,\0�X*

�� See key lecture concept diagrams below.Lecture 2

Value Proposition

�� (I½RMRK�]SYV�TVSHYGX�SV�WIVZMGI�� How does it differ from an idea�� 8LI�VSPI�SJ�TEMR�OMPPIVW��KEMR�GVIEXSVW��TVSFPIQW�RIIHW�� Identifying the competition and how your customers view these

competitive offerings�� What’s the minimum viable product?�� What’s the market type?�� Insight into market dynamics or technological shift that makes this a

fresh opportunity?

Instructors should emphasize:

�� The difference between value proposition and feature sets�� 8LI�KSEP�MW�XS�½RH�XLI�minimum viable product�� 8LEX�ZEPYI�TVSTSWMXMSR�ERH�GYWXSQIVW�EVI�MRXIKVEXIH�!�TVSHYGX�QEVOIX�½X

�� The value of annotating the business model canvas�� The need to be open to changing initial business model canvas

hypotheses

0)%2�0%92',4%(�)(9'%8367�8)%',-2+�,%2(&33/

Reading for Next Week

�� BMG�TT��ERH�� SOM TT��TVSFPIQ�YRHIVWXERHMRK��KEMR�GYWXSQIV�YRHIVWXERHMRK��TVSHYGX�QEVOIX�½X

Assignment for Next Week

Lecture

�� ;EXGL�0IGXYVI��'YWXSQIV�7IKQIRXW°XEOI�XLI�UYM^

Presentation

�� ;LEX�EVI�XLI�4EMR�6IPMIZIVW��+EMR�'VIEXSVW�ERH�OI]�JIEXYVIW#�� What is the resulting MVP?�� Propose experiments to test your value proposition�� ;LEX�GSRWXMXYXIW�E�TEWW�JEMP�WMKREP#�� 7II�LXXT��[[[�WPMHIWLEVI�RIX�WFPERO�XEKKIH�M�GSVTW�JSV�I\EQTPIW�SJ�

what’s needed in tomorrow’s presentation�� 8EPO�XS�EX�PIEWX�½ZI�TSXIRXMEP�GYWXSQIVW�� Post discovery narratives


�� Slide 1: Cover slide�� Slide 2: Current business model canvas with any changes marked�� 7PMHI��;LEX�[IVI�]SYV�I\TIVMQIRXW�XS�XIWX�ZEPYI�TVSTSWMXMSR#�� 7PMHI��(MEKVEQ�SJ�:EPYI�4VSTSWMXMSR�4EMR�+EMR�*IEXYVIW�ERH�1:4�� 7PMHI��°R��;LEX�HMH�]SY�PIEVR�EFSYX�]SYV�ZEPYI�TVSTSWMXMSR�JVSQ�XEPOMRK�XS�]SYV�½VWX�GYWXSQIVW#

� Hypothesis: Here’s what we thought � Experiments: So here’s what we did � 6IWYPXW��7S�LIVI´W�[LEX�[I�JSYRH � Iterate: So here’s what we are going to do next

PAGE51

© 2012 Steve Blank


Ensure students understand the three components of the Value Proposition

Casually introduce the three components of the Customer Segment

0)%2�0%92',4%(�)(9'%8367�8)%',-2+�,%2(&33/

Ensure students understand they have to articulate their hypotheses, design experiments, test, and hopefully get insights

)RWYVI�XLEX�WXYHIRXW�YRHIVWXERH�XLEX�TVSHYGX�QEVOIX�½X!:EPYI�4VSTSWMXMSR��'YWXSQIV�7IKQIRX

PAGE53

© 2012 Steve Blank

CLASS 3: CUSTOMER SEGMENTS

�� Team Presentation based on Value Proposition Lecture

�� Remote Lecture 3: Customer Segments

Teaching Objectives



�� Continue the pace of discovery, customer calls, insights, ERH�GVMXMUYIW�

�� Make sure teams continue to: � Annotate the business model canvas with updates � 9THEXI�XLIMV�FPSK�EW�±E�GYWXSQIV�HMWGSZIV]�REVVEXMZI�²�

�� *SGYW�]SYV�QEMR�GVMXMUYI�SR�XLIMV�YRHIVWXERHMRK�SJ�XLI�ZEPYI�proposition.

� Acknowledge you’ve read their blog.�� Comment on other egregious parts of the canvas as necessary.�� Before they leave, make sure you solve any apparent team

dysfunctions.How? �� 1SWX�XIEQW�WXEVX�[MXL�E�ZEPYI�TVSTSWMXMSR�IUYEP�XS�XLI�JIEXYVI�

set.�� Make sure they’ve articulated pain killers, gain creators, MVP.�� 9WI�]SYV�GVMXMUYIW�XS�HVMZI�XLIQ�XS�YRHIVWXERH�[LEX�TEMRW�XLIMV�

value proposition is solving, and what gains it is creating � Which features will do that? � What is the MVP to prove the value proposition?

�� Start emphasizing the importance of diagrams for each component of the business model

Common student errors on their 3rd presentation

�� Not enough customer calls�� :EKYI�HEXE�JVSQ�XLI�GYWXSQIV�GEPPW��±8LI]�PMOI�SYV�JIEXYVIW��² �� 0MXXPI�XS�RS�MRWMKLX�JVSQ�XLI�HEXE��±;I�GEPPIH�SR�X[IPZI�

customers and here’s what they said…”)�� Team thinks the purpose of the class is the execution of their idea

versus testing their hypotheses.�� Still confused about the difference between a value proposition

versus features � 'SRJYWMRK�JIEXYVIW�[MXL�TEMR�OMPPIVW�SV�KEMR�GVIEXSVW��XLI�:EPYI�

Prop is not a spec sheet)

�� Did not articulate experiments to test their hypotheses.�� (MH�RSX�EVXMGYPEXI�TEWW�JEMP�XIWXW�JSV�IEGL�L]TSXLIWMW�

Optionally this lecture is on-line. All students need to watch it before class.

0)%2�0%92',4%(�)(9'%8367�8)%',-2+�,%2(&33/

Lecture 3

Customer Segments

Learning Objectives


�� :EPYI�TVSTSWMXMSR��GYWXSQIV�WIKQIRX�!�TVSHYGX�QEVOIX�½X�� Customer pains and gains�� Customer “Jobs to be done”�� 'YWXSQIV�EVGLIX]TIW�TIVWSREW�ERH�[L]�XLI]�EVI�YWIJYP�� Problem versus Needs�� 8LI�HMJJIVIRGI�FIX[IIR�YWIVW��MR¾YIRGIVW��VIGSQQIRHIVW��

decision makers, economic buyers and saboteurs�� Market Type—explain the difference between Existing, 6IWIKQIRXIH��2I[�ERH�'PSRI�QEVOIXW

� Explain why it matters to know which one you are in

�� The difference between single- and multi-sided markets�� Lecture slides can be found here: LXXTW��[[[�HVSTFS\�GSQ�WL�\��FHWLM�KSVFZ��;&*^,\0�X*

�� See key lecture concept diagrams below.Why? �� Scientists and engineers usually have a vague sense of who will

buy.�� Get them started with talking to their peers, others at

conferences, etc.�� 6IQMRH�XLIQ�XLEX�GYWXSQIVW�EVI�XLI�GVMXMGEP�HMJJIVIRGI�FIX[IIR�

an idea and a successful company�� +IXXMRK�SYX�SJ�XLI�FYMPHMRK�MW�EFSYX�½VWX�XIWXMRK�XLIMV�ZEPYI�TVSTSWMXMSR�ZIVWYW�GYWXSQIV�L]TSXLIWIW��%X�½VWX�MX´W�LEVH�ERH�awkward.

�� 1EVOIX�8]TI�MR¾YIRGIW�LS[�QYGL�GYWXSQIVW�GER�XIEGL�XLIQ�Lecture 3

Customer Segments


�� Customers need to match their value proposition. �� 'YWXSQIV�ORS[PIHKI�PIEHW�XS�ER�EVGLIX]TI�TIWVWSRE�� In a multi-sided market, each side of a market has its own value

proposition, customer segment, revenue model and may have its own channel and customer relationships.

PAGE55

© 2012 Steve Blank


�� BMG�TT�� SOM TT��°��ERH��(MWXVMFYXMSR�'LERRIPW


Lecture

�� ;EXGL�0IGXYVI��(MWXVMFYXMSR�'LERRIPW°XEOI�XLI�UYM^

Presentation

�� What are the Pains, Gains and Jobs to be done?�� What is the resulting MVP?�� (VE[�E�HMEKVEQ�SJ�XLI�GYWXSQIV�[SVO¾S[�� Draw a diagram of your customer archetypes.�� ,S[�HS�XLI]�WSPZI�XLMW�TVSFPIQ�W �XSHE]#�(SIW�]SYV�ZEPYI�

proposition solve it? How?�� What was it that made customers interested? Excited?�� If your customer is part of a company, who is the decision maker,

how large is their budget, what are they spending it on today, how are they individually evaluated within that organization, and how will this buying decision be made?

�� 7II�LXXT��[[[�WPMHIWLEVI�RIX�WFPERO�XEKKIH�M�GSVTW�JSV�I\EQTPIW�of what’s needed in tomorrow’s presentation.

�� Talk to at least ten potential customers.�� Post discovery narratives.


�� Slide 1: Cover slide�� Slide 2: Current business model canvas with any changes marked�� 7PMHI��;LEX�[IVI�]SYV�I\TIVMQIRXW�XS�XIWX�]SYV�GYWXSQIV�

segment?�� 7PMHI��(MEKVEQ�SJ�EVGLIX]TI�W �� 7PMHI��°R��;LEX�HMH�]SY�PIEVR�EFSYX�]SYV�GYWXSQIVW�WIKQIRXW�

from talking to customers? � Hypothesis: Here’s what we thought � Experiments: So here’s what we did � 6IWYPXW��7S�LIVI´W�[LEX�[I�JSYRH � Iterate: So here’s what we are going to do next � Did anything change about Value Proposition?

0)%2�0%92',4%(�)(9'%8367�8)%',-2+�,%2(&33/


Ensure students understand the three components of The Customer Segment

Ensure students understand the four Market Types

PAGE57

© 2012 Steve Blank

Example of a Customer Flow Diagram

Example of a Customer Archetype/Persona

0)%2�0%92',4%(�)(9'%8367�8)%',-2+�,%2(&33/

CLASS 4: DISTRIBUTION CHANNELS

�� Team Presentation based on Customer Segments Lecture

�� Remote Lecture 4: Distribution Channels

Teaching Objectives



�� 'SRXMRYI�XLI�TEGI�SJ�HMWGSZIV]��GYWXSQIV�GEPPW��MRWMKLXW��GVMXMUYIW�� Make sure teams continue to:

� Annotate the business model canvas with updates � Include diagrams of each part of the hypothesis � 9THEXI�XLIMV�FPSK�EW�±E�GYWXSQIV�HMWGSZIV]�REVVEXMZI²�

�� *SGYW�]SYV�QEMR�GVMXMUYI�SR�XLIMV�YRHIVWXERHMRK�SJ�GYWXSQIV�segments

� Acknowledge you’ve read their blog

�� Comment on other egregious parts of the canvas as necessaryHow? �� Most students usually think of customers as the users of the product

� Make sure they understand there might be multiple customer WIKQIRXW��YWIVW��TE]IVW��IXG�

�� Make sure their presentation includes a customer archetype slide ERH�E�GYWXSQIV�[SVO¾S[�HMEKVEQ

� Ask them if they can draw a day in the life of customer. If not, tell them they don’t know enough.

�� 9WI�]SYV�GVMXMUYIW�XS�HVMZI�XLIQ�XS�YRHIVWXERH�[LEX�TEMRW�XLIMV�customers have, what gains they are looking for, and what jobs they want done.

� Which features from the value prop will do that?

�� ;LS�WTIGM½GEPP]�MW��EVI �XLI�EVGLIX]TI�W �� Give compliments to teams who drew archetypes and customer ¾S[�

�� Do not be polite to those who haven’t. If you can’t draw it you don’t understand it.

Common student errors on their 4th presentation

�� Not enough customer calls�� Vague data from the calls�� PI appears to be doing all the customer calls�� Mentors driving the team to an early conclusion rather than learning�� Little to no insight from the data�� Most entrepreneurs start with a vague statement such as “customer

segments are end users”�� (MH�RSX�EVXMGYPEXI�TEWW�JEMP�XIWXW�JSV�IEGL�L]TSXLIWMW

Optionally this lecture is on-line. All students need to watch it before class.

Lecture 4

Distribution Channels

Learning Objectives


�� (I½RMXMSR�SJ�E�HMWXVMFYXMSRW�GLERRIP� � Direct, Indirect and OEM

�� Difference between physical and virtual channels�� Types of physical and virtual channels�� Distribution channel versus product complexity�� Distribution Channel economics

�� See key lecture concept diagrams below

PAGE59

© 2012 Steve Blank

Why? �� Scientists and engineers think of sales as a tactic a salesperson uses.�� Most entrepreneurs confuse channels with customers. �� They do not understand an impact a channel can have on its

revenue streams. �� The more complex the channel, the smaller the margins will be. 8LIVI�MW�E�GSWX�FIRI½X�EREP]WMW�QEHI�[LIR�GLSSWMRK�GLERRIPW��

�� 'LERRIPW�EVI�E�WXVEXIK]��(MWGSZIVMRK�XLI�VMKLX�GLERRIP�½X�MW�ER�EVX�Lecture 4

Distribution Channels


�� Channels need to match their customer segments �� 'LERRIPW�RIIH�XS�QEXGL�XLI�TVSHYGX��ERH�WYTTSVX �GSQTPI\MX]�� Channel economics need to match revenue goals�� *SYRHIVW�RIIH�XS�WIPP�ERH�GPSWI�XLI�½VWX�JI[�SVHIVW�XS�±TVSZI²�XLI�

channel


�� SOM�TT��'YWXSQIV�6IPEXMSRWLMTW�,]TSXLIWIW��TT�� +IX�/IIT�+VS[


Lecture

�� ;EXGL�0IGXYVI��'YWXSQIV�6IPEXMSRWLMTW°XEOI�XLI�UYM^

Presentation

�� What is the distribution channel? Are there alternatives?�� Draw the channel diagram

� Annotate it with the channel economics

�� ;LEX�[IVI�]SYV�L]TSXLIWIW�EFSYX�[LS�[LEX�]SYV�GLERRIP�[SYPH�be? Did you learn anything different?

�� What was it that made channel partners interested? Excited?�� Did anything change about Value Proposition or Customer

segment? �� 7II�LXXT��[[[�WPMHIWLEVI�RIX�WFPERO�XEKKIH�M�GSVTW�JSV�I\EQTPIW�SJ�

what’s needed in tomorrow’s presentation�� Talk to at least ten potential customers and channel partners

(Salesmen, OEMs distributors, etc.)�� Post your discovery narratives


�� Slide 1: Cover slide�� Slide 2: Current business model canvas with any changes marked�� 7PMHI��;LEX�[IVI�]SYV�I\TIVMQIRXW�XS�XIWX�]SYV�GLERRIPW#�� 7PMHI��HMEKVEQ�SJ�'LERRIP�� 7PMHI��R��;LEX�HMH�]SY�PIEVR�EFSYX�]SYV�GLERRIP�JVSQ�XEPOMRK�XS�

customers? � Hypothesis: Here’s what we thought � Experiments: So here’s what we did � 6IWYPXW��7S�LIVI´W�[LEX�[I�JSYRH � Iterate: So here’s what we are going to do next

�� Did anything change about Value Proposition?

0)%2�0%92',4%(�)(9'%8367�8)%',-2+�,%2(&33/


Ensure students understand the Physical Distribution Channels alternatives

Ensure students understand the Web/Mobile Distribution Channels

PAGE61

© 2012 Steve Blank

Ensure students understand Reseller Channel Economics

Ensure students understand Direct Sales Channel Economics

0)%2�0%92',4%(�)(9'%8367�8)%',-2+�,%2(&33/

Ensure students understand OEM Sales Channel Economics

Ensure students understand Channel versus Product Complexity

PAGE63

© 2012 Steve Blank

CLASS 5: CUSTOMER RELATIONSHIPS (GET/KEEP/GROW)

�� Team Presentation based on Distribution Channels Lecture

�� Remote Lecture 5: Customer Relationships (Get/Keep/Grow)

Teaching Objectives



�� 4MGO�YT�XLI�TEGI�SJ�HMWGSZIV]��GYWXSQIV�GEPPW��MRWMKLXW��GVMXMUYIW�� Make sure teams continue to:

� Annotate the business model canvas with updates � Include diagrams of each part of the hypothesis � 9THEXI�XLIMV�FPSK�EW�±E�GYWXSQIV�HMWGSZIV]�REVVEXMZI²�

�� *SGYW�]SYV�QEMR�GVMXMUYI�SR�XLIMV�YRHIVWXERHMRK�SJ�HMWXVMFYXMSR�channel

� Acknowledge you’ve read their blog � 6IEPMÎ�WSQI�XIEQW�EVI�MR�XLI�±XVSYKL�SJ�HIWTEMV²

�� Comment on other egregious parts of the canvas as necessaryHow? �� Most students confuse the channel with the users of the product

�� Make sure their presentation includes a channel diagram�� Make sure the channel diagram has the economics on it�� 9WI�]SYV�GVMXMUYIW�XS�HVMZI�XLIQ�XS�YRHIVWXERH�

� What type of channel they’d use � Why they would pick that one � How much it will cost them to use it

�� Ask, “Can you draw your channel map, showing how the product moves from your startup to its end user, along with the costs and QEVOIXMRK�WEPIW�VSPIW�SJ�IEGL�WXIT�MR�XLI�GLERRIP#²�

� Make sure they’ve diagrammed it.�� (S�XLI]�YRHIVWXERH�XLI�WEPIW�G]GPI�ERH�GYWXSQIV�EGUYMWMXMSR�TVSGIWW�

� Is it repeatable and scalable? Can they prove it?�� What is the length of the sales cycle?

� What are the critical points within that process?�� Is your sales funnel predictable?


�� They may be stuck on their original customer segment or value prop � By now some might need encouragement to pivot

�� Some might be making lots of calls, getting lots of data but not have a clue what it means

�� Students often do not ask for an order or know what it takes to get an order from the customer in their contact

� 8LMW�MRJS�JIIHFEGO�MW�OI]�HEXE�JSV�HI½RMRK�WEPIW�G]GPI�� 1SWX�½VWX�XMQI�IRXVITVIRIYVW�GSRJYWI�GLERRIPW�[MXL�GYWXSQIVW�� They may not understand:

� The relationship between a channel and its revenue streams � The more complex the channel the smaller the margins will be � 8LI�GSWX�FIRI½X�EREP]WMW�GLSSWMRK�GLERRIPW

�� Did not articulate experiments to test their hypotheses�� (MH�RSX�EVXMGYPEXI�TEWW�JEMP�XIWXW�JSV�IEGL�L]TSXLIWMW

Optionally this lecture is online. All students need to watch it before class.

0)%2�0%92',4%(�)(9'%8367�8)%',-2+�,%2(&33/

Lecture 5

Customer Relationships

Get / Keep / Grow

Learning Objectives


�� How teams get customers into their sales channel and move them successfully through the sales cycle

�� How to keep them as customers and �� How to grow additional revenue from those customers over time. �� Students should understand how to develop “get customer”

experiments to determine tactics that move customers into and through the sales funnel in a repeatable and scalable way.

�� Ensure that the students have an understanding of the concept of ±0MJIXMQI�:EPYI�SJ�E�'YWXSQIV²�ERH�LS[�XS�GEPGYPEXI�XLMW�½KYVI�ERH�MRGSVTSVEXI�MX�MRXS�XLIMV�GYWXSQIV�EGUYMWMXMSR�WXVEXIKMIW��

See key lecture concept diagrams belowWhy? �� “Get, Keep and Grow” are among the most important hypotheses for

any startup to test.�� Customer relationships are the result of a complex interplay among

customers, sales channel, value proposition and budget for marketing.�� Businesses that successfully “Keep” their customers focus heavily on

retention.�� Students should use strategies, tactics and metrics such as purchase

patterns, cohort analysis, complaints, and participation in “Grow” efforts, amongst others.

�� Multi-sided markets need separate “Get, Keep and Grow” strategies �I�K��YWIVW�ERH�TE]IVW

Lecture 5

Customer Relationships

Get / Keep / Grow


�� +IX�/IIT�+VS[�RIIHW�XS�QEXGL�XLIMV�GLERRIP�ERH�GYWXSQIV�segments. Emphasis on repeatable and scalable relationship strategies1. 7EPIW�*YRRIP��'YWXSQIV�6IPEXMSRWLMT�0MJI�']GPI �

a. AwarenessÆInterestÆConsiderationÆPurchaseÆKeep CustomersÅ9RFYRHPI�9TWIPP�'VSWW�WIPPÅ6IJIVVEPW�

b. 7XEVXYTW�RIIH�XS�YRHIVWXERH�XLI�WEPIW�G]GPI�XS�±+IX��/IIT��Grow” a customer for their relevant market.

2. Demand creation—drives customers to chosen sales channelsa. 8EGXMGW��IEVRIH�ERH�TEMH�QIHME��QEVOIXMRK��SRPMRI�XSSPW

�� 'YWXSQIV�%GUYMWMXMSR�'SWXW��'%' �ERH�LS[�XS�QSHIP�GEPGYPEXI�� 'YWXSQIV�0MJIXMQI�:EPYI��08: �� 6IXIRXMSR�WXVEXIKMIW�ERH�XEGXMGW

a. How to create end user demandb. Difference between web and other channelsc. Evangelism vs. existing need or category

�� How demand creation differs in a multi-sided market

PAGE65

© 2012 Steve Blank


SOM�TT��VIZIRYI�ERH�TVMGMRK�L]TSXLIWIW��ZIVMJ]�FYWMRIWW�QSHIP��QIXVMGW�XLEX�QEXXIV

;EXGL��1EVO�4MRGYW��±5YMGO�ERH�*VIUYIRX�4VSHYGX�8IWXMRK�ERH�Assessment”


Lecture

�� ;EXGL�0IGXYVI��6IZIRYI�7XVIEQW°XEOI�XLI�UYM^

Presentation

�� Talk to at least ten potential customers .�� Build demand creation budget and forecast. �� 'VIEXI�SFNIGXMZI�TEWW�JEMP�QIXVMGW�JSV�IEGL�±+IX²�XIWX�QIXLSHSPSK]�

� ;LEX�MW�]SYV�GYWXSQIV�EGUYMWMXMSR�GSWX# � What is your customer lifetime value?

�� (MH�ER]XLMRK�GLERKI�EFSYX�:EPYI�4VSTSWMXMSR��'YWXSQIVW�9WIVW��Channel?

�� 9THEXI�]SYV�FPSK�ERH�GERZEW�� 7II�LXXT��[[[�WPMHIWLEVI�RIX�WFPERO�XEKKIH�M�GSVTW�JSV�I\EQTPIW�SJ�

what’s needed in tomorrow’s presentationPresentation Guidelines

�� Slide 1: Cover slide�� Slide 2: Current business model canvas with any changes marked�� 7PMHI��;LEX�[IVI�]SYV�I\TIVMQIRXW�XS�XIWX�+IXXMRK�'YWXSQIVW#�� 7PMHI��(MEKVEQ�SJ�+IX�/IIT�+VS[

� Annotate it with costs to “Get” customers�� 7PMHI��R��;LEX�HMH�]SY�PIEVR�EFSYX�LS[�XS�+IX�/IIT�ERH�+VS[�

customers? � Hypothesis: Here’s what we thought � Experiments: So here’s what we did � 6IWYPXW��7S�LIVI´W�[LEX�[I�JSYRH � Iterate: So here’s what we are going to do next

0)%2�0%92',4%(�)(9'%8367�8)%',-2+�,%2(&33/

Ensure students understand Get/Keep Grow Customers for Physical Channels

Ensure students understand Consumer Acquisition Cost

PAGE67

© 2012 Steve Blank

Ensure students understand Atrrition and Churn

Ensure students understand Lifetime Value

0)%2�0%92',4%(�)(9'%8367�8)%',-2+�,%2(&33/


Ensure students understand Get/Keep/Grow Customers

PAGE69

© 2012 Steve Blank

CLASS 6: REVENUE STREAMS

�� Team Presentation based on Customer Relationships Lecture�� Remote Lecture 6: Revenue Streams

Teaching Objectives



�� Teams should be showing some real progress. � 6IEPMÎ�WSQI�XIEQW�EVI�MR�XLI�±XVSYKL�SJ�HIWTEMV�²

�� Do not give up on the ones who seem lost; about half of those surprise you.

�� Don’t let them slow down the pace of discovery and customer calls.

�� Make sure teams continue to: � Annotate the business model canvas with updates � Include diagrams of each part of the hypothesis � 9THEXI�XLIMV�FPSK�EW�±E�GYWXSQIV�HMWGSZIV]�REVVEXMZI²�

9 Acknowledge you’ve read their blog�� *SGYW�]SYV�QEMR�GVMXMUYI�SR�XLIMV�YRHIVWXERHMRK�SJ�GYWXSQIV�

relationships�� Comment on other egregious parts of the canvas as necessary

How? �� Ask, “What earned media activities do you plan to do for your startup? What do you hope to achieve?”

�� Even though they won’t have time to do real demand creation XLI]�RIIH�XS�KVEWT�XLI�GSRGITXW�SJ�+IX�/IIT�+VS[��'%'��08:

�� Ensure their diagrams show funnel and real $s for costs�� Ask, “Do you know what your customers read, what trade shows

they attend, gurus they follow, and where they turn for new product information?”


�� To most, marketing is even more of a mystery than sales.�� Let them know that the funnel is their magic decoder ring to

marketing.�� Students often do not understand the difference between GYWXSQIV�±EGUYMWMXMSR²�ERH�GYWXSQIV�±EGXMZEXMSR²�JSV�[IF�QSFMPI�startups.

�� Online marketing is important, even if the product and sales channels are physical.


0)%2�0%92',4%(�)(9'%8367�8)%',-2+�,%2(&33/

Lecture 6

Revenue Streams

Learning Objectives


�� 6IZIRYI�QSHIP�!�XLI�WXVEXIK]�XLI�GSQTER]�YWIW�XS�KIRIVEXI�GEWL�from each customer segment

� Direct Sales, Licensing, Subscription

�� Within the revenue model—how do I price the product? � Pricing is a tactic. � 6IZIRYI�QSHIP�MW�XLI�strategy.

�� This is not about income statement, balance sheet and cash ¾S[��8LSWI�EVI�STIVEXMRK�HIXEMPW�XLEX�EVI�HIVMZIH�EJXIV�E�TVSZIR�6IZIRYI�1SHIP�ERH�TVMGMRK�

See key lecture concept diagrams belowLecture 6

Revenue Streams


�� Types of revenue streams�� 6IZIRYI�QSHIPW�� Pricing Tactics�� 4L]WMGEP�ZIVWYW�;IF�1SFMPI�6IZIRYI�QSHIPW�ERH�1YPXM�WMHIH�

market revenue models


�� SOM�TT��TEVXRIVW��ERH��


Lecture

�� ;EXGL�0IGXYVI��4EVXRIVW°XEOI�XLI�UYM^

Presentation

�� Talk to at least ten potential customers. Test pricing in front of ��GYWXSQIVW�SR�XLI�[IF��XIR�XS��GYWXSQIVW�RSR�[IF��

�� What’s the revenue model strategy?�� What are the pricing tactics?�� Draw the diagram of TE]QIRX�¾S[W�� What are the metrics that matter for your business model? �� (MH�ER]XLMRK�GLERKI�EFSYX�:EPYI�4VSTSWMXMSR��'YWXSQIVW�9WIVW��'LERRIP��'YWXSQIV�6IPEXMSRW#�

�� 9THEXI�]SYV�FPSK�ERH�GERZEW�� 7II�LXXT��[[[�WPMHIWLEVI�RIX�WFPERO�XEKKIH�M�GSVTW�JSV�I\EQTPIW�

of what’s needed in tomorrow’s presentation


�� Slide 1: Cover slide�� Slide 2: Current business model canvas with any changes marked�� 7PMHI��;LEX�[IVI�]SYV�L]TSXLIWIW�ERH�I\TIVMQIRXW�XS�XIWX�]SYV�6IZIRYI�1SHIP�ERH�4VMGMRK�XEGXMGW#

�� 7PMHI��(MEKVEQ�SJ�4E]QIRX�¾S[W�� 7PMHI��R��;LEX�HMH�]SY�PIEVR�EFSYX�]SYV�6IZIRYI�1SHIP��

Pricing? � Hypothesis: Here’s what we thought � Experiments: So here’s what we did � 6IWYPXW��7S�LIVI´W�[LEX�[I�JSYRH � Iterate: So here’s what we are going to do next

PAGE71

© 2012 Steve Blank


6IZIRYI�1SHIP!8LI�WXVEXIK]�XLI�GSQTER]�YWIW�XS�KIRIVEXI�GEWL�JVSQ�IEGL�GYWXSQIV�WIKQIRX

4VMGMRK�QSHIP!XLI�XEGXMGW�]SY�YWI�XS�WIX�XLI�TVMGI�MR�IEGL�GYWXSQIV�WIKQIRX

0)%2�0%92',4%(�)(9'%8367�8)%',-2+�,%2(&33/

CLASS 7: PARTNERS

�� Team Presentation based on Revenue Streams Lecture

�� Remote Lecture 7: Partners

Teaching Objectives

Student Objectives

�� Teams shold be showing some real progress. � 6IEPMÎ�XLEX�WSQI�XIEQW�EVI�MR�XLI�±XVSYKL�SJ�HIWTEMV�²

�� Do not give up on the ones who seem lost; about half of those surprise you.

�� Don’t let them slow down the pace of discovery and customer calls.�� Make sure teams continue to:

� Annotate the business model canvas with updates � Include diagrams of each part of the hypothesis � 9THEXI�XLIMV�FPSK�EW�±E�GYWXSQIV�HMWGSZIV]�REVVEXMZI²

9 Acknowledge you’ve read their blog.�� *SGYW�]SYV�QEMR�GVMXMUYI�SR�XLIMV�YRHIVWXERHMRK�SJ�VIZIRYI�QSHIPW�

and pricing.�� Comment on other egregious parts of the canvas as necessary.

How? �� Ask: � What is your revenue model? � Why did you select it? � How do customers buy today? � What do they pay today? � What do competitors charge? � (SIW�MX�VIWYPX�MR�E�PEVKI�GSQTER]#�7YJ½GMIRX�TVS½X#


�� Students confuse pricing tactics with revenue model strategy.�� Students price on cost versus value.�� No appreciation of competitive pricing or offerings; revenue adds up

to a small business�� Business too small for a company; should focus on licensing

Optionally this is lecture is online. All students need to watch it before class.Lecture 7

Partners

Learning Objectives


�� What is a Partner?�� Types of Partners�� 6MWOW�EWWSGMEXIH�[MXL�LEZMRK�E�4EVXRIV�ERH�LS[�XS�QEREKI�XLIQ�� Suggestions related to selecting a Partner as a startup�� See key lecture concept diagrams below

PAGE73

© 2012 Steve Blank

Lecture 7

Partners


�� Who are Partners�� The difference between strategic alliances, competition, joint

ventures, buyers, suppliers and licensees�� ;LMPI�4EVXRIVW�EVI�GVMXMGEP�JSV�PEVKI�GSQTERMIW��QSWX�GSQTERMIW�

do not do everything by themselves), strategic alliances and joint partnerships are not needed to serve Earlyvangelists. They are needed for mainstream customers.

�� For startups, Partners can monopolize your time.�� Partners must have aligned goals and customers.�� Some examples:

� 4EVXRIVWLMT�HMWEWXIVW��&SIMRK�� Strategic Alliances: Starbucks partners with Pepsi, create

Frappuccino � Joint Business Development: Intel partners with PC vendors � Coopetition: Automotive suppliers create AIAG � Key Suppliers: Apple builds iPhone from multiple suppliers


�� SOM TT��VIWSYVGIW��VIZIRYI�ERH�TVMGMRK


Lecture

�� ;EXGL�0IGXYVI��6IWSYVGIW��%GXMZMXMIW�ERH�'SWXW°XEOI�XLI�UYM^

Presentation

Talk to at least ten potential customers including potential partners

�� What partners will you need? �� Why do you need them and what are risks? �� Why will they partner with you? �� What’s the cost of the partnership? �� (VE[�XLI�HMEKVEQ�SJ�TEVXRIV�VIPEXMSRWLMTW�[MXL�ER]�HSPPEV�¾S[W�� (MH�ER]XLMRK�GLERKI�EFSYX�:EPYI�4VSTSWMXMSR�SV�'YWXSQIVW�9WIVW��'LERRIP��(IQERH�'VIEXMSR�SV�6IZIRYI�7XVIEQW#�

�� What are the incentives and impediments for the partners?�� 9THEXI�]SYV�FPSK�ERH�GERZEW�

� 7II�LXXT��[[[�WPMHIWLEVI�RIX�WFPERO�XEKKIH�M�GSVTW�JSV�I\EQTPIW�of what’s needed in tomorrow’s presentation.


�� Slide 1: Cover slide�� Slide 2: Current business model canvas with any changes marked�� 7PMHI��;LEX�[IVI�]SYV�L]TSXLIWMW�I\TIVMQIRXW�XS�XIWX�]SYV�

Partners?�� 7PMHI��(MEKVEQ�SJ�TEVXRIV�VIPEXMSRWLMTW�� 7PMHI��°R��;LEX�HMH�]SY�PIEVR�EFSYX�]SYV�4EVXRIVW#

� Hypothesis: Here’s what we thought � Experiments: So here’s what we did � 6IWYPXW��7S�LIVI´W�[LEX�[I�JSYRH � Iterate: So here’s what we are going to do next

0)%2�0%92',4%(�)(9'%8367�8)%',-2+�,%2(&33/


PAGE75

© 2012 Steve Blank

CLASS 8: RESOURCES, ACTIVITIES AND COSTS

�� Team Presentation based on Partners Lecture

�� Remote Lecture 8: Resources, Activities and Costs

Teaching Objectives



�� This is the last presentation.�� Teams will want to slow down or stop calling customers. Don’t let

them slow down the pace of discovery and customer calls.�� *SGYW�]SYV�QEMR�GVMXMUYI�SR�XLIMV�YRHIVWXERHMRK�SJ�TEVXRIVW�� Comment on other egregious parts of the canvas as necessary.

How? Ask:

�� How many partners have you spoken to? �� What alignment does this partner have with your customers?�� What need do you solve for this partner and how important is it to

the partner?�� ;LEX�IGSRSQMG�FIRI½X�HSIW�XLMW�TEVXRIV�TVSZMHI�]SYV�FYWMRIWW#�� How many partners are there like this?


�� Students think their business has to do everything and don’t realize the value of a partner in their value delivery.

�� Students assume getting a partner is a relatively easy process.�� Students confuse partnership interest with successful closing a

partnership deal.�� Students confuse partnership closing with successful executing

partnership.


Lecture 8

Resources, Activities and Costs

Learning Objectives

Students should understand

�� Cover the four categories of resources�� Cover the types of activities�� Talk about the effect of people upon the culture of the startup�� Enumerate the ways in which a startup’s intellectual property can be

protected�� Add up all the costs. Is this a business? worth doing?�� See key lecture concept diagrams below

Lecture 8

Resources, Activities and Costs

Students should understand

�� 6IWSYVGIW��*MRERGMEP��4L]WMGEP��-RXIPPIGXYEP��,YQER�'ETMXEP�� -RXIPPIGXYEP�TVSTIVX]�TVSXIGXMSR��8LI�EWWYQTXMZI�TEXL��TEXIRXW �QE]�

not be the right one to choose at this stage. �� Activities: Manufacturing? Supply Chain? Problem Solving?�� Costs: Fixed costs? Variable Costs?

Assignment �� Keep talking to ten customers a week

�� Final seven-minute presentation and two-minute videoVideo Presentation Guidelines

�� 7II�;SVOWLST��

0)%2�0%92',4%(�)(9'%8367�8)%',-2+�,%2(&33/


PAGE77

© 2012 Steve Blank

0)%2�0%92',4%(�)(9'%8367�8)%',-2+�,%2(&33/

WORKSHOP 3: PRESENTATION SKILLS TRAINING

Teaching Objectives

8IEQW�FVMRK�XLIMV�HVEJX�½REP�TVIWIRXEXMSRW��HVEJX�WXSV]�ZMHIS��ERH�HVEJX�XIGLRMGEP�ZMHIS��8LI]�VI½RI�ERH�TSPMWL�XLIQ�XLVSYKLSYX�XLI�day, changing slides, editing video, reshooting interviews, and redoing voiceovers while receiving comments and suggestions from the instructors along the way. The emphasis is on how they present XLIQWIPZIW�ERH�XLIMV�QEXIVMEP��[MXL�E�WTIGM½G�JSGYW�SR�XIPPMRK�E�GPIEV�ERH�compelling story.

Format Two weeks before the workshop

�� Teams are instructed to have early versions of all their presentation materials available for online review by the presentation skills instructors the week before this workshop.

One week before the workshop

�� Teams are reminded to email links to their presentations and videos. Teams who follow these instructions receive initial comments and suggestions via email a few days before the workshop.

The day of the workshop

�� 8LI�½VWX�XLMVX]�XS�WM\X]�QMRYXIW�MW�XEPOMRK�EFSYX�WXSV]XIPPMRK�ERH�TVIWIRXEXMSR�FEWMGW��8LI�OI]�PIGXYVI�GSRGITXW�EVI�MR�E�PEXIV�WIGXMSR� ��

�� Then, instructors walk the room and work with teams, one at a time. �� Often, a comment or suggestion comes up that all the teams would FIRI½X�JVSQ�LIEVMRK��ERH�MRWXVYGXSVW�KVEF�XLI�EXXIRXMSR�SJ�IZIV]SRI�in the room and share learnings with everyone.

�� After a break, each team gives their presentation to instructors and the other groups and receives notes in a formal practice session.

Assignment Students have two deliverables for the “Lessons Learned” Class:

�� Story Video: Two-minute video focused on your journey through I-Corps as it relates to your business

�� Lessons Learned Slide Deck��)MKLX�QMRYXIW�JSV�]SYV�WPMHI�presentation)

Best Practices

�� *SGYW�IZIV]�FMX�SJ�XLI�XIEQ�TVIWIRXEXMSRW��WPMHI�HIGO�ERH�ZMHISW �SR�XLI�WTIGM½GW�SJ�XLI�GSQTER]�IEGL�XIEQ�MW�WXEVXMRK��XLI�WTIGM½GW�SJ�XLI�GYWXSQIVW�XLI]�QIX��ERH�XLI�WTIGM½G�PIWWSRW�XLI]�EW�E�GSQTER]�learned about their particular product or service.

�� 9WI�HMEKVEQW�SJ�[LEX�]SY�PIEVRIH��'YWXSQIVW��GLERRIPW��IXG�� 9WI�YTHEXIH�FYWMRIWW�QSHIP�GERZEWIW�XS�WLS[�]SYV�NSYVRI]�� Teams who emailed YouTube links to their videos and slide decks

several days in advance got much better feedback, and had time to act on the feedback.

�� =SY8YFI�MW�XLI�VMKLX�QIGLERMWQ�XS�WLEVI�ZMHIS�JSV�IQEMP�GVMXMUYI��SRP]�accept YouTube links. Dropbox, and especially email attachments, are not and drag the entire process to a standstill.

PAGE79

© 2012 Steve Blank

Story Video Details

(Two minutes)

Think of the story video as the heart of the team presentation told with video

Suggested Story Video Outline

�� What are your names and what is your team’s name? Introduce ]SYVWIPZIW��4ER�XLI�GEQIVE�EVSYRH�]SYV�SJ½GI�WS�[I�GER�WII�[LIVI�you work.

�� How many customers did you talk to?�� (MH�]SY�½RH�XLMW�IEW]#�,EVH�EX�½VWX#�� When you started the class, what was the most important thing

you thought you would have to do to successfully launch a scalable startup?

�� How do you feel about that now?�� Thinking back across the class, who was the most interesting

customer you met and where did you meet them? �� What happened?? �� ;L]��WTIGM½GEPP]��[EW�XLMW�]SYV�QSWX�MRXIVIWXMRK�GYWXSQIV�

conversation? �� %RH�LS[��WTIGM½GEPP]��HMH�]SYV�FYWMRIWW�QSHIP�GLERKI�EW�E�VIWYPX#�� Now that the class is over, what was the most surprising thing you

learned in the class?

Teams need to see examples of story videos! Point the teams to good examples including:

�� 'MX]�'PMQFIV�XIEQ�JVSQ�'MX]�9RMZIVWMX]�SJ�2I[�=SVO�LXXT��[[[�WPMHIWLEVI�RIX�WFPERO�GMX]�GPMQFIV�WXSV]�ZMHIS�RWJ

�� 6IH3\�XIEQ�JVSQ�=EPI�LXXT��[[[�WPMHIWLEVI�RIX�WFPERO�VIHS\�ZMHIS�nsf

�� 4LM3TXMGW�JVSQ�9RMZIVWMX]�SJ�-PPMRSMW�LXXT��[[[�WPMHIWLEVI�RIX�WFPERO�phi-optics-story-video-nsf

�� 7SPMGYPXYVI�XIEQ�JVSQ�9'�7ERXE�'VY^�LXXT��[[[�WPMHIWLEVI�RIX�WFPERO�WSPMGYPXYVI�WXSV]�ZMHIS�RWJ

�� 2ISR0EFW�JVSQ�'EVRIKMI�1IPPSR�9RMZIVWMX]�LXXT��[[[�WPMHIWLEVI�RIX�WFPERO�RISRPEFW�WXSV]�ZMHIS�RWJ

7II�EPP�TVIWIRXEXMSRW�ERH�ZMHISW�EX��LXXT��[[[�WPMHIWLEVI�RIX�WFPERO�XEKKIH�M�GSVTW

0)%2�0%92',4%(�)(9'%8367�8)%',-2+�,%2(&33/

Lessons Learned PowerPoint Presentation (8 min)

8LI�0IWWSRW�0IEVRIH�WPMHI�HIGO�MW�E�ZIV]�WLSVX�PMWX�SJ�HI½RMXMSRW�ERH�WMQTPI�HIGPEVEXMZIW�XLEX�EVI�MRXIRHIH�XS�MRGVIEWI�XLI�UYEPMX]�SJ�XLI�presentations. Here it is, in full:

�� Story. �� &I�WTIGM½G�� Show me, don’t tell me. �� Arcs.�� Beginning, middle, end.�� Character, setting, plot.�� Editing.�� Notes.�� Look before...�� Practice!�� &I�WTIGM½G�� Use (or enhance) the diagrams you developed in weekly

presentations to illustrate these points.

-RWXVYGXSVW�[MPP�½RH�TPIRX]�SJ�QEXIVMEP�XS�[SVO�[MXL�F]�PSSOMRK�EX�XLI�WPMHI�decks and video links that are emailed in advance. Spend the morning sessions talking about the common pitfalls in team presentations.

�� Made sure Slide 1 has Team Name, your product, what business you ended up in and the number of customers you talked to.

�� Every presentation requires a diagram of Customer Archetypes, GYWXSQIV�¾S[��HMWXVMFYXMSR�GLERRIP��VIZIRYI�¾S[��

�� Every presentation requires hypotheses you tested, experiments you ran, and results.

�� Final Slides—Click through each one of your business model canvas slides.

Teams need to see examples of successful presentations! Point the teams to good examples, including:

�� 6IH3\�XIEQ�JVSQ�=EPI�LXXT��[[[�WPMHIWLEVI�RIX�WFPERO�VIHS\�½REP�nsf-presentation

�� 2ISR0EFW�JVSQ�'EVRIKMI�1IPPSR�9RMZIVWMX]�LXXT��[[[�WPMHIWLEVI�RIX�WFPERO�PMKLXXMT�RWJ�½REP�TVIWIRXEXMSR

�� 4LMSTXMGW�JVSQ�XLI�9RMZIVWMX]�SJ�-PPMRSMW�LXXT��[[[�WPMHIWLEVI�RIX�WFPERO�TLMSTXMGW�RWJ�½REP�TVIWIRXEXMSR

�� 3QIKE'LIQ�-S[E�7XEXI�9RMZIVWMX]�LXXT��[[[�WPMHIWLEVI�RIX�WFPERO�SQIKEGLIQ�RWJ�½REP�TVIWIRXEXMSR

7II�EPP�TVIWIRXEXMSRW�ERH�ZMHISW�EX��LXXT��[[[�WPMHIWLEVI�RIX�WFPERO�XEKKIH�M�GSVTW

PAGE81

© 2012 Steve Blank

Common student errors

Presentation and video

�� Students often make very bland story videos. � 8LI]�HSR´X�REXYVEPP]�LSRI�MR�ERH�GLSSWI�ZIV]�WTIGM½G�HIXEMPW�SJ�

their technology, their customers, and their learning process. This is IWWIRXMEP°XLI�QSVI�WTIGM½G�XLI�FIXXIV��

� -X�MW�SRP]�XLVSYKL�XLI�WTIGM½GMX]�SJ�E�WXSV]XIPPIV�XLEX�ER�EYHMIRGI�can extrapolate to generality, which is what one wants an investor to do.

�� Students often spend time thanking instructors, speaking excitedly about the Lean Launchpad program, or making cheeky references or inside jokes.

� This is a big mistake, and can make years of research feel like a Junior High School Science Fair Project. Students should spend absolutely zero time on any of these topics, and all meta references to how important teamwork is should be aggressively cut. This is very hard for many students to internalize.

� None of that has any place in a two-minute video about a real company that is really trying to raise real money from real investors. Investors will ascertain team dynamics for themselves when they meet a given company and the people involved.

�� Students think they need to tell a whitewashed success story. � This is another mistake, and will damage their attempts at getting WYFWIUYIRX�½RERGMRK��

� Students must strive to tell the story of their mistakes, pitfalls discovered, and pivots made.

� 1SWX�MQTSVXERXP]��WXYHIRXW�QYWX�XEPO�MR�XLI�QSWX�WTIGM½G�XIVQW�possible about the customers they actually met, what they actually said, and how that changed their business model canvases.

�� Students don’t label their axes on graphs, label their arrows in diagrams, or make a legend showing their color coding scheme. They should.

0)%2�0%92',4%(�)(9'%8367�8)%',-2+�,%2(&33/

CLASS 9 & 10: LESSONS LEARNED PRESENTATION

Teaching Objectives

Teams present:

�� 2-minute video �� 8-minute Lessons Learned Presentation

Logistics �� All teams present in the same room�� Split over two weeks

PAGE83

© 2012 Steve Blank

Appendix

0)%2�0%92',4%(�)(9'%8367�8)%',-2+�,%2(&33/

Student Peer-Grading Document

Instructor Grading Document

10. Collaborative Google Documents

PAGE85

© 2012 Steve Blank

Startup Wisdom Document

0)%2�0%92',4%(�)(9'%8367�8)%',-2+�,%2(&33/

PAGE87

© 2012 Steve Blank

11. 10-Week Syllabus—SampleENGR 245: The Lean Launch Pad

Course Title: Technology Entrepreneurship and Lean StartupsUnits�� Instructors: Steve Blank, Ann Miura-Ko, Jon Feiber TAs: Thomas HaymoreGrading��0IXXIV��%&'(�24 Days and Times��8YIW��TQ� �3J½GI�,SYVW��8YIW��TQLocation: TBDWebpage��LXXT��I��WXERJSVH�IHY�Texts: Steven Blank, Four Steps to the Epiphany��%PI\ERHIV�3WXIV[EPHIV��=ZIW�4MKRIYV��Business Model Generation

Prerequisite��-RXIVIWX�TEWWMSR�MR�HMWGSZIVMRK�LS[�ER�MHIE�GER�FIGSQI�E�VIEP�GSQTER]�

Goal: Provide an experiential learning opportunity showing how engineers, together with scientists and other professionals, really build companies.

Course Description: This course provides real world, hands-on learning on what it’s like to actually start a high-tech company. This class is not about how to write a business plan. It’s not an exercise on how smart you are in a classroom, or how well you use the research library to size markets. And the end result is not a PowerPoint slide deck for a VC presentation��%RH�MX�MW�QSWX�HI½RMXIP]�RSX�ER�MRGY-bator where you come to build a “hot idea.”

This is a practical class—essentially a lab, not a theory or “book” class. Our goal, within the con-straints of a classroom and a limited amount of time, is to create an entrepreneurial experience for you with all of the pressures and demands of the real world in an early stage start up.

You will be getting your hands dirty talking to customers, partners, and competitors, as you encounter the chaos and uncertainty of how a startup actually works. You’ll work in teams learning how to turn a great idea into a great company. You’ll learn how to use a business model to brainstorm each part of a company and customer development to get out of the GPEWWVSSQ�XS�WII�[LIXLIV�ER]SRI�SXLIV�XLER�]SY�[SYPH�[ERX�YWI�]SYV�TVSHYGX��*MREPP]��FEWIH�on the customer and market feedback you gathered, you will use agile development to rapidly iterate your product to build something customers would actually use and buy. Each block will be a new adventure outside the classroom as you test each part of your business model and then share the hard earned knowledge with the rest of the class.

7II�LXXT��WXIZIFPERO�GSQ�GEXIKSV]�PIER�PEYRGLTEH��JSV�E�[IIO�F]�[IIO�REVVEXMZI�SJ�E�TEWX�

class.

Class Culture: Startups communicate much differently than inside a university or a large company. It is dramatically different from the university culture most of you are familiar with. At times it can feel brusque and impersonal, but in reality is focused and oriented to create immediate action in time- and cash-constrained environments. We have limited time and we push, challenge, and UYIWXMSR�]SY�MR�XLI�LSTI�]SY�[MPP�UYMGOP]�PIEVR��;I�[MPP�FI�HMVIGX��STIR��ERH�XSYKL°NYWX�PMOI�

0)%2�0%92',4%(�)(9'%8367�8)%',-2+�,%2(&33/

the real world. We hope you can recognize that these comments aren’t personal, but part of the process.

;I�EPWS�I\TIGX�]SY�XS�UYIWXMSR�YW��GLEPPIRKI�SYV�TSMRX�SJ�ZMI[�MJ�]SY�HMWEKVII��ERH�IRKEKI�MR�a real dialog with the teaching team. This approach may seem harsh or abrupt, but it is all part SJ�SYV�[ERXMRK�]SY�XS�PIEVR�XS�GLEPPIRKI�]SYVWIPZIW�UYMGOP]�ERH�SFNIGXMZIP]��ERH�XS�ETTVIGMEXI�that as entrepreneurs you need to learn and evolve faster than you ever imagined possible.

Amount of Work: This class requires a phenomenal amount of work on your part, certainly compared to many other classes. Projects are treated as real startups, so the workload will be intense. Teams have reported up to twenty hours of work per week. Getting out of the classroom is what the effort MW�EFSYX��-X´W�RSX�EFSYX�XLI�PIGXYVIW��=SY�[MPP�FI�WTIRHMRK�E�WMKRM½GERX�EQSYRX�SJ�XMQI�MR�FI-tween each of the lectures outside your lab talking to customers. If you can’t commit the time to talk to customers, this class is not for you.

This class is a simulation of what startups and entrepreneurship is like in the real world: GLESW��YRGIVXEMRP]��MQTSWWMFPI�HIEHPMRIW�MR�MRWYJ½GMIRX�XMQI��GSR¾MGXMRK�MRTYX��IXG��

This class pushes many people past their comfort zone. It’s not about you, but it’s also not EFSYX�XLI�GPEWW�SV�XLI�XIEGLMRK�XIEQ��8LMW�MW�[LEX�WXEVXYTW�EVI�PMOI��ERH�XLI�GPEWW�MW�NYWX�WQEPP�part of what it is really like.) The pace and the uncertainty pick up as the class proceeds.

Team Organization: This class is team-based. Working and studying will be done in teams. You will be admitted as a team. Teams must submit a proposal for entry before the class begins. Projects must be ap-proved before the class.

Team projects can be software, a physical product, or service of any kind. The teams will self-SVKERMÎ�ERH�IWXEFPMWL�MRHMZMHYEP�VSPIW�SR�XLIMV�S[R��8LIVI�EVI�RS�JSVQEP�')3�:4W��.YWX�XLI�constant parsing and allocating of the tasks that need to be done.

&IWMHIW�XLI�MRWXVYGXSVW�ERH�8%W��IEGL�XIEQ�[MPP�FI�EWWMKRIH�E�QIRXSV��ER�I\TIVMIRGIH�IRXVI-preneur or VC) to provide assistance and support.

Suggested Projects: ;LMPI�]SYV�½VWX�MRWXMRGX�QE]�FI�E�[IF�FEWIH�WXEVXYT��[I�WYKKIWX�XLEX�]SY�GSRWMHIV�E�WYFNIGX�in which you are a domain expert, such as your graduate research. In all cases, you should choose something for which you have passion, enthusiasm, and hopefully some expertise. Teams that select a web or mobile-based product will have to build the site for the class. Do not select this type of project unless you are prepared to see it through.

Deliverables: Teams building a physical product must show us a costed bill of materials and a prototype.

1. Teams building a web product need to build the site, create demand, and have customers using it. See LXXT��WXIZIFPERO�GSQ��LS[�XS�FYMPH�E�[IF�WXEVXYT�PIER�PEYRGL-TEH�IHMXMSR�.

2. =SYV�[IIOP]�FPSK�MW�ER�MRXIKVEP�TEVX�SJ�]SYV�HIPMZIVEFPIW��;I�GYVVIRXP]�YWI�XLI�0IER�LaunchLab. It’s how we measure your progress.)

�� Your team will present a weekly in-class Powerpoint summary of progress.

PAGE89

© 2012 Steve Blank

Grading Criteria: 8LMW�GSYVWI�MW�XIEQ�FEWIH��ERH��SJ�]SYV�KVEHI�[MPP�GSQI�JVSQ�]SYV�XIEQ�TVSKVIWW�ERH�½REP�TVSNIGX��8LI�KVEHMRK�GVMXIVME�EVI�FVSOIR�HS[R�EW�JSPPS[W�

�� -RHMZMHYEP�TEVXMGMTEXMSR�MR�GPEWW��=SY�[MPP�FI�KMZMRK�JIIHFEGO�XS�]SYV�TIIVW�

�� 3YX�SJ�XLI�FYMPHMRK�TVSKVIWW�EW�QIEWYVIH�F]�FPSK�[VMXI�YTW�ERH�TVIWIRXEXMSRW�each week

Team members must:

1. 9THEXI�FYWMRIWW�QSHIP�GERZEW�weekly

2. Identify which team member did which portion of the work

�� Submit a detailed report on what the team did each week

�� Submit a weekly email of team member participation

�� 8LI�XIEQ�[IIOP]�±PIWWSR�PIEVRIH²�TVIWIRXEXMSR��WII�ETTIRHM\�JSV�JSVQEX

�� 8LI�XIEQ�½REP�VITSVX��WII�ETTIRHM\�JSV�JSVQEX

Class RoadmapEach week’s class is organized around:

�� Student presentations on their “lessons learned” from getting out of the building and iterating or pivoting their business model.

�� Comments and suggestions from other teams, and teaching teams on the lessons learned.

�� %�PIGXYVI�SR�SRI�SJ�XLI��FYMPHMRK�FPSGOW�SJ�E�FYWMRIWW�QSHIP��WII�HMEKVEQ�FIPS[��XEOIR�from Business Model Generation).

�� )EGL�XIEQ�[MPP�GETXYVI�XLIMV�TVSKVIWWMSR�MR�PIEVRMRK�F]�OIITMRK�ER�SR�PMRI�NSYVREPW�FPSKW�[MOM��

“Genius is the ability to make the most mistakes in the shortest amount of time.”

Pre-class Preparation Read:

�� 4EKIW��SJ�3WXIV[EPHIV´W�Business Model Generation.

�� 2012 Four Steps to the Epiphany 'LETXIVW��

�� 6IZMI[�XLI�TVMSV�GPEWW�QEXIVMEP�LXXT��WXIZIFPERO�GSQ�GEXIKSV]�PIER�PEYRGLTEH�

Teams:

�� Form teams of four

�� 'SQI�YT�[MXL�E�TVIPMQMREV]�GSQTER]�TVSHYGX�MHIE

Idea Approval

�� Attend a meeting with the teaching teach in Nov or December

�� &]�1SRHE]�.ERYEV]��th, submit your team project for approval to the teaching team

�� 23�32)�;-00�&)�%(1-88)(�83�8,)�'0%77�;-8,398�&)-2+�4%68�3*�%�8)%1�%2(�,%:-2+�%2�%4463:)(�463.)'8

0)%2�0%92',4%(�)(9'%8367�8)%',-2+�,%2(&33/

_______________________________________________________________

1. Jan 10th: Intro/Business Model/Customer Development

'PEWW�0IGXYVI�3YX�SJ�XLI�&YMPHMRK�%WWMKRQIRX�

What’s a business model? What are the nine parts of a business model? What are hypoth-eses? What is the Minimum Feature Set? What experiments are needed to run to test busi-ness model hypotheses? What is market size? How to determine whether a business model is worth doing?

Read:

�� Business Model Generation,�TT��WOMQ�I\EQTPIW�TT��

�� 7XIZI�&PERO��±;LEX´W�E�7XEVXYT#�*MVWX�4VMRGMTPIW�²�LXXT��WXIZIFPERO�GSQ��[LEXW�E�WXEVXYT�½VWX�TVMRGMTPIW�

�� 7XIZI�&PERO��±1EOI�2S�0MXXPI�4PERW°(I½RMRK�XLI�7GEPEFPI�7XEVXYT�²�LXXT��WXIZIFPERO�GSQ��QEOI�RS�PMXXPI�TPERW�¯�HI½RMRK�XLI�WGEPEFPI�WXEVXYT�

�� 7XIZI�&PERO��±%�7XEVXYT�MW�2SX�E�7QEPPIV�:IVWMSR�SJ�E�0EVKI�'SQTER]�²�LXXT��WXIZIFPERO�GSQ��E�WXEVXYT�MW�RSX�E�WQEPPIV�ZIVWMSR�SJ�E�PEVKI�GSQTER]�

Deliverable for January 17th:

�� Write down hypotheses for each of the nine parts of the business model.

�� Come up with ways to test:

�� -W�E�FYWMRIWW�[SVXL�TYVWYMRK��QEVOIX�WMÎ

�� Each of the hypotheses

PAGE91

© 2012 Steve Blank

�� 'SQI�YT�[MXL�[LEX�GSRWXMXYXIW�E�TEWW�JEMP�WMKREP�JSV�XLI�XIWX��I�K��EX�[LEX�TSMRX�[SYPH�you say that your hypothesis wasn’t even close to correct)?

�� 7XEVX�]SYV�FPSK�[MOM�NSYVREP

___________________________________________________________________

2. Jan 17th: The Value Proposition

Class Lecture/Out of the Building Assignment:

What is your product or service? How does it differ from an idea? Why will people want it? Who’s the competition and how does your customer view these competitive offerings? Where’s the market? What’s the minimum feature set? What’s the Market Type? What was ]SYV�MRWTMVEXMSR�SV�MQTIXYW#�;LEX�EWWYQTXMSRW�HVSZI�]SY�XS�XLMW#�;LEX�YRMUYI�MRWMKLX�HS�]SY�have into the market dynamics or into a technological shift that makes this a fresh opportu-nity?

Action:

�� +IX�SYX�SJ�XLI�FYMPHMRK�ERH�XEPO�XS�XIR�XS�½JXIIR�GYWXSQIVW�JEGI�XS�JEGI

�� *SPPS[�YT�[MXL�7YVZI]�1SROI]��SV�WMQMPEV�WIVZMGI �XS�KIX�QSVI�HEXE

Read:

�� Business Model Generation��TT��ERH��

�� Four Steps to the Epiphany��TT��ERH��

�� The Blue Ocean Strategy pages 3-22

Deliverable for Jan 18th:

�� Find a name for your team.

�� What were your value proposition hypotheses?

�� What did you discover from customers?

�� 1EVOIX�7MÎ�IWXMQEXIW��8%1��7%1��EHHVIWWEFPI �

�� Submit interview notes, present results in class.

�� 9THEXI�]SYV�FPSK�[MOM�NSYVREP

___________________________________________________________________

3. Jan 24th: Customers/users /payers


�� ;LS´W�XLI�GYWXSQIV#�9WIV#�4E]IV#�,S[�EVI�XLI]�HMJJIVIRX#�,S[�GER�]SY�VIEGL�XLIQ#�How is a business customer different from a consumer?

Action:

�� +IX�SYX�SJ�XLI�FYMPHMRK�ERH�XEPO�XS�XIR�XS�½JXIIR�GYWXSQIVW�JEGI�XS�JEGI


0)%2�0%92',4%(�)(9'%8367�8)%',-2+�,%2(&33/

Read:

�� Business Model Generation��TT��


�� +MJJ�'SRWXEFPI��±��8MTW�JSV�)EVP]�'YWXSQIV�(IZIPSTQIRX�-RXIVZMI[W�²�LXXT��KMJJGSR-WXEFPI�GSQ��XMTW�JSV�IEVP]�GYWXSQIV�HIZIPSTQIRX�MRXIVZMI[W�

Deliverable for Jan 25th:

�� What were your hypotheses about who your users and customers were? Did you learn anything different?

�� (VE[�XLI�HMEKVEQ�SJ�±GYWXSQIV�¾S[�²�

�� Submit interview notes, present results in class. Did anything change about Value Proposition?

�� ;LEX�EVI�]SYV�L]TSXLIWIW�EVSYRH�GYWXSQIV�EGUYMWMXMSR�GSWXW#�'ER�]SY�EVXMGYPEXI�XLI�HMVIGX�FIRI½XW��IGSRSQMG�SV�SXLIV �XLEX�EVI�ETTEVIRX#�

�� If your customer is part of a company, who is the decision-maker, how large is the bud-get they have authority over, what are they spending it on today, how are they individu-ally evaluated within that organization, and how will this buying decision be made?

�� What resonates with customers?

�� For web startups, start coding the product. Setup your Google or Amazon cloud infrastructure.

�� 9THEXI�]SYV�FPSK�[MOM�NSYVREP�

___________________________________________________________________

4. Jan 31st: The Channel


�� What’s a channel? Direct channels, indirect channels, OEM. Multi-sided markets. B-to-B ZIVWYW�&�XS�'�GLERRIPW�ERH�WEPIW��FYWMRIWW�XS�FYWMRIWW�ZW��FYWMRIWW�XS�GSRWYQIV

�� Action: If you’re building a web site, get the site up and running, including minimal fea-tures.

�� *SV�RSR�[IF�TVSHYGXW��KIX�SYX�SJ�XLI�FYMPHMRK�ERH�XEPO�XS�XIR�XS�½JXIIR�GLERRIP�TEVX-ners.

�� 6IEH��Four Steps to the Epiphany��TT��

Deliverable for Feb 1st :

�� For web teams:

�� Get a working web site and analytics up and running. Track where your visitors EVI�GSQMRK�JVSQ��QEVOIXMRK�GEQTEMKR��WIEVGL�IRKMRI��IXG �ERH�LS[�XLIMV�FILEZMSV�differs. What were your hypotheses about your web site results?

�� Submit web data or customer interview notes; present results in class.

�� (MH�ER]XLMRK�GLERKI�EFSYX�:EPYI�4VSTSWMXMSR�SV�'YWXSQIVW�9WIVW#�

PAGE93

© 2012 Steve Blank

�� What is your assumed customer lifetime value? Are there any proxy companies that would suggest that this is a reasonable number?

�� For non-web teams:

�� -RXIVZMI[�XIR�XS�½JXIIR�TISTPI�MR�]SYV�GLERRIP��WEPIWQIR��3)1W��IXG� ��

�� (MH�ER]XLMRK�GLERKI�EFSYX�:EPYI�4VSTSWMXMSR�SV�'YWXSQIVW�9WIVW#�

�� What is your customer lifetime value? Channel incentives—does your product or proposition extend or replace existing revenue for the channel?

�� ;LEX�MW�XLI�±GSWX²�SJ�]SYV�GLERRIP��ERH�MXW�IJ½GMIRG]�ZW��]SYV�WIPPMRK�TVMGI#

�� )ZIV]SRI��9THEXI�]SYV�FPSK�[MOM�NSYVREP��

�� What kind of initial feedback did you receive from your users?

�� What are the entry barriers?

___________________________________________________________________

5. Feb 7th: Customer Relationships/Demand Creation


�� How do you create end-user demand? How does it differ on the web vs. other chan-nels? Evangelism vs. existing need or category? General Marketing, Sales Funnel, etc

Action:

�� If you’re building a web site:

�� A small portion of your site should be operational on the web

�� %GXYEPP]�IRKEKI�MR�±WIEVGL�IRKMRI�QEVOIXMRK²��7)1 ��7TIRH��EW�E�XIEQ�XS�XIWX�GYWXSQIV�EGUYMWMXMSR�GSWX�

* Ask your users to take action, such as signing up for a newsletter.

* 9WI�+SSKPI�%REP]XMGW�XS�QIEWYVI�XLI�WYGGIWW�SJ�]SYV�GEQTEMKR�

* Change messaging on site during the week to get costs lower; team that gets lowest delta costs wins.

�� If you’re assuming virality of your product, you will need to show viral propaga-XMSR�SJ�]SYV�TVSHYGX�ERH�XLI�MQTVSZIQIRX�SJ�]SYV�ZMVEP�GSIJ½GMIRX�SZIV�WIZIVEP�experiments.

�� If non-web,

�� Build demand creation budget and forecast.

* Get real costs from suppliers.

Read:


�� (EZI�1G'PYVI��±7XEVXYT�1IXVMGW�JSV�4MVEXIW²��LXXT��[[[�WPMHIWLEVI�RIX�HQG��LEXW�startup-metrics-for-pirates-seedcamp-2008-presentation

�� (ER�7MVSOIV��±,S[�3FEQE�6EMWIH��1MPPMSR�F]�6YRRMRK�E�7MQTPI�)\TIVMQIRX�²�LXXT��FPSK�STXMQMÎP]�GSQ�LS[�SFEQE�VEMWIH��QMPPMSR�F]�VYRRMRK�ER�I\T

0)%2�0%92',4%(�)(9'%8367�8)%',-2+�,%2(&33/

Watch: 1EVO�4MRGYW��±5YMGO�ERH�*VIUYIRX�4VSHYGX�8IWXMRK�ERH�%WWIWWQIRX²��LXXT��IGSVRIV�WXERJSVH�IHY�EYXLSV1EXIVMEP-RJS�LXQP#QMH!��

Deliverable for Feb 8th

�� Submit interview notes; present results in class.

�� (MH�ER]XLMRK�GLERKI�EFSYX�:EPYI�4VSTSWMXMSR�SV�'YWXSQIVW�9WIVW�SV�'LERRIP#

�� Present and explain your marketing campaign. What worked best and why?


___________________________________________________________________

6. Feb 14th: The Revenue Model


�� What’s a revenue model? What types of revenue streams are there? How does it differ on the web versus other channels?

�� Action: What’s your revenue model?

�� How will you package your product into various offerings if you have more than one?

�� How will you price the offerings?

�� ;LEX�EVI�XLI�OI]�½RERGMEPW�QIXVMGW�JSV�]SYV�FYWMRIWW�QSHIP#�

�� 8IWX�TVMGMRK�MR�JVSRX�SJ��GYWXSQIVW�SR�XLI�[IF��XIR�XS�½JXIIR�GYWXSQIVW�RSR�[IF��

�� What are the risks involved?

�� What are your competitors doing?

Read:

.SLR�1YPPMRW��6ERH]�/SQMWEV��Getting to Plan B�� TEKIW��

Deliverable for Feb 15th :

�� Assemble an income statement for your business model. Include lifetime value calcula-tion for customers.

�� (VE[�XLI�HMEKVEQ�SJ�TE]QIRX�¾S[W�


�� (MH�ER]XLMRK�GLERKI�EFSYX�:EPYI�4VSTSWMXMSR�SV�'YWXSQIVW�9WIVW��'LERRIP��(IQERH�'VIEXMSR��6IZIRYI�1SHIP#


__________________________________________________________________

PAGE95

© 2012 Steve Blank

8. Feb 21st: Partners


�� Who are partners? Strategic alliances, competition, joint ventures, buyer supplier, licensees.

�� Action: What partners will you need?

�� Why do you need them and what are risks?

�� Why will they partner with you?

�� What’s the cost of the partnership?

�� Talk to actual partners.

�� ;LEX�EVI�XLI�FIRI½XW�JSV�ER�I\GPYWMZI�TEVXRIVWLMT#

Deliverable for Feb 22nd

�� Assemble an income statement for the your business model.


�� (MH�ER]XLMRK�GLERKI�EFSYX�:EPYI�4VSTSWMXMSR�SV�'YWXSQIVW�9WIVW��'LERRIP�� Demand Creation?

�� What are the incentives and impediments for the partners?


___________________________________________________________________

9. Feb 28th: Key Resources & Cost Structure


�� What resources do you need to build this business? How many people? What kind? Any hardware or software you need to buy? Any IP you need to license? How much money HS�]SY�RIIH�XS�VEMWI#�;LIR#�;L]#�-QTSVXERGI�SJ�GEWL�¾S[W#�;LIR�HS�]SY�KIX�TEMH�vs. when do you pay others?

�� Action: What’s your expense model?

�� ;LEX�EVI�XLI�OI]�½RERGMEPW�QIXVMGW�JSV�costs in your business model?

�� Costs vs. ramp vs. product iteration?

�� Access to resources: What is the best place for your business?

�� ;LIVI�MW�]SYV�GEWL�¾S[�FVIEO�IZIR�TSMRX#

Deliverable for March 1st

�� Assemble a resources assumptions spreadsheet. Include people, hardware, software, TVSXSX]TIW��½RERGMRK��IXG��

�� (VE[�XLI�HMEKVEQ�SJ�E�½RERGI�ERH�STIVEXMSRW�XMQIPMRI�

�� When will you need these resources?

�� 6SPP�YT�EPP�XLI�GSWXW�JVSQ�TEVXRIVW��VIWSYVGIW�ERH�EGXMZMXMIW�MR�E�WTVIEHWLIIX�F]�XMQI�


0)%2�0%92',4%(�)(9'%8367�8)%',-2+�,%2(&33/

�� (MH�ER]XLMRK�GLERKI�EFSYX�:EPYI�4VSTSWMXMSR�SV�'YWXSQIVW�9WIVW��'LERRIP��(IQERH�'VIEXMSR�4EVXRIVW#�


Guest:

Alexander Osterwalder

For March 1st or 8th

�� 4VITEVI��¯QMRYXI�8IEQ�0IWWSRW�0IEVRIH�4VIWIRXEXMSR

�� 6IZMI[��%YXSRSQS[��1EQQSTXMGW��%KSVE��ERH�4IVWSREP�0MFVEVMIW�4VIWIRXEXMSRW

__________________________________________________________________

10. March 6th: Team Presentations of Lessons Learned (1st half of the class)

Deliverable:

Each team will present a thirty-minute “Lessons Learned” presentation about their business.

_______________________________________________________________

11. March 13th: Team Presentations of Lessons Learned (2nd half of the class)

Deliverable: Each team will present a thirty-minute “Lessons Learned” presentation about their business.

LESSONS LEARNED—DEMO DAY PRESENTATION FORMAT

�� Deliverable: Each team will present a thirty-minute “Lessons Learned” presentation about their business.

�� Slide 1—Team Name, with a few lines of what your initial idea was and the size of the opportunity

�� Slide 2—Team members—name, background, expertise and your role for the team

�� 7PMHI��°&YWMRIWW�1SHIP�'ERZEW�:IVWMSR��9WI�XLI�3WXIV[EPHIV�'ERZEW��HS�RSX�QEOI�up your own).

�� Here was our original idea.

�� 7PMHI��°7S�LIVI´W�[LEX�[I�HMH��I\TPEMR�LS[�]SY�KSX�SYX�SJ�XLI�FYMPHMRK

�� 7PMHI��°7S�LIVI´W�[LEX�[I�JSYRH��[LEX�[EW�VIEPMX] �WS�XLIR��©

�� 7PMHI��°&YWMRIWW�1SHIP�'ERZEW�:IVWMSR��YWI�XLI�3WXIV[EPHIV�'ERZEW�HS�RSX�QEOI�up your own).

�� We iterated or pivoted…explain why and what you found.

�� 7PMHI��°7S�LIVI´W�[LEX�[I�HMH��I\TPEMR�LS[�]SY�KSX�SYX�SJ�XLI�FYMPHMRK

�� 7PMHI��°7S�LIVI´W�[LEX�[I�JSYRH��[LEX�[EW�VIEPMX] �WS�XLIR�

�� 7PMHI��°&YWMRIWW�1SHIP�'ERZEW�:IVWMSR��YWI�XLI�3WXIV[EPHIV�'ERZEW�HS�RSX�QEOI�up your own).

�� We iterated or pivoted…explain why and what you found.

�� )XG�©)ZIV]�TVIWIRXEXMSR�VIUYMVIW�EX�PIEWX�XLVII�&YWMRIWW�1SHIP�'ERZEW�WPMHIW��

PAGE97

© 2012 Steve Blank

�� Side n—“So here’s where we ended up.” Talk about:

�� What you learned

�� Whether you think this a viable business,

�� Whether you want to purse it after the class, etc.

Final Slides—Click through each one of your business model canvas slides.

0)%2�0%92',4%(�)(9'%8367�8)%',-2+�,%2(&33/

ENGINEERING 245: FREQUENTLY ASKED QUESTIONS (FAQ)

Enrollment�� Admission is by teams of four.

�� Teams must interview with the teaching team prior to the class start date.

�� Enrollment application closes the week before the class.

�� =SYV�IRXMVI�XIEQ�QYWX�EXXIRH�XLI�½VWX�GPEWW�XS�FI�IRVSPPIH�

�� 8LI�GPEWW�PMWX�ERH�ER]�[EMX�PMWXIH�WXYHIRXW�[MPP�FI�TSWXIH�SRPMRI�F]�QMHRMKLX�.ERYEV]��th

�� There’s a mandatory student mixer prior to the class Wednesday, December xx and ]]]�EX��41�EX�XLI�8VIILSYWI��7XYHIRXW�[MPP�JSVQ�XIEQW�ERH�WIPIGX�XLIMV�TVIJIVVIH�QIR-tors.

Students�� )RKV��MW�SRP]�STIR�XS�KVEHYEXI�WXYHIRXW�EX�7XERJSVH�JVSQ�ER]�WGLSSP�SV�HITEVXQIRX�

�� Non-graduates and non-students can serve as advisors to the teams, but our priority is providing a learning environment for Stanford graduate students.

�� Each team must have at least four Stanford graduate students.

�� Exceptions for team size and external members will be made on a case-by-case basis. Note your special team needs on your application form. We will let you know on Day One of the class.

�� 8LIVI�EVI�RS�VIQSXI�STXMSRW�JSV�XLMW�GSYVWI°]SY�QYWX�XEOI�)RKV��SR�GEQTYW�

�� 2S�EYHMXSVW��=SY�QYWX�XEOI�XLI�GSYVWI�JSV�GVIHMX��=SY�QE]�RSX�EYHMX�)RKV��

�� This is very intense class with a very high workload. We expect you to invest at least ½ZI�XS�XIR�LSYVW�TIV�[IIO�

�� =SY�GERRSX�QMWW�XLI�½VWX�GPEWW�[MXLSYX�TVMSV�ETTVSZEP�

Company IdeasIs this class for web startups only?No, anyone with any idea and preferably a product can form or join a team.

What if I do want to test a web idea?Great. The only condition is that you have to get the site up and deliver the minimum product JIEXYVI�WIX�HYVMRK�XLI�UYEVXIV�

Team FormationDo I need to be part of a team before I enroll in class? Yes.

Does my team need to have a product/business idea to enroll in E245? Yes

How do teams form? Will I be assigned to a team? We do not assign members to teams. The mixer sessions will introduce you to potential team members.

How many people compose a team? Typically four.

PAGE99

© 2012 Steve Blank

Attendance and Participation�� =SY�GERRSX�QMWW�XLI�½VWX�GPEWW�[MXLSYX�TVMSV�ETTVSZEP�

�� -J�]SY�GERRSX�GSQQMX�XS�½JXIIR�XS�X[IRX]�LSYVW�E�[IIO�SYXWMHI�XLI�GPEWWVSSQ��XLMW� class is not for you.

�� 8LI�WXEVXYT�GYPXYVI�EX�XMQIW�GER�JIIP�FVYWUYI�ERH�MQTIVWSREP��FYX�MR�VIEPMX]�MW�JSGYWIH�and oriented to create immediate action in time- and cash-constrained environments.

�� -J�HYVMRK�XLI�UYEVXIV�]SY�½RH�]SY�GERRSX�GSRXMRYI�XS�GSQQMX�XLI�XMQI��MQQIHMEXIP]�notify your team members and teaching team and drop the class.

�� If you expect to miss a class, please let the TAs and your team members know ahead of time via email.

�� We cold call in class. Be prepared.

�� We expect your attention during our presentations and those of your fellow students. If you’re getting bored, tired, or inattentive, step outside for some air. If we see reading email or browsing the web we will ask you to leave the class.

�� ;I�EWO�XLEX�]SY�YWI�E�REQI�GEVH�HYVMRK�IZIV]�WIWWMSR�SJ�XLI�UYEVXIV��

Intellectual PropertyWho owns the intellectual property tested in the Business Model? 1. =SY�S[R�[LEXIZIV�MRXIPPIGXYEP�TVSTIVX]��TEXIRXW��LEVH[EVI��EPKSVMXLQW��IXG� �]SY�

brought to class with you. No one has claim to anything you brought to class.

2. =SY�EPP�S[R�ER]�MRXIPPIGXYEP�TVSTIVX]�HIZIPSTIH�JSV�XLI�GPEWW��WYGL�EW�GSHI�JSV�E�[IF�based project) developed during class. If a team is working with a Stanford related-XIGLRSPSK]��M�I��IMXLIV�VIWIEVGL�JVSQ�SRI�SJ�XLI�XIEQ�QIQFIVW�SV�E�7XERJSVH�TEXIRX ��]SY�QYWX�GLIGO�[MXL�XLI�7XERJSVH�3J½GI�SJ�8IGLRSPSK]��0MGIRWMRK��380 �XS�FIXXIV�understand any Stanford licensing and royalties issues.

�� =SY�ERH�]SYV�XIEQ�QIQFIVW�RIIH�XS�HMWGPSWI�XS�IEGL�SXLIV�[LEX�-4�0MGIRWMRK�VMKLXW�ER]�company you’ve worked at has to inventions you make at school.

�� If any of you decide to start a company based on the class, you own only what was written and completed in the class. You have no claim for work done before or after XLI�GPEWW�UYEVXIV�

� If a subset of the team decides to start a company they do NOT “owe” anything to any other team members for work done in and during the class. All team members are free XS�WXEVX�XLI�WEQI�GSQTER]��[MXLSYX�TIVQMWWMSR�SJ�XLI�SXLIVW��;I�[SYPH�LSTI�XLEX�E�modicum of common sense and fairness would apply.)

I feel my idea/Business Model may become a real company and the “next killer app,” and I want to own it myself. What should I do? 8LMW�MW�QSVI�XLER�PMOIP]�XLI�[VSRK�GPEWW�XS�XEOI��=SYV�WPMHIW��RSXIW�ERH�½RHMRKW�[MPP�FI�TYFPMGP]�shared. Your team owns everything done in class. Discuss Intellectual Property rights with your team from the beginning. If you can’t come to agreement with the team, join another XIEQ��TMGO�ERSXLIV�TVSNIGX��SV�HVST�XLI�GPEWW��6IQIQFIV��ER]XLMRK�]SY�HS�ERH�PIEVR�MR�XLI�class is public.

Will my Intellectual Property rights be protected when I discuss my ideas with the class? NO. This is an open class. There are no non-disclosures. All your presentations and Customer Discovery and Validation notes, business model canvas, blogs and slides can, and more likely will, be made public.

0)%2�0%92',4%(�)(9'%8367�8)%',-2+�,%2(&33/

�� This class is not an incubator. At times you will learn by seeing how previous classes solved the same class of problem by looking at their slides, notes, and blogs.

�� Keep in mind that successful companies are less about the original idea and more about XLI�PIEVRMRK��HMWGSZIV]��ERH�I\IGYXMSR��8LEX´W�XLI�TYVTSWI�SJ�XLMW�GPEWW� �8LIVIJSVI�]SY�must be prepared to share your ideas openly with the class. It is a forum for you to “bounce” your ideas off your peers.

I’m not comfortable sharing what I learn with others. What should I do? Don’t take this class.

Help!What kind of support will our team have? The teaching team consists of three professors, two TAs, and at least two mentors per team. A mentor is an experienced entrepreneur or venture capitalist assigned to your team. They’ve volunteered to help with the class and your team because they love startups. Their job is to guide you as you get out of the building.

How often can we/should we meet with our mentors?Your mentor is expecting to meet with you at least every two weeks face-to-face. You can email them or meet with them more often as they have time.

Can I talk to a mentor not assigned to my team?By all means, do so. All the mentors are happy to help. However, they cannot support your team full-time unless your mentor decides to swap places with them.

I have a busy schedule and my mentor can’t meet when I want them to.Mentors have day jobs. Asking them to meet or reply to you ASAP is not acceptable. So plan ahead to allow for a reasonable amount of time for a reply or meeting. Be concise with your VIUYIWX�ERH�FI�VIWTIGXJYP�SJ�XLIMV�XMQI�

I need help now.=SY�½VWX�WXST�MW�]SYV�8%W��)QEMP�SV�WMX�HS[R�[MXL�XLIQ�HYVMRK�XLI�[IIO�MJ�]SY�LEZI�E�TVSF-PIQ��=SYV�TVSJIWWSVW�LEZI�SJ½GI�LSYVW�IZIV]�8YIWHE]�EX��TQ��-J�]SY�RIIH�WSQIXLMRK�VIWSPZIH�sooner, email us.

Who are the Mentors?See the mentor list at the end of this document and on the class website.

Team DynamicsWhat roles are in each team? Traditionally, each team member is part of the “customer development team.” You have to ½KYVI�SYX�LS[�XS�EPPSGEXI�XLI�[SVO�

What if my team becomes dysfunctional? 4VITEVI�XS�[SVO�XLVSYKL�HMJ½GYPX�MWWYIW��-J�XLI�WMXYEXMSR�GSRXMRYIW��ETTVSEGL�XLI�XIEGLMRK�team. Do not�[EMX�YRXMP�XLI�IRH�SJ�XLI�UYEVXIV�XS�VEMWI�XLI�MWWYI��

What if one of my teammates is not “pulling his/her weight”? Try to resolve it within your team. If the situation continues longer than a week, please ap-TVSEGL�XLI�XIEGLMRK�XIEQ��*MREP�KVEHIW�[MPP�EPWS�VI¾IGX�MRHMZMHYEP�TEVXMGMTEXMSR�ERH�GSRXVMFY-tion.

PAGE101

© 2012 Steve Blank

GradingHow do you determine our grade?�� -RHMZMHYEP�TEVXMGMTEXMSR�MR�GPEWW��=SY�[MPP�FI�KMZMRK�JIIHFEGO�XS�]SYV�TIIVW�

�� 3YX�SJ�XLI�FYMPHMRK�TVSKVIWW�EW�QIEWYVIH�F]�FPSK�[VMXI�YTW�each week.

�� Team members must:

�� 9THEXI�FYWMRIWW�QSHIP�GERZEW�weekly

�� Identify which team member did which portion of the work

�� Provide a detailed report on what the team did each week

�� Provide a weekly email of team member participation

�� XIEQ�[IIOP]�±PIWWSR�PIEVRIH²�WYQQEVMIW��WII�ETTIRHM\�JSV�JSVQEX

�� XIEQ�½REP�VITSVX��WII�ETTIRHM\�JSV�JSVQEX

Does everyone in the team get the same grade? No. Individual participation and contribution is also considered. You get to grade your team members on their contribution.

What kind of feedback can I expect? 'SRXMRYEP�JIIHFEGO�[IIOP]��7YFWXERHEVH�UYEPMX]�[SVO�[MPP�FI�MQQIHMEXIP]�FVSYKLX�XS� your attention.

Can I take this class Pass/NoCredit? No. Letter grade only.

0)%2�0%92',4%(�)(9'%8367�8)%',-2+�,%2(&33/

Teaching TeamSteve Blank—Lecturer, Stanford Technology Ventures [email protected] @sgblank��

Jon Feiber—General Partner Mohr [email protected]��

Ann Miura-Ko General Partner Floodgate

Teaching AssistantsBhavik Joshi—Better Place, Bus Dev Asia, Co-Founder Berkeley Stanford Cleantech Confer-ence [email protected]@joshi_bhavik��

Steve Blank

After twenty-one years in eight high technology companies, Steve VIXMVIH�MR��,I�GS�JSYRHIH�LMW�PEWX�GSQTER]��)�TMTLER]��MR�LMW�PMZMRK�VSSQ�MR��,MW�SXLIV�WXEVXYTW�MRGPYHI�X[S�WIQMGSRHYG-tor companies, Zilog and MIPS Computers; a workstation company 'SRZIVKIRX�8IGLRSPSKMIW��E�GSRWYPXMRK�WXMRX�JSV�E�KVETLMGW�LEVH[EVI�WSJX[EVI�WTMRSYX�SJ�4M\EV��E�WYTIVGSQTYXIV�½VQ��%VHIRX��E�GSQTYX-er peripheral supplier, SuperMac; a military intelligence systems sup-TPMIV��ERH�ER�)70�ERH�ZMHIS�KEQI�GSQTER]��6SGOIX�7GMIRGI�+EQIW�

After he retired, Steve wrote a book about building early stage companies called Four Steps to the Epiphany. He moved from being

an entrepreneur to teaching entrepreneurship to both undergraduate and graduate students EX�9�'��&IVOIPI]��7XERJSVH�9RMZIVWMX]��ERH�XLI�'SPYQFME�9RMZIVWMX]�&IVOIPI]�.SMRX�)\IGYXMZI�MBA program.

-R��7XIZI�[EW�E[EVHIH�XLI�7XERJSVH�9RMZIVWMX]�9RHIVKVEHYEXI�8IEGLMRK�%[EVH�MR�XLI�department of Management Science and Engineering. In 2010, he was awarded the Earl F. 'LIMX�3YXWXERHMRK�8IEGLMRK�%[EVH�EX�9�'��&IVOIPI]�,EEW�7GLSSP�SJ�&YWMRIWW�

Steve followed his curiosity about why entrepreneurship blossomed in Silicon Valley and was stillborn elsewhere. It has led to several talks on The Secret History of Silicon Valley.

-R��XLI�+SZIVRSV�SJ�'EPMJSVRME�ETTSMRXIH�7XIZI�XS�WIVZI�SR�XLI�'EPMJSVRME�'SEWXEP�'SQ-mission, the public body which regulates land use and public access on the California coast. ,I´W�SR�XLI�FSEVH�SJ�%YHYFSR�'EPMJSVRME��ERH�MXW�TEWX�GLEMV ��-R��LI�NSMRIH�XLI�FSEVH�SJ�XLI�'EPMJSVRME�0IEKYI�SJ�'SRWIVZEXMSR�:SXIVW��'0': �

7XIZI�[EW�XLI�GSQQIRGIQIRX�WTIEOIV�EX�4LMPEHIPTLME�9RMZIVWMX]�MR��

PAGE103

© 2012 Steve Blank

Jon Feiber It was a chance meeting that brought Jon Feiber into the venture industry. Jon, then a vice president at Sun Micro-systems, was considering leaving Sun for a startup. After a preliminary discussion about the startup at Mohr Davidow, LI�KSX�ER�SJJIV�XS�NSMR�XLI�½VQ�

Today, he is among Mohr Davidow’s most senior partners ERH�MW�VIWTSRWMFPI�JSV�QER]�SJ�XLI�½VQ´W�WYGGIWWJYP�MRZIWX-ments. Most of Jon’s investments harness emerging technol-ogy. “I like the intersection of emerging technology and big markets—geeky projects,” he admits.

He began his career as a software programmer for main-frame maker Amdahl Corp. “I tend towards entrepreneurs who have real insight into hard problems and a sense of their need by customers.”

Mohr Davidow, he believes, will remain one of the technology industry’s most successful inves-XSVW�FIGEYWI�SJ�MXW�JEMXL�ERH�GSQQMXQIRX�XS�IRXVITVIRIYVW��±8LMW�½VQ�LEW�EP[E]W�FIIR�ORS[R�for being direct and open in its relationships with entrepreneurs,” he explains. “Our enthusi-asm for the entrepreneur is matched by depth of knowledge and experience in the areas that we choose to invest in.”

“Being a venture capitalist is one of the greatest jobs you can have,” he continues. “I get to hang out with the smartest people in the world and help them turn their ideas into world class companies.”

Jon holds a bachelor’s degree in computer science and mathematics and astro-physics from XLI�9RMZIVWMX]�SJ�'SPSVEHS�

0)%2�0%92',4%(�)(9'%8367�8)%',-2+�,%2(&33/

12. 5-Day Syllabus—ExampleCOLUMBIA B7739-002: ADVANCED ENTREPRENEURSHIP

Instructors: Steve Blank, Bob Dorf, and Alexander Osterwalder

Credits��

TAs: Christopher Fong and Dennis Kwon

Days and Times��1SRHE]°*VMHE]��EQ°��TQ� �

Location��1SRHE]°8LYVWHE]��;EVVIR��*VMHE]��;EVVIR��

Texts: Steve Blank and Bob Dorf, The Startup Owner’s Manual

� %PI\ERHIV�3WXIV[EPHIV��=ZIW�4MKRIYV��Business Model Generation

Prerequisite��-RXIVIWX�TEWWMSR�MR�HMWGSZIVMRK�LS[�ER�MHIE�GER�FIGSQI�E�VIEP�GSQTER]�

Pre-class Assignments:

�� 6IEH�TEKIW��SJ�Business Model Generation.

�� 6IEH�TEKIW��SJ�The Startup Owner’s Manual

�� 6IZMI[�GSYVWI�WXVEXIK]�EX�LXXT��WXIZIFPERO�GSQ�GEXIKSV]�PIER�PEYRGLTEH��

�� 6IZMI[�XIEQ�TVIWIRXEXMSRW�LXXT��[[[�WPMHIWLEVI�RIX�WFPERO�XEKKIH�M�GSVTW�ERH�LXXT��[[[�WPMHIWLEVI�RIX�WFPERO�XEKKIH�WXERJSVH��RSXI�XLI�RYQFIV�SJ�GYWXSQIV�GSRXEGXW�each team made over the course.)

Each team comes into the 1st day of class:

�� With a Business Model Canvas. You will present for three minutes on Day One.

�� 4VITEVIH�XS�QEOI�JSYV�SV�QSVI�GYWXSQIV�MRHYWXV]�GSRXEGXW�MR�2I[�=SVO�[LIR�GPEWW�M s not in session

Goal: provide an experiential learning opportunity showing how startups and new ventures are built.

Course Description:

This course provides real world, hands-on learning on what it’s like to actually start a scalable company. This class is not about how to write a business plan. It’s not an exercise on how smart you are in a classroom, or how well you use the research library to size markets. And the end result is not a PowerPoint slide deck for a VC presentation.

This is a practical class—essentially a lab, not a theory or “book” class. Our goal, within the constraints of a classroom and a limited amount of time, is to create an entrepreneurial experience for you with all of the pressures and demands of the real world in an early stage startup.

You will be getting your hands dirty talking to customers, partners, and competitors, as you encounter the chaos and uncertainty of how a startup actually works. You’ll work in teams learning how to turn a great idea into a great company. You’ll learn how to use a business model to brainstorm each part of a company and customer development to get out of the

PAGE105

© 2012 Steve Blank

GPEWWVSSQ�XS�WII�[LIXLIV�ER]SRI�SXLIV�XLER�]SY�[SYPH�[ERX�YWI�]SYV�TVSHYGX��)EGL�HE]�[MPP�be a new adventure outside the classroom as you test each part of your business model and then share your hard-earned knowledge with the rest of the class.

7II�LXXT��WXIZIFPERO�GSQ�GEXIKSV]�PIER�PEYRGLTEH��JSV�E�REVVEXMZI�SJ�E�TEWX�GPEWW�

Class CultureStartups communicate much differently than inside a university or a large company. It is dra-matically different from the corporate culture most of you are familiar with. At times it can JIIP�FVYWUYI�ERH�MQTIVWSREP��FYX�MR�VIEPMX]�MW�JSGYWIH�ERH�SVMIRXIH�XS�GVIEXI�immediate action in time- and cash-constrained environments. We have limited time and we push, challenge, ERH�UYIWXMSR�]SY�MR�XLI�LSTI�]SY�[MPP�UYMGOP]�PIEVR��;I�[MPP�FI�HMVIGX��STIR��ERH�XSYKL°NYWX�like the real world. We hope you can recognize that these comments aren’t personal, but part of the process.

Amount of WorkThis class requires a lot of work on your part, certainly compared to many other classes. This class is a simulation of what startups and entrepreneurship are like in the real world: chaos, uncer-XEMRX]��MQTSWWMFPI�HIEHPMRIW�MR�MRWYJ½GMIRX�XMQI��GSR¾MGXMRK�MRTYX��IXG��

Team OrganizationThis class is team-based. Working and studying will be done in teams.

Team projects can be software, physical products, or services of any kind. The teams will self-SVKERMÎ�ERH�IWXEFPMWL�MRHMZMHYEP�VSPIW�SR�XLIMV�S[R��8LIVI�EVI�RS�JSVQEP�')3�:4W°NYWX�XLI�constant parsing and allocating of the tasks that need to be done.

Class RoadmapEach day’s class is organized around:

�� Student presentations on their “lessons learned” from getting out of the building and iterating or pivoting their business model.

�� Comments and suggestions from other teams, and teaching teams, on the lessons learned.

�� %�PIGXYVI�SR�SRI�SJ�XLI�RMRI�FYMPHMRK�FPSGOW�SJ�E�FYWMRIWW�QSHIP��WII�HMEKVEQ�FIPS[��taken from Business Model Generation).

“Genius is the ability to make the most mistakes in the shortest amount of time.”

___________________________________________________________________

MONDAY, APRIL 16TH

8MQI�� °��EQ�

Lecture 0: Class Introduction

�� Teaching Team Introductions

�� Class Goals

�� Teaching Philosophy

�� Expectations of You

�� 8IEQ�-RXVSHYGXMSRW¯IEGL�SJ�XLI�XIEQW�[MPP�TVIWIRX�MXW�FYWMRIWW�QSHIP�GERZEW�

0)%2�0%92',4%(�)(9'%8367�8)%',-2+�,%2(&33/

_______________________________________________________________

8MQI�� EQ°��TQ�

Working Lunch

_______________________________________________________________

8MQI�� °��TQ�

Lecture 1: Business Model/Customer Development

'PEWW�0IGXYVI��8LI�&YWMRIWW�1SHIP�'YWXSQIV�(IZIPSTQIRX

What’s a business model? What are the nine parts of a business model? What are hypotheses? What is the Minimum Feature Set? What experiments are needed to run to test business model hypotheses? What’s “getting out of the building?” What is market size? How do you determine whether a business model is worth doing?

_______________________________________________________________

8MQI�� °��TQ�

Lecture 2: Customer Discovery—The Art

Class Lecture: How to Talk to Customers

9RHIVWXERHMRK�XLI�TVSFPIQ��YRHIVWXERHMRK�XLI�WSPYXMSR��;L]�MX´W�HMJJIVIRX�XLER�WIPPMRK�

_______________________________________________________________

8MQI�� °��TQ��WXEVX�QE]�FI�HIPE]IH

Get out of the building!

We expect you to have set up meetings to talk to potential customers in the New York Area.

6IEH�

�� The Startup Owner’s Manual��TEKI��

�� +MJJ�'SRWXEFPI��±��8MTW�JSV�)EVP]�'YWXSQIV�(IZIPSTQIRX�-RXIVZMI[W�²�LXXT��KMJJGSR-WXEFPI�GSQ��XMTW�JSV�IEVP]�GYWXSQIV�HIZIPSTQIRX�MRXIVZMI[W�

In a startup there is no “spare time.”

___________________________________________________________________

(IPMZIVEFPIW�JSV�XSQSVVS[��8YIWHE]��%TVMP��XL�

6IEH��

�� Business Model Generation��TT��

�� The Startup Owner’s Manual��VIZMI[�TEKIW��

�� 7XIZI�&PERO��±;LEX´W�E�7XEVXYT#�*MVWX�4VMRGMTPIW�²�LXXT��WXIZIFPERO�GSQ��[LEXW�E�WXEVXYT�½VWX�TVMRGMTPIW�

PAGE107

© 2012 Steve Blank

�� 7XIZI�&PERO��±1EOI�2S�0MXXPI�4PERW°(I½RMRK�XLI�7GEPEFPI�7XEVXYT�²�LXXT��WXIZIFPERO�GSQ��QEOI�RS�PMXXPI�TPERW�¯�HI½RMRK�XLI�WGEPEFPI�WXEVXYT�

�� 7XIZI�&PERO��±%�7XEVXYT�MW�2SX�E�7QEPPIV�:IVWMSR�SJ�E�0EVKI�'SQTER]�²�LXXT��WXIZIFPERO�GSQ��E�WXEVXYT�MW�RSX�E�WQEPPIV�ZIVWMSR�SJ�E�PEVKI�GSQTER]�

You will be presenting your results tomorrow morning.

8IEQ�4VIWIRXEXMSR�JSV�XSQSVVS[��8YIWHE]��%TVMP��XL�

�� Market size

�� Type of business: IP, licensing, startup, unknown

�� Proposed experiments to test customer segment, value proposition, channel and rev-enue model of the hypotheses:

�� ;LEX�GSRWXMXYXIW�E�TEWW�JEMP�WMKREP�JSV�IEGL�XIWX��I�K��EX�[LEX�TSMRX�[SYPH�]SY�WE]�XLEX�your hypothesis wasn’t even close to correct)?

______________________________________________________________________________________________________________________

TUESDAY, APRIL 17TH

8MQI�� °��EQ��

Team Presentations

8IEQ�4VIWIRXEXMSRW��QMRYXIW�IEGL��EPP�XIEQW

�� 7PMHI��'SZIV�WPMHI��ETTIRHM\�%��WPMHI��

�� Slide 2: Current business model canvas with any changes marked

�� 7PMHI��8IPP�YW�EFSYX�]SYV�1EVOIX�WMÎ��8%1�7%1�8EVKIX

�� 7PMHI��;LEX�X]TI�SJ�FYWMRIWW�EVI�]SY�FYMPHMRK#��-4��PMGIRWMRK��WXEVXYT��YRORS[R

�� 7PMHI��;LEX�EVI�]SYV�TVSTSWIH�I\TIVMQIRXW�XS�XIWX�GYWXSQIV�WIKQIRX��ZEPYI�TVSTSWM-tion, channel and revenue model of the hypotheses:

�� ;LEX�GSRWXMXYXIW�E�TEWW�JEMP�WMKREP�JSV�IEGL�XIWX��I�K��EX�[LEX�TSMRX�[SYPH�]SY�WE]�that your hypothesis wasn’t even close to correct)?

___________________________________________________________________

8MQI�� EQ°��TQ� � �

Lecture 3: Value Proposition / Customer Segments

Class Lecture: Value Proposition

What is your product or service? How does it differ from an idea? Why will people want it? Who’s the competition and how does your customer view these competitive offerings? Where’s the market? What’s the minimum feature set? What’s the Market Type? What was ]SYV�MRWTMVEXMSR�SV�MQTIXYW#�;LEX�EWWYQTXMSRW�HVSZI�]SY�XS�XLMW#�;LEX�YRMUYI�MRWMKLX�HS�]SY�have into the market dynamics or into a technological shift that makes this a fresh opportu-nity?

0)%2�0%92',4%(�)(9'%8367�8)%',-2+�,%2(&33/

;LS´W�XLI�GYWXSQIV#�9WIV#�4E]IV#�,S[�EVI�XLI]�HMJJIVIRX#�;L]�HS�XLI]�FY]#�,S[�GER�]SY�reach them? How is a business customer different from a consumer? What’s a multi-sided market? What’s segmentation? What’s an archetype?

_______________________________________________________________

8MQI�� °��TQ�

Working Lunch

_______________________________________________________________

8MQI�� °��TQ�

Lecture 4: Business Model Canvas Examples

Class Lecture: Best practice examples in the evolution of business models.

___________________________________________________________________

8MQI�� °��TQ�

Lecture 5: Corporate Entrepreneurship—Part I

Class Lecture: The Startup inside of a company

Sustaining versus disruptive innovation. Impediments to innovation.

___________________________________________________________________

PAGE109

© 2012 Steve Blank

8MQI�� ETTVS\� �



___________________________________________________________________

Deliverables for Wednesday, April 18th

�� 6IEH��

�� Business Model Generation��TEKIW��ERH��

�� The Startup Owner’s Manual��TEKIW��ERH��

Team Presentation for tomorrow, Wednesday, April 18th

�� Get out of the building and talk to as many people as you can.

�� What were your value proposition hypotheses?

�� Get out of the building and begin to talk to customers for April 18th .

�� What did potential customers think about your value proposition hypotheses?


______________________________________________________________________________________________________________________

WEDNESDAY, APRIL 18th

8MQI�� EQ°��TQ��

Team Presentations

8IEQ�4VIWIRXEXMSRW��QE\MQYQ�XIR�QMRYXIW�IEGL��EPP�XIEQW

�� Slide 1: Cover slide


�� 7PMHI��°R��;LEX�HMH�]SY�PIEVR�EFSYX�]SYV�ZEPYI�TVSTSWMXMSR�JVSQ�XEPOMRK�XS�]SYV� ½VWX�GYWXSQIVW#

�� Hypothesis: Here’s what we thought

�� Experiments: So here’s what we did

�� 6IWYPXW��7S�LIVI´W�[LEX�[I�JSYRH

�� Iterate: So here’s what we are going to do next

___________________________________________________________

Lecture 6: Channels / Get, Keep, Grow / Revenue Model

'PEWW�0IGXYVI��(MWXVMFYXMSR�'LERRIPW�'YWXSQIV�6IPEXMSRWLMTW�6IZIRYI�1SHIP

0)%2�0%92',4%(�)(9'%8367�8)%',-2+�,%2(&33/

What’s a channel? Physical versus virtual channels. Direct channels, indirect channels, OEM. 1YPXM�WMHIH�QEVOIXW��&�XS�&�ZIVWYW�&�XS�'�GLERRIPW�ERH�WEPIW��FYWMRIWW�XS�FYWMRIWW�ZIVWYW� business to consumer).

How do you Get, Keep and Grow customers? How does it differ on the web versus other channels? Evangelism vs. existing need or category? General Marketing, Sales Funnel, etc. How does demand creation differ in a multi-sided market?

What’s a revenue model? What types of revenue streams are there? What are pricing tactics? How does revenue model and pricing differ on the web versus other channels? How does this differ in a multi-sided market?

___________________________________________________________________

8MQI�� °��TQ�

Working Lunch

___________________________________________________________________

8MQI�� °��TQ�


Class Lecture: Best practice examples

___________________________________________________________________

8MQI�� °��TQ�

Lecture 8 : Corporate Entrepreneurship—Part II

Class Lecture: The Startup inside of a company

Sustaining versus disruptive innovation. Impediments to innovation.

___________________________________________________________________

8MQI�� °��TQ



___________________________________________________________________

(IPMZIVEFPI�JSV�8LYVWHE]��%TVMP��XL�

6IEH��The Startup Owner’s Manual��TEKIW��

8IEQ�4VIWIRXEXMSR�JSV�8LYVWHE]��%TVMP��XL�

�� +IX�SYX�SJ�XLI�FYMPHMRK�ERH�XEPO�XS�XIR�XS�½JXIIR�TSXIRXMEP�GLERRIP�TEVXRIVW�JEGI�XS�JEGI��7EPIWQIR��3)1W��HMWXVMFYXSVW��IXG�

�� ;LEX�[IVI�]SYV�L]TSXLIWIW�EFSYX�[LS�[LEX�]SYV�GLERRIP�[SYPH�FI#�(MH�]SY�PIEVR�anything different?

PAGE111

© 2012 Steve Blank

�� Present and explain your marketing campaign. How will you get customers?

�� Did anything change about your Value Proposition?

______________________________________________________________________________________________________________________

THURSDAY, APRIL��XL

8MQI�� °��EQ��

Team Presentations

8IEQ�4VIWIRXEXMSRW��XIR�QMRYXIW�IEGL��EPP�XIEQW



�� 7PMHI��;LEX�HMH�]SY�PIEVR�EFSYX�]SYV�ZEPYI�TVSTSWMXMSR�JVSQ�XEPOMRK�XS�]SYV�½VWX�customers?





______________________________________________________________

8MQI�� °��EQ��

Guest Speaker: Fred Wilson, Union Square Ventures

___________________________________________________________________

8MQI�� EQ°��TQ�

Team Presentations: 10 minutes each (all teams)—continued

___________________________________________________________________

8MQI�� °��TQ�

Working Lunch

___________________________________________________________________

8MQI�� °��TQ�

Lecture 9: Partners, Key Resources & Activities

Class Lecture: Who are partners?

Strategic alliances, competition, joint ventures, buyer supplier, licensees. What resources do you need to build this business? How many people? What kind? Any hardware or software you need to buy? Any IP you need to license? How much money do you need to raise? When? Why?

0)%2�0%92',4%(�)(9'%8367�8)%',-2+�,%2(&33/

___________________________________________________________________

8MQI�� °��TQ�


Class Lecture: Best practice examples

___________________________________________________________________




Deliverables for Friday, April 20th:

6IEH��

�� Business Model Generation, pages 200-211

�� The Startup Owner’s Manual��TEKIW��

Final Team Presentation for Friday, April 20th

+IX�SYX�SJ�XLI�FYMPHMRK�ERH�XEPO�XS�XIR�XS�½JXIIR�GYWXSQIVW�

___________________________________________________________

___________________________________________________________

FRIDAY, APRIL 20TH

8MQI�� EQ°��TQ��

Team Final Presentations

8IEQ�4VIWIRXEXMSRW��QE\MQYQ�½JXIIR�QMRYXIW�IEGL��EPP�XIEQW



�� 7PMHI��;LEX�HMH�]SY�PIEVR�EFSYX�]SYV�ZEPYI�TVSTSWMXMSR�JVSQ�XEPOMRK�XS�]SYV�½VWX�customers?





___________________________________________________________________

Time: 12:00—1:00 pm

Lunch

___________________________________________________________________

PAGE113

© 2012 Steve Blank

Time: 1:00—2:00 pm

Team Final Presentations, continued

___________________________________________________________________


Lecture 11: Costs and Metrics that Matter

'PEWW�0IGXYVI��-QTSVXERGI�SJ�GEWL�¾S[W#�;LIR�HS�]SY�KIX�TEMH�ZW��[LIR�HS�]SY�TE]�SXLIVW#

Pivot or Proceed: What data you need to assemble, and how to determine whether you have validated your business model to the point where moving forward makes sense.

0)%2�0%92',4%(�)(9'%8367�8)%',-2+�,%2(&33/

13. Mentor Handbook—Sample

E245

The Lean LaunchPad

Mentor and Advisor Handbook

LXXT��WXERJSVH�IHY�KVSYT�I��GKM�FMR��

Classes meet 4:15 -7:05 pm

Yang and Yamazaki Environment and Energy (Y2E2) building—Room 111

Professors:

Steve Blank [email protected]

Jon Feiber [email protected]

%RR�1MYVE�/S� � � ERR$¾SSHKEXI�GSQ

Teaching assistants:

Thomas Haymore [email protected]

PAGE115

© 2012 Steve Blank

Welcome as a team mentor or advisor�MR�XLI�)RKV��Lean Launchpad course in Stanford School of Engineering.

Mentors�TPE]�ER�EGXMZI�VSPI�MR�[IIOP]�GSEGLMRK�SJ�E�WTIGM½G�XIEQ��

Advisors are on-call resources for the entire class.

The Role of MentorsAs a mentor, you are an extension of the teaching team responsible for the success or failure of one team with four students. In ten very short weeks your team has to 1) get outside the classroom and test all their business model hypotheses and 2) if it’s a web-based business get it up and running and if it’s a physical product, build a prototype.

Here’s what you are signing up for:

�� Offering your team strategic guidance and wisdom:

�� Offer business model suggestions

�� Identify and correct gaps in the teams business knowledge

�� Providing your team with tactical guidance every week:

�� 6IZMI[MRK�]SYV�XIEQ´W�weekly presentation before they present

�� Commenting weekly on your team’s Customer Discovery progress blog

�� 6IWTSRHMRK�XS�XLI�XIEGLMRK�XIEQ´W�GVMXMUYI�SJ�]SYV�XIEQ�

�� 6SPSHI\�LIPT°±;L]�HSR´X�]SY�GEPP�\#�0IX�QI�GSRRIGX�]SY�²�

�� 4YWLMRK�XLI�XIEQ�XS�QEOI�½ZI�XS�XIR�GYWXSQIV�GSRXEGXW�[IIO

�� Meeting one-on-one with the team at least twice during the class

�� 'LIGOMRK�MR�[MXL�XIEGLMRK�XIEQ�EX�GPEWWIW��ERH��XS�HMWGYWW�WXYHIRX�TVSKVIWW

8LI�1IRXSV�&VMI½RK�MW�8YIWHE]�.ERYEV]��XL�JVSQ��TQ��=�)��FYMPHMRK°6SSQ��

8LI�½VWX�GPEWW�JSPPS[W�JVSQ��TQ�

If you can’t commit to the time to be a mentor, consider being an Advisor.

The Role of AdvisorsAs an advisor, you are a class resource for your particular domain expertise.

Here’s what you are signing up for:

�� 6IWTSRH�XS�WXYHIRX�IQEMPW�TLSRI�GEPPW�[MXLMR�X[IRX]�JSYV�LSYVW

�� 7O]TI�GEPPW�[MXL�SRI�X[S�XIEQW�E�[IIO��EW�RIIHIH

Invitations to both Mentors/AdvisorsYou are welcome to attend any and all lectures

You’re invited to speak at a class for ten minutes on a subject of general interest

Course Goal: Lean StartupsProvide an experiential learning opportunity to see how entrepreneurs really build companies.

0)%2�0%92',4%(�)(9'%8367�8)%',-2+�,%2(&33/

In ten weeks, teach a four-person team how to transform a technology idea into a venture-scale business opportunity. Do it by having them get outside the classroom and test each element of their business model.

The goal is not a business plan, revenue plan, 5 year forecast, etc.

By the way, this is the class that the National Science Foundation has standardized to teach ��SJ�XLIMV�FIWX�WGMIRXMWXW�ERH�IRKMRIIVW��7II��LXXT��WXIZIFPERO�GSQ��IYVIOE�E�RI[�IVE�JSV�WGMIRXMWXW�ERH�IRKMRIIVW�

Mentors and Getting Out of the BuildingThe class is about teaching the students that the nine building blocks of a business model are simply hypotheses until they actually validate them with customers and partners. There are “no facts inside the building, they need to get outside.” This means as part of this class they need to talk to customers, channel partners, and domain experts and gather real-world data—for each part of their plan.

This can be a daunting and formidable task. To the best of your ability, help them network, teach them how to send email and make phone calls and run customer surveys. Open your rolodex to whatever level you feel comfortable.

Your role is to help the teams learn how to test their hypotheses about their business model.

Questions that are helpful are, “Have you considered x?” “Why don’t you look at company z and see what their business model is and compare it to yours?” or “Here are some names SJ�HSQEMR�I\TIVXW�MR�XLI�½IPH��]SY�WLSYPH�XEPO�XS�XLIQ�²�8V]�XS�EZSMH�WTIGM½GEPP]�XIPPMRK�XLIQ�what to do.

6IQIQFIV��8LI�GPEWW�MW�RSX�XV]MRK�XS�FI�='SQFMREXSV��;I�EVI�XV]MRK�XS�KMZI�WXYHIRXW�QSH-IPW��LIYVMWXMGW�ERH�I\TIVMIRGI�XLI]�GER�ETTP]�[LIR�XLI]�PIEZI�&IVOIPI]�'SPYQFME��8LI�GPEWW�MW�about what they learned on the journey.

Mentors and Web-based StartupsIf your team is building a web-based business, they need to get the site up and running during XLI�WIQIWXIV��8LI�KSEP�MW�RSX�E�½RMWLIH�SV�TSPMWLIH�WMXI�FYX�E�ZILMGPI�WS�XLI]�GER�XIWX�XLIMV�EW-sumptions about minimum feature set, demand creation, virality, stickyness, etc.

StudentsAdmission to the class is by interviews of pre-formed teams of graduate students. We’ll take ten to twelve teams. The students are typically working on their Masters or PhDs in engineer-ing or science; however the class is also open to MBA students.

The teams will self-organize and establish individual roles on their own. There are no formal ')3�:4W°NYWX�XLI�GSRWXERX�TEVWMRK�ERH�EPPSGEXMRK�SJ�XLI�XEWOW�XLEX�RIIH�XS�FI�HSRI��

Deliverables:Teams that select a web-based product will have to build the website for the class. Teams that select a physical product must have a bill of materials and a prototype.

The teams will be blogging their progress in between classes. It is an integral part of their HIPMZIVEFPIW��-X´W�LS[�[I�QIEWYVI�XLIMV�TVSKVIWW��EPSRK�[MXL�]SYV�MR�GPEWW�4S[IVTSMRX�TVIWIR-tations.) Each time they post they must notify you. Please look at their posts in-between class and give them feedback.

PAGE117

© 2012 Steve Blank

Lean Launchpad Course OrganizationThe course is organized around Alexander Osterwalder’s Business Model Canvas and Steve &PERO´W�'YWXSQIV�(IZIPSTQIRX�TVSGIWW��7II�XLI�W]PPEFYW�JSV�HIXEMPW�

Each week’s class is organized around:

�� A lecture on one of the nine building blocks of a business model.

�� Student teams present their “lessons learned” from getting out of the building and iter-ating or pivoting their business model.

The Eight (3 hour) Class Sessions:

�� Session 1: Jan 10th—Course Introduction, Business Models, Customer Development

�� 7IWWMSR��.ER��XL°:EPYI�4VSTSWMXMSR

�� 7IWWMSR��.ER��XL°'YWXSQIV�7IKQIRX

�� 7IWWMSR��.ER��WX°'LERRIPW

�� 7IWWMSR��*IF��XL°(IQERH�'VIEXMSR

�� 7IWWMSR��*IF��XL°6IZIRYI�1SHIP

�� 7IWWMSR��*IF��WX°4EVXRIVW�

�� 7IWWMSR��*IF��XL¯�6IWSYVGIW�ERH�'SWXW

�� 7IWWMSRW��1EV��XL��1EV��XL°0IWWSRW�0IEVRIH�4VIWIRXEXMSRW�

Schedule 'PEWWIW�QIIX�EX��TQ�

=ERK�ERH�=EQEÊOM�)RZMVSRQIRX�ERH�)RIVK]��=�)� �FYMPHMRK°6SSQ��

0)%2�0%92',4%(�)(9'%8367�8)%',-2+�,%2(&33/

3J½GI�LSYVW�EVI�LIPH�FIJSVI�GPEWW�

Textbooks%PI\ERHIV�3WXIV[EPHIV��=ZIW�4MKRIYV��Business Model Generation�LXXT��[[[�FYWMRIWWQSHIP-KIRIVEXMSR�GSQ�SVHIV�TLT

Steven Blank, Four Steps to the Epiphany�LXXT��[[[�WXIZIRFPERO�GSQ�FSSOW�LXQP

Getting PreparedThe best way for you to get a feel of the course is to:

��6IEH�XLI�FPSKW�EFSYX�XLI�TVIZMSYW�GPEWW��7II��LXXT��WXIZIFPERO�GSQ�GEXIKSV]�PIER�PEYRGL-TEH��

-J�]SY�GER´X�VIEH�EPP�SJ�XLI�TSWXW�EX�PIEWX�VIEH�XLMW�SRI��LXXT��WXIZIFPERO�GSQ��XLI�PIER�PEYRGLTEH�¯�XIEGLMRK�IRXVITVIRIYVWLMT�EW�E�QEREKIQIRX�WGMIRGI��ERH�XLMW�SRI��LXXT��WXIZIFPERO�GSQ��XLI�PIER�PEYRGLTEH�EX�WXERJSVH�¯�XLI�½REP�TVIWIRXEXMSRW�

2. Download and breeze through the explanation of Osterwalder’s Business Model Canvas

LXXT��[[[�FYWMRIWWQSHIPKIRIVEXMSR�GSQ�HS[RPSEHW�FYWMRIWWQSHIPKIRIVEXMSRCTVIZMI[�THJ

��0SSO�EX�XLI�WXYHIRXW´�[IIOP]�ERH�½REP�TVIWIRXEXMSRW��LXXT��[[[�WPMHIWLEVI�RIX�WFPERO�XEK�WXERJSVH�ERH�XLI�2EXMSREP�7GMIRGI�*SYRHEXMSR�TVIWIRXEXMSRW��LXXT��[[[�WPMHIWLEVI�RIX�WFPERO�XEK�M�GSVTW

��6IEH�XLI�GPEWW�W]PPEFYW�LXXT��[[[�WPMHIWLEVI�RIX�WFPERO�I��W]PPEFYW�VIZ��ERH�GPEWW�[IF-WMXI��LXXT��WXERJSVH�IHY�KVSYT�I��GKM�FMR��

Thanks once again for your support and participation,

Steve, Jon and Ann

PAGE119

© 2012 Steve Blank