The Truth Behind Netflix’s Incredible Success

Today, it’s hard to think of Netflix as anything but an incredible success. Its business has grown  at breakneck speed and now streams to 190 countries, yet it has also been consistently profitable, earning over $1 billion last year. With hit series like Orange is the New Black and Stranger Things, it broke the record for Emmy Nominations last year.

Most of all, the company has consistently disrupted the media business through its ability to relentlessly innovate. Its online subscription model upended the movie rental business and drove industry giant Blockbuster into bankruptcy. Later, it pioneered streaming video and introduced binge watching to the world.

Ordinarily, a big success like Netflix would offer valuable lessons for the rest of us. Unfortunately its story has long been shrouded in myth and misinformation. That’s why Netflix Co-Founder Marc Randolph’s new book, That Will Never Work, is so valuable. It not only sets the story straight, it offers valuable insight into how to create a successful business.

The Founding Myth

Anthropologists have long been fascinated by origin myths. The Greek gods battled and defeated the Titans to establish Olympus. Remus and Romulus were suckled by a she-wolf and then established Rome. Adam and Eve were seduced by a serpent, ate the forbidden fruit and were banished from the Garden of Eden.

The reason every culture invents origin myths is that they help make sense of a confusing world and reinforce the existing order. Before science, people were ill-equipped to explain things like disease and natural disasters. So stories, even if the were apocryphal, gave people comfort that there was a rhyme and reason to things.

So it shouldn’t be surprising that an unlikely success such as Netflix has its own origin myth. As legend has it, Co-Founder Reed Hastings misplaced a movie he rented and was charged a $40 dollar late fee. Incensed, he set out to start a movie business that had no late fees. That simple insight led to a disruptive business model that upended the entire industry.

The truth is that late fees had nothing to do with the founding of Netflix. What really happened is that Reed Hastings and Marc Randolph, soon to be unemployed after the sale of their company, Pure Atria, were looking to ride the new e-commerce wave and become the “Amazon of” something. Netflix didn’t arise out of a moment of epiphany, but a process of elimination.

The Subscription Model Was An Afterthought

Netflix really got its start through a morning commute. As Pure Atria was winding down, Randolph and Hastings would drive together from Santa Crux on Highway 17 over the mountain into Silicon Valley. It was a long drive, which gave them lots of time to toss around e-commerce ideas that ranged from customized baseball bats to personalized shampoo.

The reason they eventually settled on movies was the introduction of DVD’s. In 1997, there were very few titles available, so stores didn’t stock them. They were also small and light and were easy to ship. Best of all, the movie studios recognized that they had made a mistake pricing movies on videotape too high and planned to offer DVD’s at a level consumers would buy them.

In the beginning, Netflix earned most of its money selling movies, not renting them. However, before long they realized that it was only a matter of time before Amazon and Walmart began selling DVD’s as well. Once that happened, it was unlikely that Netflix would be able to compete and they would have to find a way to make the rental model work.

The subscription model began as an experiment. No one seemed to want to rent movies by mail, so they were desperate to find a different model and kept trying things until they hit on something that worked. It wasn’t part of a master plan, but the result of trial and error. “If you would have asked me on launch day to describe what Netflix would eventually look like,” Randolph wrote, “I would have never come up with a monthly subscription service.”

The Canada Principle

As Netflix began to grow it was constantly looking for ways to grow its business. One idea that continually came up was expanding to Canada. It’s just over the border, is largely English speaking, has a business-friendly regulatory environment and shares many cultural traits with the US. It just seemed like an obvious way to increase sales.

Yet they didn’t do it for two reasons. First, while Canada is very similar to the US, it is still another country, with its own currency, laws and other complicating factors. Also, while English is commonly spoken in most parts of Canada, in some regions French predominates. So what looked simple at first had the potential to become maddeningly complex.

The second and more important reason was that it would have diluted their focus. Nobody has unlimited resources. You only have a certain number of people who can do a certain  number of things. For every Canadian problem they had to solve, that was one problem that they weren’t solving in the much larger US business.

That became the what Randolph called the “Canada Principle,” or the idea that you need to maximize your focus by limiting the number of opportunities that you pursue. It’s why they dropped DVD sales to focus on renting movies and then dropped a la carte rental to focus on the  subscription business. That singularity of focus played a big part in Netflix’s success.

Nobody Knows Anything

Randolph’s mantra throughout the book is that “nobody knows anything.” He borrowed the phrase from the writer William Goldman’s memoir Adventures in the Screen Trade. What Goldman meant was that nobody truly knows how a movie will do until it’s out. Some movies with the biggest budgets and greatest stars flop, while some of the unlikeliest indy films are hits.

For Randolph though, it’s more of a guiding business philosophy. “For every good idea,” he says, “there are a thousand bad ideas it is indistinguishable from.” The only real way to tell the difference is to go out and try them, see what works, discard the failures and build on the successes. You have to, in other words, dare to be crap.

Over the years, I’ve had the chance to get to know hundreds of great innovators and they all tell a different version of the same story. While they often became known for one big idea, they had tried thousands of others before they arrived at the one that worked. It was perseverance and a singularity of focus, not a sudden epiphany, that made the difference.

That’s why the myth of the $40 late fee, while seductive, can be so misleading. What made Netflix successful wasn’t just one big idea. In fact, just about every assumption they made when they started the company was wrong. Rather, it was what they learned along the way that made the difference. That’s the truth of how Netflix became a media powerhouse.

Courtesy of Greg Satell

Getting Schooled – Lessons from an Adjunct

From Poets & Quants, posted December 3, 2019 on Steveblank.com (Steve is considered Godfather of lean startup as creator of the customer development process which started the methodology).

I’ve been an adjunct professor for nearly two decades. Here’s what I’ve learned.


Colleges and universities that offer entrepreneurs the opportunity to teach innovation and entrepreneurship classes may benefit from a more formal onboarding process.

The goal would be six-fold:

  1. Integrate adjuncts as partners with their entrepreneurship centers
  2. Create repeatable and scalable processes for onboarding adjuncts
  3. Expose adjuncts to the breadth and depth of academic research in the field
  4. Expose faculty to current industry practices
  5. Create a stream of translational entrepreneurship literature for practitioners (founders and VC’s.)
  6. Create fruitful and mutually beneficial relationships between traditional research faculty and adjunct faculty.

In my experience as both an adjunct and a guest speaker at a number of universities, I’ve observed the often-missed opportunity to build links between faculty research and practitioner experience. Entrepreneurial centers have recognized the benefits of both, but a more thoughtful effort to build stronger relationships between research and practice—and the faculty and adjuncts who are teaching – can result in better classes, strengthen connections between research and practice, build the Center’s knowledge base and enhance the reputation of the Center and its program.  (See here for what that would look like.)

An adjunct is a non-tenure track, part-time employee. Innovation and entrepreneurship programs in most schools use experienced business practitioners as lecturers or adjunct faculty to teach some or all of their classes. In research universities with entrepreneurship programs adjuncts are typically founders, VC’s or business executives. Tenure track faculty focus on research in innovation and entrepreneurship while the adjuncts teach the “practice” of entrepreneurship.

It’s Been A Trip
I’ve been an adjunct for almost 18 years, and I still remember the onboarding process at the Haas School of Business at the University of California, Berkeley. I started as a guest lecturer, essentially walk-on entertainment, where the minimal entry was proving that I could form complete sentences and tell engaging stories from my eight startups that illustrated key lessons in entrepreneurship.

Feeling like I had passed some test (which I later learned really was a test), I then graduated to co-teaching a class with Jerry Engel, the Founding Executive Director of the Lester Center for Entrepreneurship at Haas. Here I had to master someone else’s curriculum, hold the attention of the class and impart maximum knowledge with minimum damage to the students. While I didn’t realize it, I was passing another test.

I knew I wanted to write a book about a (then) radically new entrepreneurship idea called Customer Development (later the foundation of the Lean Startup movement). Concurrently, Jerry needed an entrepreneurial marketing course, and suggested that if I first created my class, a book would emerge from it. He was right. The Four Steps to the Epiphany, the book that launched the Lean Startup movement, was based on the course material from my first class. I don’t know who was more surprised – Jerry hearing that an adjunct wanted to create a course or me hearing Jerry say, “Sure, go ahead. We’ll get it approved.”

And here’s where the story gets interesting. John Freeman, the Faculty Director of the Lester Center for Entrepreneurship at Haas, began to mentor me as I started teaching my class. While I expected John to drop in to monitor how and what I was teaching, I was pleasantly surprised when he suggested we grab coffee once a week. Each week, over the course of the semester, John gently pointed (prodded) me to read specific papers from the academic literature that existed on customer discovery in the enterprise and adjacent topics. In exchange, I shared with him my feedback on whether the theory matched the practice and what theory was missing. And herein lies the tale.

I got a lot smarter discovering an entire universe of papers and people who had researched and thought long and hard about innovation and entrepreneurship. While no one had the exact insights about startups I was exploring, the breadth and depth of what I didn’t know was staggering. More importantly, my book, customer development, and the Lean methodology were greatly influenced by all the research that had preceded me. In hindsight, I consider it a work of translational entrepreneurship. 18 years later I’m still reading new papers and drawing new insights that allow me to further refine ideas in the classroom and outside it.

The Relationship of Faculty, Staff and Adjuncts
What I had accidentally stumbled into at U.C. Berkeley was a rare event. The director of the entrepreneurship center and the faculty research director were working as a team to build a department which explored both research and practice in depth. Together, in just a few years, they used the guest speaker > to co-teacher > to teacher methodology to build a professional faculty of over a dozen instructors.

A few lessons from that experience:
A successful adjunct program starts with the mindset of the faculty research director and the team building skills of the center director. If they recognize that the role of adjuncts is to both teach students practical lessons and to keep faculty abreast of real-world best practices, the relationship will flourish.

However, in some schools, this faculty-adjunct relationship may become problematic. Faculty may see the role of adjuncts in their department as removing the drudgework of “teaching” from the research faculty so the faculty can pursue the higher calling of entrepreneurial research, publishing and advising PhD students. In this case, adjuncts at the entrepreneurial center are treated as a source of replaceable low-cost teaching assets (somewhere above TA’s and below PhD students.) The result is a huge missed opportunity for a collaborative relationship, one that can enhance the stature and ranking of the department.

When there is support from the faculty research director, the director of the entrepreneurship center can build a stronger program that enhances the reputation of the faculty, program and school.

At U.C. Berkeley this support eventually led the entire school to change its policy toward adjuncts, giving them formal recognition – designating them ‘professional faculty,’ creating a shared office space suite, inviting adjuncts to participate in some faculty meetings, etc.

A side effect of this type of collaboration is that the faculty-adjunct relationship offers the school an opportunity to co-create translational entrepreneurship.

Translational entrepreneurship is fancy term for linking entrepreneurial research with the work of entrepreneurs. As a process, adjuncts would read an academic paper, understand it, see if and how it can be relevant to practitioners (founders, VC’s, corporate exec or employees) and then sharing it with a wide audience.

While Jerry and John built a great process, they didn’t document it. When John Freeman passed away and Jerry Engel retired, the onboarding process went with them. Linked here is my attempt to capture some of these best practices in an “Onboarding Adjuncts Handbook” for directors of entrepreneurship centers and adjuncts.  It’s worth a look.

Lessons Learned:  A small investment in building repeatable and scalable processes for onboarding adjuncts would:

  • Allow entrepreneurship centers to integrate adjuncts as partners
  • Expose adjuncts to the breadth and depth of academic research in the field
  • Potentially create a stream of translational entrepreneurship literature for practitioners (founders and VC’s.)
  • The result would be:
    • Better adjunct-led classes
    • Deeper connections between research and practice
    • Better and more relevant academic research
    • Enhanced reputation of the center and its program
  • See – https://docs.google.com/document/d/15uQQU4kiEHtX47sJ2J2UTgIyNJdFTNvy9dCyzaZiZ18/editfor a suggested onboarding handbook.

 

Entrepreneur stories to inspire your own business success!

Each day this week…enjoy a new story from an inspiring entrepreneur.

Sheila Cowart is the owner of Longevita Pilates & Yoga Studio. Competition is fierce in this space, with more than 38,000 gyms and fitness studios in the United States. To stand out from the crowd, Sheila focused on discovering what real problems people were facing and how her business could help solve it.

For Sheila and Longevita, this means building a positive, community atmosphere that can lead to achieving fitness and activity goals. This course of action includes tailoring classes and routines for pre- and postnatal women, as well as for those with conditions like multiple sclerosis.

“If I can make a positive difference in their life for that hour or hour-and-a-half that they’re here, I fell I’ve done my job,” Sheila says.

Sheila is clear that it’s been a lot of hard work, including filling multiple from sales to marketing and more. Yet, she would never trade it for a more traditional corporate role because she knows that what she does matters and “makes a difference in people’s lives.”

Enjoy the Longevita Video

Celebrity Entrepreneurs To Inspire Your Students

Who do your students look to for inspiration when it comes to entrepreneurship? Many people—especially young people—look to celebrities for inspiration. Here are a few celebrities you can sprinkle into your lectures and examples to help motivate your student entrepreneurs.

Of course, you’ll want to caution students that celebrities have an easier time getting businesses off the ground than the average person. They have little trouble raising money—or have their own funds to invest. And they’re instantly able to get media attention for their ventures.

Having a celebrity’s name on a product helps move merchandise, so many celebrities merely license their names and likenesses to other companies who do all the work except promotion. But many celebrities pull up their sleeves and get to work, helping their products and businesses grow, and learning a lot about entrepreneurship in the process.

Here are just a few entrepreneur celebrities to help inspire your students’ entrepreneurial ambitions:
** Oprah Winfrey

Oprah, unlike most other celebrity entrepreneurs, became an entrepreneur well before she was a household name. Oprah’s talent enabled her to transform a small Chicago daytime talk show into the leading talk show in America. Her entrepreneurial spirit led her to take charge of her own future, creating her own production company—Harpo Productions.  As a result, Oprah became—and still is—not only a very, very rich woman, but one of the most influential people in the country. Oprah’s the Grand Dame of Celebrity Entrepreneurs.

** George Clooney

Clooney loves drinking tequila, so he and two friends designed their own tequila recipe after sampling 700 recipes. In 2013, they launched Casamigos, investing $600,000 a piece. It was a darn good investment! Four years later, they sold it for a billion dollars.

** Selena Gomez

Some celebrities start their entrepreneurial journeys young. This singer, actress, former Disney star, launched her own clothing line—Dream Out Loud—when she was just 18 years old. Gomez has had partnerships with brands as varied as Coach, Sears, and Kmart.

** Magic Johnson

Johnson’s entrepreneurial reach is wide, and he’s focused on more than just making money. Magic Johnson Enterprises (MJE), founded in 1987, prides itself on bringing successful businesses to urban settings. MJE has had partnerships with Starbucks and Sony. He has controlling interest in a television network, a financial services company, and a food service and facilities management company. To top it off, he’s co-owner of the Los Angeles Dodgers.

** Steve Carrell 

Not many celebrities own very small businesses, but as of 2009, actor Steve Carrell was a shopkeeper in Massachusetts. Carrell owns Marshfield Hills General Store, a general merchandise shop in a small town where he and his wife spend their summers. I suspect Carrell’s not spending his time ordering jams or stocking shelves, but it’s nice to see a celebrity who’s a genuine small business owner.

** Ann Patchett

Patchett may not have the name recognition of other celebrities, but in literary circles, she’s a bright light. Bestselling author of seven novels, including Bel Canto, The Patron Saint of Liars, and the just-published The Dutch House, Patchett owns and runs an independent bookstore: Parnassus Booksin Nashville, Tennessee. Those of us who love independent bookstores admire Patchett for taking some of her fame to become an advocate for keeping these community havens flourishing.

** Ashton Kutcher

Not many celebrities can say they’re active venture capitalists, but Kutcher can. In 2010, he launched his first venture capital firm, A-Grade Investments, and in 2015, he founded Sound Ventures. He’s been hands-on with product design and management at tech companies such as Lenova and Ooma. On top of that, he’s a human rights activist—fighting the sexual exploitation of children—and launched A Plus, a media company focusing on good news.

** Bill Rancic

Over the years I’ve become friends with Rancic, who’s a true advocate for small business as well as a successful entrepreneur himself. This former winner of the first season of The Apprentice and spouse of Giuliana Rancic is also co-founder and co-owner of a chain of highly popular and scrumptious restaurants, RPM restaurants.

** Sean “Diddy” Combs ­

Also known as P. Diddy and Puff Daddy, this music star leveraged his fame and abilities to start an award-winning fashion line (Sean John), his own record label, music cable network, and invested in vodka. Forbes dubbed him the richest person in Hip-Hop, with a net worth over $820 million in 2017.

Courtesy Rhonda Abrams, CEO Planning Shop’s The Entrepreneurship Educator 

 

 

There Is Only One Steve Blank.

On the eve of the “lean” experts conference in the Santa Cruz mountains Dec. 4th and 5th it a great time for a retrospective on lean startup.  First, the conference will attempt to gather well-known Lean Methodology practitioners so each can learn from one other.  Since its launch a decade ago, “lean” has remade entrepreneurship education and startup practice  It is the basis of I-Corps (including NSF, NIH, DOE), Hacking for Defense (DoD), Hacking for Policy (State Department), and countless university courses around the US and world.  Steve, Jerry Engel (editor’s old teacher from Cal), Phil Weilerstein from Venture Well, and Pete Newell will host the best in the country to generate ideas for the biggest challenges and opportunities, what works best, the next generation business modeling, domain specific teaching programs, experiences internationally (Singapore, UK, Middle East, West Africa, Barcelona, etc.), mission-driven teaching, and a wrap of key learnings. Steve will post a blog on steveblank.com shortly thereafter summarizing the key findings which we will try to post as well.

Left –  Hilton Santa Cruz/Scotts Valley, CA (near Steve’s home and Silicon Valley), site of the 12/4-5 Innovation Summit gathering.

Next, here’s an article from Cofounder Magazine written by  Jan Ameri after an interview with Steve about the past, present, and future of the lean startup movement:  “You have been in the technology industry for over 30 years, working in multiple companies, IPOs and more. But there may be two or three of our readers who don’t know who you are. Could you give us a brief intro in your own words?”

“Sure! For the first half of my career I was an entrepreneur – a practitioner. I did 8 startups in 21 years, including 4 IPOs. More importantly, I had 2 failures, one of them a very large one. That made me think about the nature of innovation and entrepreneurship. When I retired 19 years ago, I started thinking that we needed a methodology for innovation and entrepreneurship, but none existed. So the second half of my career has been as an educator at Stanford, Columbia and Berkeley, coming up with something called the Lean Startup movement. It provides entrepreneurs with tools and techniques to build companies and has now been adopted by companies, corporations and governments.

What kind of key findings have come up, and how has the Customer Development method evolved since you created it?

There have been a couple of interesting things. As you mentioned, Customer Development was my observation that investors in the 20th century treated startups like they were smaller versions of large companies. It turns out that’s not true. Large companies, at their core, execute their own business models, but startups search for a business model.

This distinction between search and execution had never been articulated before; once you start describing it, you realise that what we needed to do was build tools to search for facts about hypotheses we have as entrepreneurs: Who are the customers? Who are the competitors? What’s the right channel? What’s the right pricing? What’s the right product? To do that, we needed a methodology, which I built, called Customer Development.

Customer Development is built on the idea that there are no facts inside your building, so get outside! Results are built on the idea that a startup is a temporary organisation designed to search for a repeatable and scalable business model. This is all about searching for the business model.

What has changed since Customer Development is this notion that there is a way to formulize a business model on a single piece of paper – it was best articulated by Alexander Osterwalder. I started by using Osterwalder’s business model as a diagram of what it is you are searching for: articulate your hypotheses, put them on the wall, then get out of the building and use Customer Development.

The third thing that happened was that one of my students, Eric Ries, pointed out that in the 21st century people don’t use waterfall engineering, they use agile engineering. So agile became the third part of what became Lean Startup. If you use agile engineering and build products iteratively and incrementally, you can build what we call the “Minimum Viable Product”. Those three components – the business model canvas from Osterwalder, my Customer Development process, and Ries’ agile engineering observations – together became what is called The Lean Startup.

What else has changed is that by about 2013 large companies realised they were being disrupted at a rate they had never seen before in the history of corporations. Not only by startups, but by changes in the economy and technology. They were looking about trying to figure out what tools and techniques they could use, and the cover of the May 2013 Harvard Business Review featured an article called “Why The Lean Startup Changes Everything”. I couldn’t believe it! There’s the phrase: this will happen when hell freezes over. Well, it froze over!

Large companies, who had always ignored startups with an attitude of “that’s nice, but we don’t do that”, realised that they needed to act, at least on the periphery, as quickly as startups. Now we see the world in Continuous Disruption. Corporations that would have followed Jack Welch’s rules from GE in the 20th century don’t follow them now. Follow those rules today and you will be out of business, not because Jack Welch was stupid, but because the environment has changed so radically for a large corporation.

The third change is that governments are also realising now that they are being continually disrupted, much like companies. They are all facing this need for continuous innovation. It turns out that startups have built a process to do all that and we have a formal methodology. We have some tools and it turns out they are applicable for corporations and governments as well.

I don’t think it has hit Europe yet, but it will. The two biggest changes I’ve seen in startups in the last 3 years in the United States are, firstly, the enormous size and scale of investments coming from players that you would never have expected. SoftBank and the National Fund of Saudi Arabia are putting hundreds of millions of dollars into Series A funding. It’s unbelievable! If you put a couple of hundred million dollars into a startup, all your competitors go away – the theory is that if your competitors have only raised 10 million dollars, you could wipe them out. I don’t know if that’s true, but that is the game being played on a scale that no one would have believed before. SoftBank now has a hundred-billion-dollar venture fund. It is probably a hundred times the size of anything else that exists. I don’t think that has been seen at scale in Europe yet, but it is affecting the Valley.

The second thing that I think is going to occur all over the world, and that we are already seeing in some parts, is ICOs – initial coin offerings.

This ability to raise money without venture capital or a national stock market is a disruptor for innovation finance. The big idea was innovation clusters: centres of innovation needed not only entrepreneurs, but also needed risk capital at scale. How many places in the world could you have raised 50 million dollars for Series A? Before ICOs, the answer was about five places: Silicon Valley, New York, Beijing, London and maybe Tel Aviv, . ICOs allow you to do that from anywhere, which potentially changes the notion of where entrepreneurial clusters can exist.

One last thing has changed, and this is like an old guy complaining, so it’s kind of funny; when I was an entrepreneur in the 20th century, the only ways investors achieved liquidity that made money, was through an IPO, and an IPO required – at least in the US, and I think in Europe as well – that you had to have at least a year of increasing revenue and profits before serious bankers would take you public. There was no law, it was just what you were taught if you were a technology company. Since your investors wanted to make money and that was the only way to make money, they taught their CEOs and management teams how to make revenues and profits. It wasn’t about users or market shares, it was about revenue and profit, so you learned those skills. In the 21st century that is not the liquidity game. The liquidity game now might be the number of users, market share, or something else. Revenue and profit is not at the top of the list any more. Therefore, entrepreneurs are learning very different skills; skills that are not particularly aligned with revenue and profit, but are aligned with whatever metrics are necessary to increase valuation and fast liquidity.

Do you also see changes in M&A activity from the tech giants? Facebook and Google buying everything, for example?

Given the scrutiny the three tech giants have from regulators in the United States now, tech has gone from incredibly popular to very much under the microscope. It is not clear that they will be running at that same acquisition pace for the next year or two – I think they are going to dial that way back down, because I don’t think they want to be looked at as much as they were about to be looked at. But yes, they were the giant sucking sound you heard: where
people went to work, and how other companies achieved liquidity by being acquired by Google, Facebook and, to some extent, Apple and others.

The other new thing, and it’s a new/old thing, is that corporate M&A and corporate VC has got back in the game. Over the years they have been in, out, in again, and now they are not only in, but there are over 200 “innovation outposts”: corporations with offices in Silicon Valley.

You have been repeating the simple advice to get out of the building, so what do you think about Augmented Reality and Virtual Reality? Do people still need to get out of the building, or could this new technology do that job?

There is kind of hierarchy to getting out of the building. The key part about it is being able to see someone’s pupils dilate. You want to look at their facial reactions when you talk to them. High-quality video teleconference is sometimes just as good as an in-person visit, particularly if distance matters, but it is about watching somebody’s body language. There is a hierarchy of interview techniques: in person, you can see what else is in their office, you can look at their desk, but AR and VR are probably right behind that. Video is next, as long as it has a good enough resolution to see their eyes. Then email. Email is probably a factor of ten less good, because you have no idea what they are doing. Surveys are probably at the bottom of the list. So it is a trade-off between time and distance. If you are in a remote location and it takes hours to get to each customer, then AR/VR is probably just fine.

Once we had the methodology in place, we realised that startups were operating by saying, “let’s read the book and go and implement this”. I was teaching at Berkeley and Stanford at the time; the cornerstone class back then – the best class you could take in any University, anywhere – was how to write a business plan. I realised that no one had created a class combining all these Lean techniques, and I realised that it was up to me. So in 2011 at Stanford, in the engineering school, I started a class called Lean Launchpad, which combined all the elements of Lean. We worked on a different part of the canvas each week: you had to get out of the building, talk to 10-15 customers, then present not only what you had learned, but your MVP for that week. Students repeated that for ten weeks, speaking to over 100 customers.

Because the class was so radical, I blogged every week of the class, and when the class was over I got a call from the US Government in which they said, “We think you have invented the scientific method for Entrepreneurship.” It turned out that the group that had called me was the National Science Foundation, our Head of Research in the United States. To cut a long story short, the US Government adopted the class to commercialise all science in the US. It is now called the I-Corps, or Innovation Corps. Over 15,000 teams of our country’s best scientists and engineers took the class. It is a law now in the United States – they made it a mandated class.

Three years ago, we started another version of the class. The first one was called “Hacking for Defence”, the next was called “Hacking for Diplomacy”, and now there are also versions called “Hacking for Energy” and “Hacking for Impact”. It is basically the same class, except this time students work on real problems given to them by the government. That class is also a Federal programme now, taught in 13 different Universities. So that’s the answer to your question about the Lean Launchpad.

Is it also available online, for free? The lectures from the first online classes are still available. Anybody can take the lectures.

How do you see the future of the startup movement? Looking back, it is unbelievable. It used to be that entrepreneurship was limited to just a set of clusters, not small business entrepreneurship. Technology entrepreneurship was limited to maybe Silicon Valley and Boston when I started. Domain expertise, mentorship and other elements were very limited, because information was transferred by having coffee with experienced people. In fact, you were limited by your coffee bandwidth if you think about it. The internet changed everything. The minute I write something now, it is available to everyone who has an internet connection. A good example of something that went viral because of the internet is entrepreneurship. It is everywhere, because entrepreneurship information is everywhere, but the limiting factor for entrepreneurship in scale was that risk capital wasn’t everywhere. That’s when we go back to ICOs, which might change that too. Just because you have a cluster of entrepreneurs, it doesn’t mean you have an innovation cluster, because if there’s no capital you really can’t grow those ideas.

What are the most common pitfalls you see repeatedly that founders make? The classic one that people still make today is that they kind of understand Lean, they say, “yeah, yeah, that’s great,” then they go and build whatever they want. They don’t really get out, and don’t understand who they are building it for or why they’re building it. The fundamental problem still is building things that people don’t want or don’t care about. The other problem is not understanding that the game you are really in business for is to have a liquidity event. You may think that you are in business to deliver product x or y, but the minute you take money from someone, their business model has now become yours. If you don’t understand your investor’s business model, you are screwed from that day on. If you don’t understand the timeframe and the multiples that your investors want, you are going to be the former-CEO. You should have asked!

Are many CEOs removed some time after the VC money comes in? It used to be the norm, but that has changed dramatically in the US in the last five years. They were removed because the CEO couldn’t scale to execution, because you needed an execution person, not only to build the sales force but, more importantly, so you could take it public. Wall Street investors didn’t want to see a 23-year-old. Because product cycles happen so rapidly, the biggest problem is not execution; the biggest problem is continuous innovation – the big idea. In the past you could take one innovation cycle and it would last three to four years – long enough to get liquidity. That is no longer true. In fact, it was the big insight by Andreessen-Horowitz, a venture firm here in the US, for which they were originally positioned as being unique, but now everybody has copied: it is a lot easier to train a founder how to execute than it is to train an execution person how to innovate. Once you think about it, it is pretty obvious. We can hire a COO to stick underneath the founder to run sales, but there is no way you can hire someone to be a founder. You don’t hire founders, you fund them. If you look at what has happened since that realisation, and by the way the data supports this, we went from zero to close to 200 unicorns in that same time. Almost all those unicorns are run by their founders. Big Idea!

Do you still do some angel investing? I invest in my students. And if you do invest what do you look for in a founder before making the decision to write a cheque?

Can they go through a wall. Meaning: it’s not just the idea, but are they capable of making something wonderful happen against all odds. That is different from an innovator. An innovator is somebody with a great idea. An entrepreneur is someone that can take a great idea and push it through all the way. They’re very rare.”

Artificial Intelligence Threaten White-Collar Jobs

First, robots came for manufacturing jobs.

Now, artificial intelligence wants the jobs in management, analysis, programming and information technology.

That’s the summary of a Brookings Institution study on growing capacity of computer programs that can sift data and trends, learn from it and predict outcomes with ever-growing sagacity. Males of European and Asian ancestry, being over-represented in those fields in the U.S., are most likely to take the hit in lost jobs.

And Atlanta, with its growing hub of technical businesses, is rated the 9th most job-exposed city in the U.S., says the report released Wednesday, “What Jobs are Affected by AI.”

The growing role of technology to do jobs that have been the domain of the laboring class, such as moving goods through a warehouse, launched a thousand prognostications in recent years from study groups and universities about a coming jobpocalypse for blue-collar workers. And jobs have been and continue to be lost, though others, such as building and maintaining robots, have been created. The study points out that the loss of manual jobs has led to more income inequality and job instability for poorer Americans.

The Brookings study is among the first to focus on white-collar jobs by looking at how artificial intelligence has growing capacity to do accounting, planning, programming and make decisions that have been the strength of the professional class. The study made its calculations of job exposure by comparing the most recent 16,400 patents for artificial intelligence technology. It figured out what jobs AI will do by looking for patent phrases describing what it will accomplish and comparing those accomplishments with the U.S. Department of Labor’s list of job descriptions.

These AI technologies “are set to affect very different parts of the workforce than previous automation. Most strikingly, it now looks as if whole new classes of well-paid, white-collar workers (who have been less touched by earlier waves of automation) will be the ones most affected by AI,” the report says.

The city whose jobs face the most exposure is the high-tech honeypot of San Jose, Calif. Atlanta’s measurement as 9th most job-exposed city is tied with Charlotte, N.C.; Nashville, Tenn.; Durham-Chapel Hill, N.C.; and Indianapolis, Ind.

By Christopher Quinn, The Atlanta Journal-Constitution, Nov 20, 2019

Global Entrepreneurship Week, 18-24 Nov. 2019

Global Entrepreneurship Week is a celebration of innovators who dream big and launch startups that bring ideas to life. Each November, GEW reaches millions of people of all ages and backgrounds through local, national and global events and activities. From large-scale startup competitions and workshops to small, community discussions – GEW reaches new audiences and connects participants to a network that can help them take the next step, no matter where they are on their entrepreneurial journey.

In the United States alone, nearly 5,000 events, activities and competitions are planned across all 50 states by a wide variety of organizations including: colleges and universities, entrepreneurial support organizations, government agencies, economic development groups and more. Why do so many groups plan and conduct activities during Global Entrepreneurship Week?Because it is a simple way to reach beyond your immediate network and connect with potential new partners, funders and members.

INSPIRE: Made possible by the Kauffman Foundation, Global Entrepreneurship Week introduces entrepreneurship and innovation to those who otherwise might not have considered it as a career path or as a way to solve real-world problems they are passionate about. Through partner events, activities and competitions, GEW shares uplifting and informative experiences that motivate participants to take action.

CONNECT: This week provides an opportunity for individuals and organizations to connect with others and strengthen their entrepreneurship ecosystem. GEW provides an opportunity to expand your organization’s reach beyond traditional audiences and energize new partnerships or increased membership. It also can open doors to an international audience and connect your local network to a global community.

ENGAGE: The GEW celebration empowers organizations by building and reinforcing linkages for deeper engagement throughout the year between active and inspiring entrepreneurs along with investors, mentors, corporates, community leaders, media and other startup support champions.

Get Involved

  • Attend an event – see what’s happening in your community and what resources are available to help you on your entrepreneurial path. Discover GEW events near you this November.
  • Host an event – anyone can participate in GEW. Just schedule an event that celebrates, educates and connects entrepreneurs in your community during GEW in November. Register the event on our website and download the logo to help promote your event. Join the network and register your event here.
  • Become an organizing partner – Make your city a GEW city by applying to organize GEW for your community. Organizer responsibilities include hosting a launch event on the Monday of GEW, collaborating with other local community leaders, inviting local partners to host events that support entrepreneurship, and working with GEW headquarters in Washington, D.C. to promote and highlight your city as an inspiration for other global cities working to increase their support for entrepreneurs. Apply Here.
  • Make global connections – Share your tips for attracting talent, retaining big name companies, and supporting entrepreneurs at the city level with other cities around the world. Co-host a virtual event or program with a city that closely aligns with yours.

 

Synchronicity, How to Create Your Own Luck.

THE ART OF GETTING WHAT YOU NEED

Humans are split between two worlds: The first is the world of space and time, cause and effect, energy and matter; the second is the world of histories and futures, stories and meanings, memories and hopes.

The happenings of the first world can be measured and predicted as a way to understand the deep past and, sometimes, assume the far future. Cause and effect connect this world: When you do something here, your actions are bound by the logic unearthed by the laws of physics. This is the world your body lives in, and it’s a world your body has to live in harmony with.

The happenings of the second world, however, are complex and uncertain. They are a product of the collisions that occur whenever a multitude of infinitely varied experiences come together to produce new joint experiences. This is the world of our individual and collective minds. Stories and meanings connect this world. History is a story; the future is a story — memories are shaped by meaning; hopes are shaped by meaning. And it’s this second world that makes the first world rich and granular — that adds color where there is otherwise only an outline.

When these two worlds come into contact with each other, something interesting happens. In a world without humans, physical processes are either deterministic or random — things happen, and that’s that. In a world with humans, however, they are that, sure, but they are also judged to be good or bad relative to an observer — meaning what happens in the world can be valued on a spectrum, a spectrum of fortune and misfortune.

The Oxford English Dictionary defines luck as: “Success or failure apparently brought by chance rather than through one’s own actions.” This definition suggests that you can’t ever create luck through your own efforts but you can adjust your exposure to luck by managing your actions. The more intention you apply, and the better that intention aligns with reality, the less you leave up to chance. The less you leave up to chance, the less likely it is that bad luck is going to disrupt your life, and the more likely it is that good luck simply isn’t needed. In a way, this is the same as creating your own luck, but it lacks the serendipity that makes luck what it is.

To be lucky, then, can’t primarily be about action; it has to be about interpretation, about what the meaning of something is. It’s not hard to imagine how two people can have the same thing occur to them but make sense of this thing very differently, where one considers it to be a great fortune, while the other thinks of it as a great misfortune. The event itself is secondary. The important thing is how well the event fits into the existing story of the person experiencing said event.  Managing our actions allows us to reduce the slings and arrows of chance in the first world, the world of space and time, which alters our exposure to luck — both good and bad — but it’s only the second world, the world of stories and meanings, that enables us to create what can be called luck.

There is an incident the psychotherapist Carl Jung shares in his biography about a client he once had, a client that came to him at a low point in his life. Over time, however, with the help of Jung, this client began to make progress. Not only that, but he even developed a great friendship with Jung. But the client’s wife, a possessive woman, didn’t like this. Jealous of the time her husband was spending with his therapist, she asked the man to prematurely stop the sessions against Jung’s best recommendations. And he did.

The way Jung tells it is that a few months later, he was at a conference out of town. He had just returned to his hotel room late at night, and as he was ready to get into bed, he heard a loud crack and then felt a sudden pressure on his skull. Looking around, he found nothing — no sign of life, no sign of fallen items, no sign of other disturbances. The next morning, however, he received a call informing him that his old client had passed away the night before. The cause? A self-inflicted gunshot wound to the head around the same time Jung was getting back to his hotel room.

This story reflects a personal superstition Jung had throughout his life: He was a believer in the paranormal. He thought that two people or two events could be connected to each other beyond cause and effect and through meaning — that is, say, a husband and a wife who have loved each other for decades would be capable of sharing a deep, inner bond beyond actions confined by space and time, almost as if this meaning existed on a different plane of existence altogether. He called this synchronicity.

Today, scientists have diverged away from Jung’s superstitious intuition, and they attribute synchronicity more to coincidence than they do paranormal forces. That said, it’s generally accepted that it plays an important role in how we understand the world we interact with. There might not be a logical connection between a husband feeling an uneasy pressure in his heart while at the supermarket and the heart-attack suffered by his wife of 30 years at exactly the same time elsewhere, but if that’s what he feels, it completely changes how he understands his life: first, in the realm of stories and meanings, and subsequently, in the realm of space and time.

These examples of synchronicity may at first appear detached from the idea of luck, but at its core, the process of identifying synchronous experiences is the same as the process of creating luck. When two disparate events are connected in your mind as having a relation beyond physical cause and effect, you are creating meaning. When you create meaning, you reconfigure your attention to see more connections in a random world. When you see more connections in a random world, you are more likely to notice luck where you might not have before because your surface area of recognition is greater — your attention is more attuned to certain surroundings.

There is nothing lucky about Jung’s old client taking his own life or an old man’s wife suffering a heart-attack, but the fact that both people made the connections they did changes how they interact with their loved ones moving forward — it changes what they remember, what they expect, what they value, what they are grateful for, what they are moved by. As long as their feet are planted on the ground in the real world, assigning the meanings they do to the coincidences in their lives only adds more beauty, more potentiality, to the depth and the richness of their experiences.

By definition, the creation of luck lies beyond intentional action. It’s something that happens, something that happens randomly yet fits into your life perfectly. It’s this fitness between randomness and the reality of our lived experiences that synchronicity helps establish, and it’s this same fitness that generates meaning and, thus, luck.

Whether we realize it or not, we all make use of synchronicity in various non-obvious ways. Some people, naturally, do this more than others. In fact, a small minority take it so far they ignore the fact that we live in a physical world dictated by laws that don’t bend to their personal expectations. And that’s a problem. That said, being intentional about assigning synchronous meanings can yield gifts that are otherwise hidden, and those who ignore this possibility also ignore a level of beauty not found in a world of pure causes and pure effects. There is a certain magic that comes with generating your own luck, and if approached with humility and awe, this magic can spark up a special sense of aliveness and vividity.

Personally, I spend a fair amount of time meeting new people in my life. I enjoy interesting company, so this is one of the things I value and prioritize. And yet, sometimes, meeting new people can be exhausting — the novelty wears off, the next person begins to resemble the last person, and my own boredom with it all can make even the most fascinating encounter appear mundane. It’s often the same with email. Because of my writing, I’m fortunate enough to have a lot of really thoughtful people reach out to me on a daily basis. These interactions aren’t something I would trade for the world. But, sometimes, due to the sheer volume, it can start to feel like a task.

Recently, I have started to ask myself a simple question anytime I find myself falling into these habit patterns: Why is this person in my life, right now, in this particular moment? To be sure, I’m not inclined towards believing that some divine plan has brought them here or that it’s anything more than a coincidence, but the simple act of treating it like there might be a reason for it is generally enough to open my eyes wide enough to actually see the person: who they are, how their life is colliding with my own, and all of the interesting things I could potentially learn from them.

And true enough: Because I’m suddenly paying attention to the words coming out of the other person’s mouth or listening to the actual voice behind the writing in the email, I notice things that I otherwise would not. Sometimes it’s something as simple as realizing that a certain book recommendation is exactly what I need at a particular point in my life, one that I wouldn’t have found without the stranger emailing it to me, one that perhaps even changes the trajectory of my life. Other times, it’s seeing that the person who just introduced themselves to me has qualities that I admire, a few that I even lack, and that I find that moving and inspiring and that I want to spend more time with them, time that may even lead to a relationship that, one day, I will look back on, not able to imagine having been without.

Both people and events travel along paths, and every time they merge with other paths, they create new paths. Along these new paths, there are new meanings, new coincidences, new sources of luck. But new paths don’t always get walked because we don’t always have the vision to take them. Synchronicity is that vision, and helped with intention, it’s a vision that creates and generates worlds — worlds of beauty and serendipity, life and zest, but most of all, worlds of potential, the potential for something brighter, something gentler, and perhaps, something a little more human.

EDITOR: I had a successful commercial insurance boss early on who preached “activity breeds activity”.  As a young bond producer working under him, he asked proteges to get busy in activities leading in the direction of their goals;  one contact or event led to another, and pretty soon we were attracting more opportunities than we could handle. The secret was we had a goal, and, without realizing it, our activities attracted its outcome.  In my book, “Set Your Own Salary”, I explain how I arrived in Jacksonville FL, a city I had never been to before.  With the goal of starting my own insurance agency, I set out working a year to earn the right to sit for a license exam, learning the insurer landscape, putting together a strategy, and launching at the end of the required period.  Only synchronicity could have brought three separate events together and pointed me to one insurance company in particular as a chosen vehicle.  One was an impossible bond written across town by a competitor, another word-of-mouth information from the agent’s license exam, and the third getting beat in a bid in rural Georgia using an exceptionally competitive product.  Each event hit me over the head with an arrow pointing in the direction of this important insurance company.  Synchronicity was alive and well in startup entrepreneurship then and remains just as alive to use today!

November Annual C.E.O. Conference a Smash Hit.

C.E.O. (the Collegiate Entrepreneurship Organization) just completed a steller conference in Tampa FL with about 1,000 students from around the U. S. participating. They were not disappointed with excellent pitches for new products and services, nationally recognized speakers, and a side trip to the beautiful Lowth Center for Entrepreneurship at the nearby University of Tampa.

One such Keynoter was Kyle Taylor CEO of super fast-growing startup Penny Hoarder based in St. Petersburg FL. His rapidly growing firm is in danger of running out of desk space, even after moving into its new 23,000-square-foot headquarters last fall. So Taylor often lets desk-less employees use his office. “Learn how to breathe, or you’ll never finish each day,” says Taylor, 31, when asked about the pressures of leading a company that experienced revenue growth of 9,396% between 2013 and 2016. That rampant growth continues, with sales increasing by 80%, from $20.48 million in 2016 to $37 million last year. The source of those sales is branded content that reaches between 12 million and 17 million per readers per month, including 5 million fans of the Penny Hoarder Facebook page. Some of its big-name advertising clients include Uber, Lyft and Sam’s Club. The company also brings in revenue by creating advertising campaigns that encourage readers to sign up for a client’s email newsletter, download a client’s app or register for a client’s service.

 In addition to Tyler, the other notables included Geogg Hyanes, President of Ra Power Pro, Jules Pieri, Founder of Grommet, Thad Tarkington, CEO of Second Nature and former C.E.O. student, Tony DiBenedetto, Founder of TriBridge. Steve Sheetz, Chairman of Sheetz, and Dan Soviero, CEO of Signature Lacrosse. These latter two speakers capped the conference with stories of their journeys. Sheetz built the family Sheetz, Inc., a chain of 600 convenience stores based in Altoona, PA while Soviero built his NCCA client business from his college dorm room at the University of Tampa. Today his company serves over 1,500 clients with over 6 million balls sold around the world in just three years with annual revenues tracking towards $3 Million.

Some of the useful breakout session dealt with social media, failure as a pre-requisite, mentoring, better marketing, scaling video productions, selling for entrepreneurs, how to embrace technology, building a business by coding, understanding accounting, financial know-how, getting to a VC yes, balancing relationships and a startup, blockchain, creating and seizing opportunities, and crafting the perfect pitch. There were a total of 50 subject-matter experts on a variety of business-related topics.

One of the highlights of the conference is the CEO Global Pitch Competition, where 80 student entrepreneurs had 90 seconds to pitch their startup business ideas to a panel of judges for a chance to win part of $15,000 in prize money. A sample of this year’s pitch competition include:

  • “Yard Service in a Box” — a “one-stop shop” style package designed to help teenagers start their own yard-service business.
  • “Birthday Candles for Kids” — a nonprofit that throws fully personalized birthday parties for homeless, fostered and orphaned children.
  • “Verapy” — redefines physical and occupational therapy through virtual reality games, resulting in better patient outcomes.
  • “Soundless Sleep” — a noise-cancelling pillow for anyone who struggles to fall asleep with loud background noise.
  • “Click: Assistive Technology” — a tool designed to assist blind or otherwise visually impaired individuals safely check the level of liquid in a container.

Pitches were woven throughout the conference with competition for best chapter, best student entrepreneur, best chapter advisor, best cross campus innovation, and grand pitch winner.

A real special side trip was offered the final night to visit the state-of-the-art Lowth Entrepreneurship Center at the University of Tampa. Department Chair, Dr. Rebecca White, whose leadership garnered the 2014 Outstanding Emerging Entrepreneurship program in the country by USASBE, hosted. Guest toured the center’s auditorium, common spaces, conference rooms, and reference library. The Center has graduated some extraordinary entrepreneurs like James Zebrowski, current C. E. O. director and the above mentioned Soviero.

2019 was a memorable experience for all who attended the Collegiate Entrepreneurship Organization Conference.

Four Ways to Make Innovation Flourish

Intuit CEO Brad Smith breaks down the principles that keep new ideas flowing at the 30-year old software maker (see story below in blog).

1. Get people to fall in love with problems, not solutions.  Leadership’s job is to focus people on a grand challenge.  It took 20 years for QuickBooks to get 5 million small-business customers.  Smith recently challenged the QuickBooks team to double that in 3 years.

2.  Set up an environment where people can test their ideas quickly and cheaply.  Intuit gives employees 10% of their hours as unstructured time.  The legal department created a tool kit that lets product managers talk to legal.  The IT department accelerated the time it took to set up test environments for new Web products from two months to two hours.

3. Share the lessons of failures in the most public forum possible.  In an all-hands meeting in August Scott Cook (founder and former CEO) told the story of how he rejected the idea a few managers had to make a retail checkout product combining hardware and software.  Cook said, no, we’re a software firm.  They didn’t listen, and it’s now a $100 million business.

4.  Leaders live by the same rules as everyone else.  When Smith became CEO in 2008 he pushed for anew technology to connect QuickBooks to app developers.  It cost $70 million and took three years and failed.  A rival team of two engineers built its replacement in only several months.  Every decision he has made since has gone through hypothesis testing.