The Lean LaunchPad Educators Teaching Handbook

THE LEAN LAUNCHPAD EDUCATORS TEACHING HANDBOOK STEVE BLANK & JERRY ENGEL JANUARY 2013

Steve Blank & Jerry Engel January 2013

NCIIA

PREFACE
Purpose
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. We expect you, as an educator, to adapt the class to your own school and curriculum as appropriate. At UC Berkeley Haas Business School, Andre Marquis allowed us to test the class in his department, and Jerry Engel and Jim Hornthal of CMEA Capital joined the teaching team. And this same group taught the first National Science Foundation Innovation Corps classes, joined by John Burke from True Ventures and Owen Jacobs of Toytalk. They were joined by teaching teams from University of Michigan (Jeff Bocan, Jonathan Fay, Ailleen Huang Saad and Doug Neal) and Georgia Tech (John Bacon, Paul Freet, Merrick Furst and Keith McGreggor). Bhavik Joshi was the TA for both the Berkeley and the first NSF classes. At Columbia, Murray Low and my co-author, Bob Dorf, taught the first five-day version of the class. None of this would have been possible without Jerry Engels persistence and guidance.

The Lean LaunchPad class was developed based on experience mostly at the graduate level of several of the nations leading universities. It has been taught in both engineering and business schools, as well as to post-graduate teams under the National Science Foundation 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 challenges faced by small- and medium-size businesses, as well as new ventures in large corporations.

Acknowledgements
The Lean LaunchPad was first taught at Stanford University as part of the Stanford Technology 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 venture capitalists who volunteered their time to teach this Stanford class with me: Jon Feiber of Mohr Davidow Ventures and Ann Miurako of Floodgate. Lisa Forssell taught the how to present class, and Thomas Haymorewas indefatigableteaching assistant and our team ofmentors.

LEAN LAUNCHPAD EDUCATORS TEACHING HANDBOOK Steve Blank & Jerry Engel January 2013

Scope

CONTENTS
I. The Lean LaunchPad Manifesto.................................................................................6 Strategy..........................................................................................................................6 Process............................................................................................................................7 Organization.................................................................................................................8 Education.......................................................................................................................9 Instructional Strategy............................................................................................. 10 Lessons Learned........................................................................................................11 II. E-School: The New Entrepreneurship Curriculum............................................12 The Rise of Business SchoolsManagement As an Occupation ...........12

Business Schools Were Founded to Train Managers, Not Entrepreneurs.13 21st-Century Entrepreneurship Curricula ........................................................14 The Lean LaunchPad Class....................................................................................15 III. The Lean LaunchPad Class: Goals......................................................................... 18 Helping Startups Fail Less Often........................................................................ 18 Lean LaunchPad Pedagogy: Experiential Learning .................................... 18 The Flipped Classroom.......................................................................................... 18 The Business Model Canvas .................................................................................19 Customer Development ....................................................................................... 20 IV. Teaching Team............................................................................................................ 22 Faculty......................................................................................................................... 22 Teaching Assistant................................................................................................... 22 Pre-class.............................................................................................................. 22 During class....................................................................................................... 22 Mentors and Advisors............................................................................................ 22 The Role of Mentors........................................................................................ 22 How Mentors Help Teams............................................................................. 23 Mentors and Web-Based Startups..................................................................... 23 The Role of Advisors....................................................................................... 23 Recruiting Mentors/Advisors ...................................................................... 23 V. Student Teams.............................................................................................................. 24 Team Formation: Strategy.................................................................................... 24 Team Formation: Mixers/Information Sessions............................................ 24
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LEAN LAUNCHPAD EDUCATORS TEACHING HANDBOOK Steve Blank & Jerry Engel January 2013

The MBA CurriculumFrom Fieldwork to Case Studies............................12

Team Formation: Admission................................................................................ 24 Admission by Interview................................................................................. 24 Admission by Teams, Not Individuals....................................................... 25 Team Formation: Application Forms................................................................. 26 VI. Class Organization..................................................................................................... 27 Team Projects............................................................................................................ 27 Student Team Coursework and Support Tools............................................. 27 Class Culture.............................................................................................................. 28 Amount of Work....................................................................................................... 28 Team Dynamics........................................................................................................ 29

LEAN LAUNCHPAD EDUCATORS TEACHING HANDBOOK Steve Blank & Jerry Engel January 2013

Sharing Policy........................................................................................................... 29 Student/Instructor Success Criteria................................................................... 29 Process................................................................................................................. 29 Culture................................................................................................................. 29 VII. The 10-Week Course, 12-Week Course, 5-Day Course................................ 30 10-Week Course Logistics..................................................................................... 30 Teaching Team Role and Tools.............................................................................31 Best Practices.....................................................................................................31 Lectures....................................................................................................................... 32 LaunchPad Central.................................................................................................. 33 Office Hours............................................................................................................... 34 Textbooks .................................................................................................................. 34 Grading ...................................................................................................................... 34 Guidelines for Team Presentations.................................................................... 35 VIII. Instructor Pre-Course Preparation.................................................................... 35 Instructor Reading Material:................................................................................ 35 IX. Detailed Class Curriculum....................................................................................... 37 Student Assignment: Before the Teams Show Up in Class........................ 37 Class 1: Intro & Business Models and Customer Development................ 40 Classes 1 through 8: Presentation Agenda and Teaching Assistant Activities............................................................................................................. 43 Lecture 1: Key Concept Diagrams ............................................................. 44 Class 2: Value Proposition..................................................................................... 46 Lecture 2: Key Concept Diagrams.............................................................. 48
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Class 3: Customer Segments................................................................................ 49 Lecture 3: Key Concept Diagrams.............................................................. 52 Class 4: Distribution Channels............................................................................. 54 Lecture 4: Key Concept Diagrams.............................................................. 56 Class 5: Customer Relationships (Get/Keep/Grow).............................. 59 Lecture 5: Key Concept Diagrams.............................................................. 62 Lecture 6: Key Concept Diagrams.............................................................. 67 Class 7: Partners ....................................................................................................... 68 Lecture 7: Key Concept Diagrams.............................................................. 70 Class 8: Resources, Activities and Costs .......................................................... 71

Workshop 3: Presentation Skills Training.........................................................74 10-Week Syllabus: Sample.................................................................................... 80 5-Day Syllabus: Example............................................................................................... 97 Mentor HandbookSample.....................................................................................106

LEAN LAUNCHPAD EDUCATORS TEACHING HANDBOOK Steve Blank & Jerry Engel January 2013

Lecture 8: Key Concept Diagrams.............................................................. 72

I. THE LEAN LAUNCHPAD MANIFESTO

For the last decade weve been teaching students how to write business plans. Yet time and again we watched as few business plans survived first contact with customers. It took us a while to recognize that we insisted on business plans because we assumed that startups were just smaller versions of large companies. What weve now realized is that theyre not. We now know that a startup is a temporary organization designed to search for a repeatable and scalable business model. This emphasis on search for a business model versus execution of a plan is the heart of the Lean LaunchPad curriculum.

LEAN LAUNCHPAD EDUCATORS TEACHING HANDBOOK Steve Blank & Jerry Engel January 2013

The Business Model Canvas as a Weekly Scorecard

When first starting a new venture the business model is unknownthat is, just a set of untested hypothesesand the startup team is searching to verify its components, market, customers, features, channels, pricing, Get/Keep/Grow strategy etc. Once the business model is known, then the new venture will be executing it.

Strategy
The term business model first appeared around 50 years ago, but the concept didnt catch on until the 1990s. A business model describes how a company creates, delivers and captures value. It became common to discuss business models, but without a standard framework and vernacular, confusion reigned.

In 2010, when Alexander Osterwalder published 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 hypotheses. The primary objective of a startup is to validate its business model hypotheses until it finds one that is repeatable and scalable (it contin-

ues to iterate and pivot until it does). Then it moves into execution mode. Its at this point that the business needs a business plan: a document that articulates the model, market, competition, operating plan, financial requirements, forecasts and other well-understood management tools.

Process

Yet as powerful as the Business Model Canvas (a template with the nine blocks of a business model) Customer validation tests whether the resultis, at the end of the day its a tool for identifying ing business model is repeatable and scalable. hypotheses, without a formal way of testing them. If not, you return to customer discovery. The Lean LaunchPad approach extends this pro Customer creation is the start of execution. It cess, providing a set of tools for testing hypotheses builds end-user demand and drives it into the and enhancing the venture through experimentasales channel to scale the business. tion and iteration. Company building transitions the organizaThe processes used to organize and implement tion from a startup to a company focused on the search for the business model are customer executing a validated model. development and agile development. A search for a business model can occur in any new business In the search steps, you want a process designed to be dynamic, so you work with a rough business in a brand-new startup or in a new division of an model description, knowing it will change. The existing company. business model changes becausestartupsuse The customer development model breaks out all customer development to run experiments to test the customer-related activities of an early-stage the hypotheses that make up the model (first testcompany into four easy-to-understand steps. The ing their understanding of the customer problem first two steps of the process outline the search for and then solutions). Most of the time these experithe business model. Steps three and four execute ments fail. Search embraces failure as a natural the business model thats been developed, tested part of the startup process.Unlike existing compaand proven in steps one and two. The steps: nies that fire executives when they fail to match a plan, we keep the founders and changethe model. Customer discovery first captures the founders vision and turns it into a series of business Once a company has found a business model (it model hypotheses. Then it develops a plan to knows its market, customers, product/service,
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test customer reactions to those hypotheses and turn them into facts.

LEAN LAUNCHPAD EDUCATORS TEACHING HANDBOOK Steve Blank & Jerry Engel January 2013

channel, pricing etc.), the organization moves from (BRD) leads to a market requirements document (MRD) and then gets handed off to engineering as search to execution. a functional specifications document (FSD) impleThe product execution processmanaging the mented via agile or waterfall development. life cycle of existing products and the launch of follow-on productsis the job of the product management and engineering organizations. It results inalinear processin which you make operating plans and refine them into detail. The more granularity you add to a plan, the better people can execute it: a business requirements document

LEAN LAUNCHPAD EDUCATORS TEACHING HANDBOOK Steve Blank & Jerry Engel January 2013

Organization

back directly. In contrast, execution (which follows search) assumes that the job specifications for each The search for a busiof the senior roles in the company can be tightly ness model requires a authored. Execution requires the company to be different organization than the one used to ex- organized by function (product management, ecute a plan. Searching sales, marketing, business development etc.) requires the company Companies in execution suffer from a fear of failto be organized around ure culture, quite understandable since they were a customer develophired to execute a known job spec.Startups with ment team led by the Customer Development teams have a learning founders. Its only the and discovery culture for search. The fear of makfounders who can make ing a move before the last detail is nailed down is the strategic decisions one of the biggest problems existing companies to iterate and/or pivot have when they need to learn how to search. the business model, and to do that they need to The idea of not having a functional organization until the organization has found a proven busihear customer feed8

ness model is one of the hardest things for new startups to grasp. There are no sales, marketing or business development departments when you are searching for a business model.If youve organized your startup with those departments, you are not really doing customer development. (Its like trying to implement a startup using Waterfall engineering.)

Education

cremental innovation, Entrepreneurship curricula are only a few decades but it wont turn out students prepared for old. First taught as electives and now part of core business school curricula, the field is still struggling the realities of building new ventures. Educators to escape from the bounds of the business plan are now beginning to centric view that startups are smaller versions build their ownE-school of a large company. Venture capitalists whove watched as no startup business plan survived first curriculums with anew class ofmanagement contact with customers continue to insist that tools built around startups write business plans as the price of entry searchand discovery. to venture funding. This continues to be the case Business model deeven as many of the best venture capitalists (VCs) sign,product/service understand that business planning, and not the development,customer plan itself, is what is important. development, startup The trouble is that over time, this key message has team building,entrepregotten lost. As business school professors, many neurial finance, marketof whom lack venture experience, studied how ing, founder transition, VCs made decisions, they observed the apparently etc.: all provide the central role of the business plan and proceeded startup equivalent of to make the plan, not the planning, the central the management tools framework for teaching entrepreneurship. As new MBAs learn for execugenerations of VCs with MBAs came into the busition. ness, they compounded the problem:Thats how we always done it, or, Thats what I learned (or the senior partners learned) in business school. Entrepreneurshipeducators have realized that a plan-centric curriculum may get by for teachingin9

LEAN LAUNCHPAD EDUCATORS TEACHING HANDBOOK Steve Blank & Jerry Engel January 2013

LEAN LAUNCHPAD EDUCATORS TEACHING HANDBOOK Steve Blank & Jerry Engel January 2013

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 knowledge 1. capture and visualize the evolution ofbusiness is gained when students actively participate in a learning in a company, and discussion of a situation that may be faced by deci2. see what patterns match real-world iterations sion makers. and pivots. It is a tool that better matches the But the search for a repeatable business model real-world search for the business model. for a new product or service does not follow a In addition, teaching for the Lean LaunchPad class predictable pattern. An entrepreneur must start is typically done with a flipped classroom. Here, with the belief that all her assumptions are simply the lectures are homework (as interactive videos), hypotheses that will undoubtedly be challenged and the homework (testing hypotheses in front of by what she learns from customers. Analyzing a customers) is the classroom discussion, as all teams case in the classroom, removed from the realities present. To keep track of the students customer of chaos and conflicting customer responses, adds discovery progress, we use an online tool (Launchlittle to an entrepreneurs knowledge. Cases cant Pad Central) to record the week-by-week narrative be replicated because the world of a startup is too of their journey. chaotic and complicated.The case method is the antithesis of how entrepreneurs build startupsit An entrepreneurial curriculum obviously will have some core classes based on theory, lecture and teaches pattern recognition tools for the wrong patternsand therefore has limited value as a tool mentorship.Theres embarrassingly little research on entrepreneurship education and outcomes, but for teaching entrepreneurship. we do know that students learn best when they
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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

can connect with the material in a hands-on way, personally making the mistakes and learning from them directly. As much as possible, the emphasis ought to be on experiential, learner-centric and inquiry-based classes that help to develop the mindset, reflexes, agility and resilience an entrepreneur needs to search for certainty in a chaotic world.

Execution requires operating plans and financial forecasts Product management is the process for executing the model Entrepreneurial education is developing its own management stack Starting with how to design and search for a business model Adding all the other skills startups need The case method is the antitheses of an entrepreneurial teaching method

Lessons Learned
The search for the business model is the front end of the startup process This is true in the smallest startup or the largest company The goal is to find a repeatable/scalable business model, and then execute Customer development and agile development are the processes for searching and building the model Searching for the business model comes before executing it

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LEAN LAUNCHPAD EDUCATORS TEACHING HANDBOOK Steve Blank & Jerry Engel January 2013

industry-orientation (steel, railroads, etc.) to a functional one The Rise of Business Schools (marketing, factory and Management As an Occupation employment manageThe invention of the business school was in ment, etc.). A functional response to American corporate need for a profes- curriculum served the sional management class. purpose of enabling academic research (and In 1881 Wharton established the first business careers), as traditional school for undergraduates, and the first students academic fields such with bachelors of finance emerged three years as psychology and later. (Wharton would offer its first MBA in 1921.) mathematics found But it was with the establishment of a graduate their application in the degreethe master of business administration applied business do(first for business at Tuck at Dartmouth in 1900, but mains of management, more importantly for education of management organizational behavior, at the Harvard Business School in 1908)that marketing and finance. business management education really took off. More importantly, the Harvard provided a broad foundation for those focus on a functional students entering commerce or manufacturcurriculum, rather than ing, and professional training for those entering on experiential work accounting or auditing, railroading, banking and outside the classroom, insurance. meant that mastery of The MBA CurriculumFrom Fieldwork to cases, rather than imCase Studies mersion in real-world When Harvard started the MBA program there uncertainty, became were no graduate-level business textbooks. From the mode of instruction. the inception of the school they used the problem method, which emphasized that fieldwork was an important part of the curriculum. In other words they got out of the classroom and visited real companies. Students observed how execs worked, interviewed leading executives, wrote up how they solved problems and then discussed these problems in class. But by the early 1920s a new dean began to reshape the curriculum, shifting it from an
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II. E-SCHOOl: THE NEW ENTREpRENEURSHIp CURRICUlUm

LEAN LAUNCHPAD EDUCATORS TEACHING HANDBOOK Steve Blank & Jerry Engel January 2013

Harvards switch to the case method started with the marketing curriculum. (The case system had already been taught at Harvards commercial law course from the day the school started.) By 1923, with 24 faculty and 600 students, two-thirds of the courses were taught with the case method, and the pattern was set for business education in the 20th century. The case method attempts to bring the real world into the classroom, but it has a classic weakness: it occurs in the past, and the analysis is based principally on the facts presented in the case. While supplementary secondary research is

acceptable, no primary data collection or engagement with the marketplace is encouraged, or really possible. It teaches one how to analyze a problem given the facts, and to suggest solutions. In other words, it trains managers and consultants, not entrepreneurs. Harvard would become the gold standard for graduate business education in the 20th century. Harvard MBAs would become captains of industry, and they would hire their professors as consultants.

In 1947 Myles Mace taught the first entrepreneurship course in the United States at Harvard Business School (at the same time Georges Doriot was teaching his famous manufacturing class). In 1967 the first contemporary MBA entrepreneurship courses were introduced at Stanford and NYU, and a year later Babson offered the first undergraduate entrepreneurship program. By 1970, 16 schools were offering entrepreneurship courses, and in 1971 UCLA offers the first MBA in entrepreneurship. Entrepreneurship textbooks started appearing: Small Business Management: Essentials of Entrepreneurship and Entrepreneurship: Playing to Win. In 1985 the first national business plan competition was held at the University of Miami. By 1991 there were 57 undergraduate and 22 MBA programs. Textbooks, papers and journal articles proliferated.

Business Schools Were Founded to Train Managers, Not Entrepreneurs

Once business schools were formed, what was taught at them, and who taught it? Of course Bschools taught management: ultimately, the challenge was to train people how to manage a large corporation.

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LEAN LAUNCHPAD EDUCATORS TEACHING HANDBOOK Steve Blank & Jerry Engel January 2013

With the emergence of venture capitalfunded startups becoming an increasingly important business dynamic, it was clear that there were two highly distinct forms of small-business entrepreneurship: 1) highly scalable, high-growth potential startups and 2) classic small- and medium-size Main Street enterprises. Yet business education often failed to recognize this critical distinction. At their core, most entrepreneurship courses were teaching execution.

LEAN LAUNCHPAD EDUCATORS TEACHING HANDBOOK Steve Blank & Jerry Engel January 2013

21st-Century Entrepreneurship Curricula

Entrepreneurshipeducators are realizing that curricula oriented around business plans and execution fail to prepare students for the realities of building or working in startups. Running a startup is a fundamentally different activity than managing a business. Therefore entrepreneurial education must teach how to search the uncertainties and unknowns. Entrepreneurs are now getting their own curricula, their own textbooks and their own pedagogy. To this end, entrepreneurial education must include skill-building courses in creative think14

ing, business models, customer and agile development, leadership, startup finances and metrics. Educators are now beginning to build curricula that embrace startup management tools built around searching for a business model rather than execution of a business model.

The Lean LaunchPad Class

The diagram below illustrates a notional curriculum built around these ideas. The sum of all these While the Lean LaunchPad class can be taught as classes will provide the startup equivalent of the part of an existing curriculum in a business or enmanagement tools MBAs learn for execution. gineering school, it is a harbinger of a completely new entrepreneurship curriculum. It is a curriculum Think of it as E-school versus B-school. Brief summaries of each class follow. that recognizes that startups require anew class ofmanagement tools built around the searchand discovery of the business model.

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LEAN LAUNCHPAD EDUCATORS TEACHING HANDBOOK Steve Blank & Jerry Engel January 2013

ENTR 100: IntrODUCtiOn tO StArtUPs 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 from employees? PedagogyCan be taught as a survey class (lecture + guests) or as a flipped classroom with small team-based experiential projects PrerequisitesNone ENTR 101: InnOVAtiOn AnD CreAtiVitY Where do ideas come from? How to recognize opportunities.

PrerequisitesENTR 104: Customer Discovery ENTR 105: StArtUP PAtent LAW Patents, trademarks, copyright, trade secrets, NDAs and contracts. Which one to use and when? What to patent? Why? When? What matters in a startup? What matters later? Differences by country. How to build a patent portfolio. PedagogyLecture with business model and customer discovery cases PrerequisitesNone

LEAN LAUNCHPAD EDUCATORS TEACHING HANDBOOK Steve Blank & Jerry Engel January 2013

ENTR 106: BUiLDinG tHe TeAmStArtUP CULtUre AnD HR What is a startup culture? Why is it different? Culture versus management style. Founders, early PedagogyLecture with small team-based experi- employees, mission, intent, values. Managing the growing startup. ential projects PrerequisitesNone PedagogyLecture with business model and customer discovery cases, optional simulations

ENTR 102: BUsiness MODeL DesiGn PrerequisitesNone Based on Osterwalders Business Model Generation text, this class give students practice in ENTR 107: Get, KeeP AnD GrOWSALes AnD MArKetdeconstructing existing business models as well as inG creating new ones. How does a startup get, keep and grow customers? How does this differ for web, mobile and physPedagogyLecture with business model cases ical channels? Details about acquisition, activation, PrerequisitesNone retention, upsell, cross-sell, viral components, etc. ENTR 103: CUstOmer DisCOVerYMArKets AnD OPPOrtUnities

How to validate business model hypotheses. Problem recognition in the real world (I have technology is there a market? I have a market is there technology?) Market sizing. PedagogyLecture with small experiential projects PrerequisitesENTR 102: Business Model Design ENTR 104: MetriCs tHAt MAtterStArtUP FinAnCe Finance before the income statement, balance sheet and cash flow. How to test customer acquisition cost, lifetime value, average selling price, time to close, sales force productivity, burn rate. PedagogyLecture with business model and customer discovery cases
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PedagogyLecture with simulations and experiential projects PrerequisitesENTR 104 Metrics that Matter ENTR 108: AGiLe DeVeLOPment Agile programming and engineering for both hardware and software (web/mobile/cloud). PedagogyLecture with small team-based projects PrerequisitesJava? PHP? ENTR 109: User-InterfACe DesiGn User-interface design and interaction is a critical part of web/mobile apps. How and when to iterate and what to optimize. PedagogyLecture with small team-based projects

PrerequisitesWeb/mobile tools ENTR 150: FrOm FOUnDer tO OPerAtinG EXeCUtiVe Most founders dont make the transition to operating exec. Yet the most successful large technology companies are still run by their founders. What skills are needed? Why is the transition so difficult? PedagogyLecture with business model and customer discovery cases PrerequisitesNone ENTR 200/202: THe LeAn LAUnCHPAD Experiential business model design and customer development. PedagogyCan be taught with lectures or optional flipped classroom; team-based, immersive and experiential PrerequisitesCan either be none, or have taken ENTR 102, 103 and 104

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LEAN LAUNCHPAD EDUCATORS TEACHING HANDBOOK Steve Blank & Jerry Engel January 2013

III. THE LEAN LAUNCHPAD ClASS: GOAlS

The Lean LaunchPad class is currently taught at colleges, universities, accelerators and incubators, and for the National Science Foundation. It has also been taught inside Fortune 1000 companies as a template for building new businesses. The class has different goals depending where its taught and who the audience is.

Experiential learning has been around forever. Think of the guilds, apprentices, etc. Mentors were master craftsmen. Thats the core idea of this class. This class uses experiential learning as the paradigm for engaging the participants in discovery and hypotheses testing of their business models. From the first day we meet, the teams get out of the classroom and learn by doing.

LEAN LAUNCHPAD EDUCATORS TEACHING HANDBOOK Steve Blank & Jerry Engel January 2013

This is very different from how a business school how to write a business plan class works. There, In a graduate engineering or business school university class, the goal of the Lean LaunchPad is a valid business model is assumed. In this Lean to impart a methodology for scalable startups that LaunchPad class, the teams are not building a students can use for the rest of their careers. When business (yet). What they learn from customers will validate/invalidate their hypotheses (theses), taught in an accelerator or incubator, the goal of and they will modify the business model (iterate the Lean LaunchPad is a series of investor-funded or pivot). This results in the teams bringing marstartups. ket needs forward. Then they can decide whether When taught as part of corporate entrepreneurtheres a business to be built. ship, the Lean LaunchPad helps existing compaWhat this class does not include is execution of the nies to efficiently start new businesses. business model. In this course, implementation is Finally, the same Lean LaunchPad methodology, all about discovery outside the classroom. Once by emphasizing small-business tactics, can be used discovery has resulted in a high degree of confito teach how to efficiently start Main Street busidence that a viable business model exists, it is time nesses. to create an execution plan. If the student teams continue with their companies, they will assemble Helping Startups Fail Less Often the appropriate operating plans (financial models, The Lean LaunchPad doesnt guarantee that startups will succeed. It does guarantee that if they revenue plans, etc.). follow this process they are less likely to fail. The Flipped Classroom 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 a successful company. Heres how we do it. Instructors have the option of running a flipped classroom. The classroom need not be used for lectures by a live instructor. Rather, the lectures become homework. Steve Blank has recorded eight 30-minute class lectures, each with quizzes. Students can watch a lecture on each component of the Business Model Canvas, take a short quiz and have access to a class forum for questions. Their homework for that week assumes they will use that new knowledge to test that specific part of the business model. Of course, if they prefer, instructors can deliver the lectures in person.

Lean LaunchPad Pedagogy: Experiential Learning

The Lean LaunchPad is a hands-on program that immerses student teams in testing their business model hypotheses outside the classroom. Inside the classroom, it deliberately trades lecture time for student/teaching-team interaction. The Lean LaunchPad uses the customer development process and the Business Model Canvas to collapse the infinite possibilities of a startup into a solvable problem.
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The Business Model Canvas

Often theres a lack of a shared and clear understanding of how a startup creates, delivers and captures value. This class uses Alexander Osterwalders Business Model Canvas (and text) to diagrammatically illustrate how that happens.

The canvas represents a company with nine boxes depicting the details of the product, customers, channels, demand creation, revenue models, partners, resources, activities and cost structure.

When teams first draft their initial hypotheses, their canvas begins to fill up, looking like this: But the canvas is more than a static snapshot of the business at a moment in time. Through customer developmentand this classit is extended and used as a scorecard for tracking the progress of the search for a business model. Every week the teams update their canvas to reflect any pivots or iterations, highlighting in red the changes from the last week.

Then, after the team agrees to the business model changes, they integrate them into what becomes the new canvas for the week (the accepted changes go from red to black). During the next week any new changes are again shown in red. The process repeats each

week, with new changes showing up in red. By the end of the class, each team will have at least eight canvases. When clicked through one at a time, they show something never captured before: the entrepreneurial process in motion.
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LEAN LAUNCHPAD EDUCATORS TEACHING HANDBOOK Steve Blank & Jerry Engel January 2013

Week 3

Week 2

LEAN LAUNCHPAD EDUCATORS TEACHING HANDBOOK Steve Blank & Jerry Engel January 2013

Week 1

The Business Model Canvas as a Weekly Scorecard

Customer Development
The Business Model Canvas is, at the end of the day, a tool for brainstorming hypotheses, without 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. The first two steps of the process outline the search for the business model. Steps three and four execute the business model thats been developed, tested and proven in steps one and two.

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The Lean LaunchPad class focuses on the two search steps. Customer discovery first captures the founders vision and turns it into a series of business model hypotheses. Then it develops a plan to test customer reactions to those hypotheses and turn them into facts. Customer validation tests whether the resulting business model is repeatable and scalable. If not, you return to customer discovery.

We use Steve Blank and Bob Dorfs Startup Owners Manual as the text to teach customer development concepts.

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LEAN LAUNCHPAD EDUCATORS TEACHING HANDBOOK Steve Blank & Jerry Engel January 2013

IV. TEACHING TEAm

While a single instructor and a part-time teaching assistant (TA) can teach this class, the optimal teaching team has a minimum of: Two instructors One teaching assistant One mentor per team

Teaching Assistant
Given all the moving parts of the class, a teaching assistant is helpful for keeping the trains running on time. Heres what teaching assistants do: Pre-CLAss Organize the mixers/information sessions Keep track of the student applications Answer basic questions about the class and the application process

Faculty

LEAN LAUNCHPAD EDUCATORS TEACHING HANDBOOK Steve Blank & Jerry Engel January 2013

On its surface the class can be taught by anyone. The canvas and customer development do not ap- DUrinG CLAss pear overly complex, and with a flipped classroom Manage LaunchPad Central (see section 7) the students appear to be doing all the work. All Communicate in-class information to course you do is critique and grade their weekly presentaparticipants tion. Collect weekly team presentations and manHowever, the quality, depth and insight you bring ages the order of presentation, timing to the critiques of the teams are the core of the class. If you have startup (not just general business) Create and manages three Google documents: experience, then the critiques you offer to your The instructor-grading sheet students are the painful lessons youve learned by used by the teaching team for building businesses. If you dont, you can still do grading and real-time collaboraa fine job in teaching, just be aware that there are tion for instructors some old habits to break. The student-feedback grading In a perfect world at least one of the instructors would be an adjunct with startup experience, and another would be a local investor/venture capitalist. Having an adjunct allows the class critiques to be based on pattern recognition and brings credibility to the teaching-team comments. Having a local investor/VC on the teaching team brings credibility and investing experience, along with an unexpected benefit: time after time weve seen that the class changes the investors perceptions. VCs stop believing that a business plan or a standard investor pitch deck is useful. They come to understand that a customer discovery narrative and the Business Model Canvas are more effective tools for judging early stage ventures. sheetused by the students to offer feedback to their peers (actually designed to keep students actively engaged in watching the progress of other teams, rather than reading their email) The startup wisdom document, which the TA uses to capture and post teaching-team critiques Manage office hours signup sheet

Mentors and Advisors

Mentors play an active role in weekly coaching of a specific team. Advisors are on-call resources for the entire class. THe ROLe Of MentOrs Mentors are an extension of the teaching team; each is responsible for the success or failure of a team of four students. The role of the mentors is to help the teams test their business model hypotheses. Heres what they do:

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Offer teams strategic guidance and wisdom: Offer business model suggestions Identify and correct gaps in the teams business knowledge

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 semester. The goal is not a finished or polished site but a vehicle, so they can test their assumptions about minimum feature set, demand creation, virality, stickiness, etc. THe ROLe Of ADVisOrs Advisors are a resource to the class and any of its teams for their particular domain expertise.

Provide teams with tactical guidance every week: Review teams weekly presentation before they present Comment weekly on teams LaunchPad Central customer discovery progress Respond to the teaching teams critique of their team Offer Rolodex help: Why dont you call x? Let me connect you. Push the teams to make 5 to 10 customer contacts/week

Respond to student emails/phone calls within 24 hours Skype calls with one/two teams a week, as needed

Meet one-on-one with their team ReCrUitinG MentOrs/ADVisOrs members at least twice during the This class has no guest lectures. Getting mentors class involved is not about having them come in and tell war stories. Nor is it about having them teach stu Check in with teaching team at classes 3 and 7 to discuss student dents how to write a business plan or put together an income statement, balance sheet or cash flow. progress If someone cant commit to the time it takes to be a mentor, have them consider being an advisor. HOW MentOrs HeLP TeAms Team mentors are involved with their teams on a regular basis throughout the course. Weekly interaction and comments via LaunchPad Central is the minimum expectation. Bi-monthly face-toface meetings are also expected. These should be scheduled at the mentors convenience. Questions from mentors to their teams that are helpful include Have you considered x?; Why dont you look at company z and see what their business model is and compare it to yours; or Here are some names of domain experts in the field, you should talk to them. Try to avoid specifically telling them what to do. Remember: The class is not trying to be YCombinator. We are trying to give students models, heuristics and experience they can apply when 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 that as part of this class, they need to talk to customers, channel partners and domain experts and gather real-world datafor each part of their plan. Youre looking for experienced local entrepreneurs and investors who are willing to learn as much as they will teach. In recruiting mentors, it is important to select individuals with significant intellectual curiosity, relevant business experience, a generous spirit and an understanding of the value of the Business Model Canvas and customer discovery. If you picked the right ones, by the end of the class they will understand that a customer discovery narrative and the Business Model Canvas are important tools for building early stage ventures.
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LEAN LAUNCHPAD EDUCATORS TEACHING HANDBOOK Steve Blank & Jerry Engel January 2013

As advisors, they are committing to:

V. STUDENT TEAmS

Through trial and error weve learned that the class Finally, we ask, Whos looking for a team to join? is best when: We have those students introduce themselves Its team-based (background and interests). The teaching team Its interdisciplinary then leaves the students to mix and see if they can form teams. Admission is based on team composition When its taught as a graduate class, this means having a mix of students on each team, from a variety of academic backgroundsbusiness school, engineering, medical school, etc. When its taught as an undergrad class, this means having students across a diverse set of majors.

nical work background) and their idea (maximum of two minutes each).

Team Formation: Admission

ADmissiOn bY InterVieW The course, as constructed in this guide, requires instructor permission for admission. The teaching team selects the best student teams for admission, as opposed to the best projects. Your department may have bidding processes or first-come, first-served rules for class admission. Weve taught the class using those rules and found that they greatly diminish the experience for the students and the teaching team. (Obviously, if those are the rules, you can make do.) In the past, wed select the best ideas for admission. The irony being that we already knew that almost every one of those ideas would substantively change by the end of the class. Now we select for the best teams. What we look for is a balanced team with passion. Is there a visionary, a hacker and a hustler on the team? Teams that have great ideas but no ability to implement them typically fail. When the class is taught at a university, we want the students to focus on a scalable idea, i.e. one that can grow to tens or hundreds of millions of dollars. When its taught at colleges, the exact small class can be used to teach small business startups.

LEAN LAUNCHPAD EDUCATORS TEACHING HANDBOOK Steve Blank & Jerry Engel January 2013

Team Formation: Strategy

We insist that the Lean LaunchPad class be open to students from all departments engineering, business school, etc. The best teams are a mix of engineers and MBAs. The teams will self-organize and establish individual roles on their own. Weve found that having the teaching team try to form teams creates zero team cohesion. (I didnt do well because you assigned me to people I didnt like.) Within teams there are no formal CEOs or VPs. Just the constant parsing and allocating of the tasks that need to be done. By design, the teams to need figure out how to collaborate.

Team Formation: Mixers/Information Sessions

Every two weeks beginning six weeks before class starts, we sponsor a student mixer/information session (pizza provided) about the class (a total of three sessions). We have our teaching assistant organize an evening session, creating demand by widely broadcasting how exciting the class is and providing the session location via posters across the campus, emails to department lists, etc. In the mixer the members of the teaching team introduce themselves and provide a 10-minute overview of the class. Next, we take questions from the potential students. Then, we ask, Who has an idea for a team? We go around the room and let each of those students introduce themselves (tech24

ADmissiOn bY TeAms, NOt InDiViDUALs Admission to the class is by team. We do not accept individual applications. We have found that having the students come in with an already formed team accomplishes three things: It saves weeks of class time. Students have met, gotten to know each other and brainstormed their idea and are ready to hit the ground running. It eliminates the most egregious team dynamics issues of finding out which students cant work with each other. Most (though not all) of these issues get worked out pre-class, on their time, not yours. Most importantly, we get to select for passion, interest, curiosity and the ability to learn on their own.

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LEAN LAUNCHPAD EDUCATORS TEACHING HANDBOOK Steve Blank & Jerry Engel January 2013

As teams are formed in the mixers, the teaching as- Try hard not do it. To successfully run this sistant schedules team interviews during the second and third mixer (and another later if needed). class you need students who fight to get in, not Students have to apply using two slides: 1) a sumthose who think its just mary of who was on their team and 2) a filled-out another elective. This Business Model Canvas. (See examples.) class requires a ton of Admission by cross-disciplinary team can be a work. You are going to challenge in the bureaucracy of the siloed acapush these students redemic world. Depending on where the course is ally hard. situated in your college or university, you may run into the traditional you cant do that attitude and rules. Business schools may want you to admit their own students regardless of skill or passion. Some may want to control class admission by a class bidding or other system. Depending on sponsorship, departments may want you to admit a quota from their own departments.

Team Formation: Application Forms

Students apply as teams. They tell us about themselves and their team using the Team Information template in figure 1. They also submit a Business Model Canvas using the Business Model Information template in figure 2. The teaching team interviews all teams.

LEAN LAUNCHPAD EDUCATORS TEACHING HANDBOOK Steve Blank & Jerry Engel January 2013

Figure 1: Lean LaunchPad Application - Team Information

The Business Model Canvas as an application form gets the teams thinking about some of the fundamental questions about their project long before the class starts. What is a business model? What product or service am I offering? Who are my customers? We set the pace and tempo of the class by having the teams present the Business Model Canvas they used as an application on the first day of the class. They hit the ground running.

Figure 2: Lean LaunchPad Application - Business Model Information

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VI. ClASS ORGANIZATION

Team Projects
Team projects can be a product or service of any kind. This can include software, physical products, web-based services, etc. For many students, their first instinct may be a web-based startup. We suggest that they consider something that they are a domain expert in, 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.

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, summarizing their out-ofclassroom customer discovery. When they are not presenting, all teams peer-grade the presenting teams using a shared Google doc.

Team Deliverables
Teams are accountable for the following deliverables: Get outside the classroom and test all their business model hypotheses

Outside the classroom, Present a weekly in-class PowerPoint summary teams are expected to of their customer discovery progress (10+ cus- spend 10 to 15 hours a week talking to customtomer meetings a week) ers, 10+ customers each Use LaunchPad Central to blog a discovery week. Teams summarize narrative; its how the teaching team measures their detailed findings in their progress the form of a customer Show a costed bill of materials and a prototype discovery narrative and if building a physical product an updated Business Model Canvas using the Build the website, create demand and LaunchPad Central tool have customers using the product if build(described later). If the ing a web product (see http://steveblank. com/2011/09/22/how-to-build-a-web-startup- teaching team flips the classroom and uses the lean-launchpad-edition/) optional online lectures, We suggest that teams carefully consider the effort each student is required their project will require before they start. They to watch the current should not undertake a project they are not preweeks lecture and take pared to see through to completion. the quizzes.

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LEAN LAUNCHPAD EDUCATORS TEACHING HANDBOOK Steve Blank & Jerry Engel January 2013

LEAN LAUNCHPAD EDUCATORS TEACHING HANDBOOK Steve Blank & Jerry Engel January 2013

Figure 3 Student Assignments and Tools

Class Culture
Heres what we tell the students: Communication in a startup is very different from that in a university or large company. The culture is dramatically different from the university culture most of them are familiar with. At times it can feel brusque and impersonal, but in reality it is focused and oriented to create immediate action in timeand cash-constrained environments. We have limited time, and we push, challenge and question the students in the hope they will quickly learn.We will be direct, open and toughjust like in the real world.We hope they can recognize that these comments arent personal, but part of the process. We also expect them to question you, challenge your point of view if they disagree and engage in a real dialogue with the teaching team. This approach may seem harsh or abrupt, but it is all part of the teaching teams desire that the students learn to challenge themselves quickly and objectively, and to appreciate that as entrepreneurs they need to learn and evolve faster than they ever imagined possible.

Amount of Work
Heres what else we tell the students: This class requires a phenomenal amount of work, certainly compared to many other classes. Projects are treated as real startups, so the workload is intense. Teams have reported up to 20 hours of work each per week. Getting out of the classroom is what the effort is about. Its not about the lectures. Between lectures, students will be spending a significant amount of time outside the class talking to customers. If they cant commit the time to talk to customers, this class is not for them. This class is a simulation of what entrepreneurship is like in the real world, with all its chaos,uncertainly, impossible deadlines, conflicting input, etc.It pushes many people past their comfort zone. Its not about them, but its also not about the class or the teaching team. This is what startups are like and the class is just small part of what it is really like.The pace and the uncertainty pick up as the class proceeds.

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Team Dynamics
Just like in a startup, the demands and the pressure of the class can at times create conflicts within teams. At times weve seen:

Sharing Policy

Student/Instructor Success Criteria

The success of this curriculum depends on a consistent culture and set of beliefs among the students and instructors. The fundamental principles of the course are: PrOCess There are no facts inside your lab or building, so get the heck outside Your idea/invention is not a company, its one of the nine building blocks We use the Business Model Canvas to articulate our hypotheses

We use the Business Model Canvas to keep track of what we learned We expect that many of our initial hypotheses are wrong Iterations and pivots are the expectation

CULtUre A mindset of hypotheses testing, not execution Active participation by all team members All of you are held accountable for your team performance High-speed pace Teams average 100 customer contacts (not including focus groups and surveys) Bring your sense of humorwithout it, you will suffer

is more serious, make sure you document all conversations.

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LEAN LAUNCHPAD EDUCATORS TEACHING HANDBOOK Steve Blank & Jerry Engel January 2013

We tell the students that one of the key elements of the Lean LaunchPad is that we get smarter collectively. We learn from each otherfrom other teams in the class Students who enroll as well as from teams for the course but that came before. have overcommitted to other curricu- This means that as part lar or extracurricular of the class, the teams activities will be sharing their customer discovery Students who lose journeythe narrative interest when they of how their business find out that their model evolved as they idea was not supported by customer got the details of the customers they talked interest to. At times they will Teams that cant learn by seeing how agree on level of previous classes solved effort by each team the same kind of probmember lem, looking at their Other team tensions slides, notes and blogs. And they will share their It is the teaching teams presentations, Business responsibility to help, Model Canvas, blogs but not to solve the and slides with their teams problems. The peers and the public. teaching team can Just to be clear, this help diagnose issues and facilitate solutions. doesnt mean sharing their intellectual propAt times, all it takes is erty, but it does mean a conversation about roles, expectations and sharing details of what desired outcomes from they learned outside the the class. If the problem building.

We use customer development to test those hypotheses

VII. THE 10-WEEK COURSE, 12-WEEK COURSE, 5-DAY COURSE

The balance of this instructors guide provides specific and detailed guidance for offering the Lean LaunchPad course over a quarter (10 weeks) or a semester (12 weeks), with one three-hour meeting per week. Each format has been very successful, but the course material can be adapted and applied in various ways. In fact, in the appendix we have included a syllabus for a five-day course that has been successfully taught at Columbia University and Caltech. For the sake of convenience and cogency, this document describes the 10week format. However, we encourage you to experiment and adapt it to suit your requirements.

10-Week Course Logistics

Info sessions/mixers prior to the class for team formation The class is offered once a week Each class is 3 hours There are 8 weekly lectures, plus a 9th and a 10th week for the final team presentations (the class is easily configured for anywhere from 8 to 12 weeks. Three workshops are offered outside of normal class hours for customer discovery practice, details on customer acquisition and activation, and presentation skills training Lecture Info session/Mixer Info session/Mixer Info session/Mixer Lecture 1 Workshop 1 Lecture 2 Lecture 3 Lecture 4 Workshop 2 Lecture 5 Lecture 6 Lecture 7 Lecture 8 Workshop 3 Lessons Learned Lessons Learned Topic Course Q/A, students form teams Course Q/A, students form teams, 1st interviews Course Q/A, students form teams, final interviews Intro, business models, customer development Customer discovery practice for the real world Value proposition Customer segments Channels Customer acquisition and activation Customer relationships, Get/Keep/Grow Revenue model Partners Resources and costs Presentation skills training Lessons learned presentations teams 1-6 Lessons learned presentations teams 7-12

LEAN LAUNCHPAD EDUCATORS TEACHING HANDBOOK Steve Blank & Jerry Engel January 2013

Week 6 weeks prior 4 weeks prior 2 weeks prior Week 1 Week 1 Week 2 Week 3 Week 4 Week 4 Week 5 Week 6 Week 7 Week 8 Week 8 Week 9 Week 10

The optional online lectures are available via the Udacity website: http:// www.udacity.com/view#Course/nsfllp The PowerPoint versions of the lectures are available at SlideShare: http:// www.slideshare.net/sblank/tagged/syllabus

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Teaching Team Role and Tools

For each weekly class session, students are assigned: Pre-class readings In-class lectures (or instructors can choose optional prerecorded online lectures with quizzes) An in-class 10-minute team 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 components with 10+ customers The last weekly sessions are lessons learned presentations from each team; they consist of a 2-minute video plus an 8-minute PowerPoint presentation

Best PrACtiCes Some of the best practices weve seen work well: Using critiques of specific teams to make a general point for the entire class Trying hard not to offer students prescriptive advice or give them the answers, trying instead to teach them to see the patterns Adjuncts telling war stories with a specific lesson for the class Keeping in mind that everything youre hearing from students are their hypotheses guessesthat you want them to turn into facts Numbers of customer visits matter; the more visits, the more insights The goal is to get them to extract learning from the customer interactions

In class the role of the instructor is to: Answer questions about the on-lecture subject matter Critique the team presentations and offer guidance on customer discovery strategy and tactics Grade the student presentations and share private comments with the rest of teaching team

Outside class the role of the instructor is to: Review and comment weekly on each teams customer discovery narrative Hold mandatory office hours weekly, cycling each team in front of a member of the teaching team at least twice

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LEAN LAUNCHPAD EDUCATORS TEACHING HANDBOOK Steve Blank & Jerry Engel January 2013

LEAN LAUNCHPAD EDUCATORS TEACHING HANDBOOK Steve Blank & Jerry Engel January 2013

Figure 4 Teaching Team Responsibilities and Tools

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 PowerPoint if you decide to use them in class. The lectures have also been put online at Udacity if you decide to flip the classroom and offer them as homework. If you do so, you free up more class time for Q&A about the lecture material.

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LaunchPad Central
One of the problems in managing multiple teams is that it is difficult to keep track of their progress while maintaining a high level of instructor-to-team engagement. Without some way to keep detailed track of all teams progress during the week, your in-class critiques would be based

only on their 10-minute presentations.

LaunchPad Central Main Admin Page

LaunchPad Central Team Admin Page

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LEAN LAUNCHPAD EDUCATORS TEACHING HANDBOOK Steve Blank & Jerry Engel January 2013

their Business Model Canvas. We have them do it all online. Various To solve this problem, we insist that each team online solutions can be cobbled together (a blog their customer discovery progress. We online mash-up of blogging tools). However, we force them to write a weekly narrative of cus- favor using an integrated purpose-built tomers theyve visited tool called LaunchPad (they can include phoCentral. tos of their meetings), hypotheses theyve Using LaunchPad Centested, results theyve tral software we have found and changes in managed two simulta-

neous classes, each with 27 teams. This tool allows the teaching team to comment on each teams progress posts and interactively follow their progress 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 each team presents, your comments and critiques are informed by their progress.

Office Hours
In addition to reviewing each teams progress via the LaunchPad Central software, the teaching team has mandatory office hours for teams every week. Depending on the size of the teaching team and the number of student teams, you may cycle through one-third to all the teams each week. Office hours help to provide course-correct and uncover the inevitable team dynamics issues.

Textbooks
There are two required textbooks for this course: The Startup Owners Manual: The Step-by-Step Guide for Building a Great Company (Steve Blank and Bob Dorf, 2012) Business Model Generation: A Handbook for Visionaries, Game Changers and Challengers (Alexander Osterwalder, Yves Pigneur, 2010) Lecture slides can be found here: http://www.slideshare.net/sblank/tagged/syllabus Online lectures can be found here: http://www. udacity.com/overview/Course/nsfllp/CourseRev/1 Student presentation examples: http://www.slideshare.net/sblank/ for examples of whats needed in team presentations

LEAN LAUNCHPAD EDUCATORS TEACHING HANDBOOK Steve Blank & Jerry Engel January 2013

Grading
The course is team-based, and 85% of the grade will come from team progress and the final lessons learned presentation. The grading criteria are as follows: 15% Individual participation in peer grading in-class 40% Out-of-the-building progress as measured by weekly LaunchPad Central write-ups and presentations Team members must: 1) Update Business Model Canvas weekly 2) Write a detailed narrative on customer conversations weekly 20% The team in-class weekly lessons learned presentation 25% The team final lessons learned presentation and video

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Guidelines for Team Presentations

Each team is expected to speak to 10+ customers every week. The 10-minute weekly team presentations are summaries of the teams findings during that week. Slide 1 Slide 2 Slide 3-n Cover slide (team name, team members/roles, number of customers spoken with, what the team does) Updated Business Model Canvas What did you learn about topic of the day (canvas block x)? - Hypothesis: Heres what we thought - Experiments: So heres what we did - Results: So heres what we found Slide 4 - Iterate: So heres what we are going to do next Diagram (if appropriate) of what you learned this week (e.g., customer workflow, payment flows, distribution channel diagram)

Feedback from the teaching team during oral presentations is where the most learning occurs. Due to the pace of the course, participants must be held accountable to the material for the specific class.

VIII. INSTRUCTOR PRE-COURSE PREpARATION

Objective: Have a basic understanding of: The Lean LaunchPad class The Business Model Canvas Customer development Textbooks & Advanced Viewing Alexander Osterwalder & Yves Pigneur, Business Model Generation (BMG) http://www.businessmodelgeneration.com/order.php Steven Blank, The Startup Owners Manual (SOM) http://www.stevenblank.com/startup_index_qty. html Watch the Osterwalder video at: http://steveblank.files.wordpress.com/2012/04/osterwalder-guest-talk-012912.mov Review the lectures All PowerPoint decks here: https://www.dropbox.com/sh/gkrf8a9axfwpod3/02-jatKz4y Online Lectures 4-8 here Review the Lean LaunchPad class background http://steveblank.com/category/lean-launchpad/ http://steveblank.com/2010/12/07/the-lean-launchpad--teaching-entrepreneurship-as-a-management-science/ http://steveblank.com/2011/05/10/the-lean-launchpad-at-stanford--the-final-presentations/
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Instructor Reading Material:

LEAN LAUNCHPAD EDUCATORS TEACHING HANDBOOK Steve Blank & Jerry Engel January 2013

http://steveblank.com/2012/02/16/who-dareswins-the-2nd-annual-international-businessmodel-competition/ Look at Business Model Canvas http://www.businessmodelgeneration.com/ downloads/businessmodelgeneration_preview.pdf Read Customer Development Manifesto (chapter 2, SOM) Previous I-Corp Weekly and Final Presentations http://www.slideshare.net/sblank/tagged/icorps Official lecture slides: https://www.dropbox. com/sh/x26bdshi2gorbv0/WBFzHxL1tF

LEAN LAUNCHPAD EDUCATORS TEACHING HANDBOOK Steve Blank & Jerry Engel January 2013

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IX. DETAIlED ClASS CURRICUlUm

Student Assignment: Before the Teams Show Up in Class
Learning Objectives Students should come to class able to answer the following questions: Whats the difference between search and execution? What is a business model vs. a 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? 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, first lecture.

Why? How?

Reading Watch the Osterwalder video at: Assignment http://steveblank.files.wordpress.com/2012/04/osterwalder-guest-talk-012912.mov for day 1 of the Read: Business Model Generation: pp. 14-49 class Startup Owners Manual: 1-50 intro to customer development Course strategy: http://steveblank.com/category/lean-launchpad/ I-Corps team presentations: http://www.slideshare.net/sblank/tagged/i-corps. Team Assignment for day 1 Assignment Objective

Prepare your teams business model using the Business Model Canvas Come prepared with a customer contact/visit list that will last 3 days We dont 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 2-slide presentation to present your team to the cohort: Slide 1: Title slide Slide 2: Business Model Canvas See below for the presentation format

Hold Mentor Briefing

We suggest holding a mentor briefing an hour before the class starts. Go over the Mentor Handbook (see the appendix). Invite the mentors to the first class.

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LEAN LAUNCHPAD EDUCATORS TEACHING HANDBOOK Steve Blank & Jerry Engel January 2013

Assign readings before the class starts. Inform students that knowing these concepts are required. To test their knowledge, we have each team prepare its first pass of its Business Model Canvas prior to the first class (see section 10 for description and figures) Teams will present their canvas as the introduction to their cohort. But more importantly, so that the teaching team can assess how adequately they prepared for the course.

Team Name

Number of Customers this Week 0 TOTAL 0

Number of customers talked to this week. Total number to date

What your team does (2 lines or less )

LEAN LAUNCHPAD EDUCATORS TEACHING HANDBOOK Steve Blank & Jerry Engel January 2013

Team Members and Roles

Team cover slide for weekly presentations

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LEAN LAUNCHPAD EDUCATORS TEACHING HANDBOOK Steve Blank & Jerry Engel January 2013

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 teams level of preparation and understanding. Introduce the Business Model Canvas development principles. Shock and awe immersion in the present/critique teaching method. Fast-paced, in-depth instructor critique and analysis of each teams initial business models is critical during this session to emphasize to the students the level of preparation necessary. Have students understand that there is no such thing as spare time, and they need to be out of the building talking to customers. Customer development role playing: take two teams and have them role play discovery. Critique and correct the process.

LEAN LAUNCHPAD EDUCATORS TEACHING HANDBOOK Steve Blank & Jerry Engel January 2013

Why?

These are the fundamental principles of the course. The format of all the classes will be: Teams present in front of their peers Teaching team critiques each student team Instructors lecture on a component of the Business Model Canvas Having the students present on day one gives them full immersion on day one, first lecture It also gives the teaching team the ability to provide remedial help for any team after the first day of class; in almost every class, one or two need coaching

How?

Have teams start by presenting their Business Model Canvases as their introduction to the class Have the teaching team immediately start offering critiques of the models and team members; an interactive dialogue is encouraged These first critiques should focus on value prop, customers, channels, customer relations and revenue model Theyre usually wrong Dont go deep on one team; its the sum of the comments across the teams that is important When you see a common error, announce, This is a big idea, its one you will all encounter Have teaching team and TA start with grading and offering first impressions of each teams business model Have the students grade and comment their peers on the student Google Doc grading sheet Have teaching team present lectures 1-3 face-to-face to get command of the class (lectures 4-8 are recorded)

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Common student errors on their 1st presentation

Business model ignorance Not understanding the difference between a value prop and features Not understanding any detail about their customers No understanding of a channel Fantasy revenue model Business Model Canvas looks like a business plan Thinking that theyre in the class to execute their plan, not to search for one Start with Lecture 0, Introduction to the class and teaching team Next have the teams present their Business Model Canvases Finish with Lecture 1, Business Models/Customer Development Students will understand the level of hypotheses testing their business model will require After role-playing exercise students will have a feel for basic discovery techniques Lecture slides can be found here:

Lecture Learning Objectives

https://www.dropbox.com/sh/x26bdshi2gorbv0/WBFzHxL1tF

Students should understand the relationship between canvas components: Value proposition/customer segmentsproduct market fit Customer relationships: get/keep/grow Revenue/costsmaking money Many startups spend years attacking a small market. Having them think about the size of the opportunity early helps them keep asking, How big can this really be? Is it worth doing? See key lecture concept diagrams follow. Lecture 0 Class Introduction

Introduce the teaching team. Key concepts: Start by saying that the students are or will become domain experts in their fields. We will not be questioning their expertise. But we are the domain experts in building companies. We have a model that works, is intensive and will make all of them work extremely hard. Its 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 Their technology is ONE of the many critical pieces necessary to build a company and is part of the value propositioncustomers do not care about their technology, rather they are trying to solve a problem Difference in customer development between web/mobile vs. physical channels

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LEAN LAUNCHPAD EDUCATORS TEACHING HANDBOOK Steve Blank & Jerry Engel January 2013

Students should understand the concepts of: 9 parts of a business model Hypotheses vs. facts Getting out of the building Web/mobile vs. physical Problem/solution Product/market fit Hypotheses/experiment design/test/insight Iteration vs. pivot Focus on the right half of the canvas.

Lecture 1 Business Model Canvas & Customer Development

Intro of the Business Model Canvas and customer development Definition of hypothesis Definition of minimum feature set Description of experiments Definition of getting out of the building Definition of market size How do you determine whether a business model is worth doing? In part 3 of the lecture, pick any one final team presentation you feel most comfortable with from http://www.slideshare.net/sblank BMG, pp. 86-111, 135-145 SOM, pp. 51-84, market size, value proposition and MVP pp. 188-199 getting out of the building, 457-459 market type Whats a Startup? First Principles: http://steveblank.com/2010/01/25/whats -a-startup-first-principles/ Make No Little Plans: Defining the Scalable Startup: http://steveblank. com/2010/01/04/make-no-little-plans-%E2%80%93-defining-the-scalable-startup/ A Startup Is Not a Smaller Version of a Large Company: http://steveblank. com/2010/01/14/a-startup-is-not-a-smaller-version-of-a-large-company/ 12 Tips for Early Customer Development Interviews: http://giffconstable. com/2010/07/12-tips-for-early-customer-development-interviews/

Reading for next week

LEAN LAUNCHPAD EDUCATORS TEACHING HANDBOOK Steve Blank & Jerry Engel January 2013

Assignment for next week

Lecture Watch Lecture 2 Value Propositiontake the quiz http://www.udacity.com/view#Course/ep245/CourseRev/1/Unit/76001/Nugget/326002 Presentation Identify your market size Identify your type of business (IP/licensing/startup/unknown) Propose experiments to test your value proposition, customer segment, channel and revenue model of your business model What constitutes a pass/fail signal for each test? See http://www.slideshare.net/sblank/tagged/i-corps for examples of whats needed in tomorrows presentation Talk to at least 5 potential customers Get team blog up and post first discovery narratives

Tomorrows Presentation Guidelines

Slide 1: Cover slide Slide 2: Current Business Model Canvas with any changes marked Slide 3: Market size (TAM/SAM/Target) Slide 4: What type of business are you building? IP, licensing, startup, unknown? Slide 5: What are your proposed experiments for testing customer segment, value proposition, channel and revenue model of the hypotheses? What constitutes a pass/fail signal for each test? For example, at what point would you say that your hypothesis wasnt even close to correct?

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CLAsses 1 tHrOUGH 8: PresentAtiOn AGenDA AnD TeACHinG AssistAnt ACtiVities

Teaching Assistant Activities for Classes 18 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 Preflight logisticsprojectors, screens, Wi-Fi, break rooms, etc. Collect student slides beforehand so no individual computer setup is necessary Then load them on a single presentation computer TA to email team presentation order TA to keep the clock on team presentation time announce 1 minute to go Have the TA prepare the shared Google Doc grading sheets One for the teaching team A separate one for the students TA should 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 After Class Schedule office hours

Typical Class 1 Student Business Model Canvas: A Business Plan on a Page

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LEAN LAUNCHPAD EDUCATORS TEACHING HANDBOOK Steve Blank & Jerry Engel January 2013

LeCtUre 1: KeY COnCePt DiAGrAms

LEAN LAUNCHPAD EDUCATORS TEACHING HANDBOOK Steve Blank & Jerry Engel January 2013

Ensure that students understand all parts of the Business Model Canvas

Ensure that students understand the Four Steps of Customer Development

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Ensure that students understand the Hypotheses>Design>Test>Insight Loop

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LEAN LAUNCHPAD EDUCATORS TEACHING HANDBOOK Steve Blank & Jerry Engel January 2013

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 Student Presentations Instructor Critiques How?

Set expectations for: Customer discovery: quantity, speed and insight Annotation of the Business Model Canvas updates Their blog as a customer discovery narrative Remind them: Customer calls are not optional; they need to be continuous Hypotheses need to be turned into facts; there are no facts inside their university/lab This class is not about the execution of their original idea Yesterday after class, the teams spoke to at least 5 customers. They were supposed to set up meetings before they arrived. Hang a team publicly that did not call on anyone (theres always one) Stop their presentation and have them leave to make phone calls Tell them that if they have something to add before the rest of the presentations are over, they can present Make it clear that this is what the class is about Todays presentation teams explain what they learned in those calls Have them annotate the canvas with new learning each week Make comments to show youve read their blog and that its critical to update Make sure they are articulating their hypotheses (what they expected to learn) vs. what they found. Without that its just a bunch of random customer interviews. This hypothesis>experiment>data>insight loop is the core of the process and the class Not enough customer calls Vague data from the calls Little to no insight from the data No clue about market size or overly optimistic Not clear whether theyre IP/licensing/startup/unknown Did not articulate experiments to test their hypotheses Did not articulate pass/fail tests for each hypothesis

LEAN LAUNCHPAD EDUCATORS TEACHING HANDBOOK Steve Blank & Jerry Engel January 2013

Common student errors on their 2nd presentation

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

Lecture 2 Value Proposition Learning Objectives

Students should understand: The smartest teams believe its all about their invention Your goal is to teach them its all about the business model The majority of product features are never used by customers The MVP and customer development eliminate waste in time/cash Engineers love to add features The goal of the MVP is to find the minimum feature set The difference in an MVP for a physical product vs. the low- and high-fidelity MVPs for a web/mobile product Explain why customer development cant be done with Waterfall engineering but needs an Agile Development process Lecture slides can be found here: https://www.dropbox.com/sh/x26bdshi2gorbv0/WBFzHxL1tF See key lecture concept diagrams below.

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Lecture 2 Value Proposition

Defining your product or service How does it differ from an idea The role of pain killers, gain creators, problems/needs Identifying the competition and how your customers view these competitive offerings Whats the minimum viable product? Whats 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 The goal is to find the minimum viable product That value proposition and customers are integrated = product/market fit The value of annotating the Business Model Canvas The need to be open to changing initial Business Model Canvas hypotheses

Assignment for Next Week

Lecture Watch Lecture 3: Customer Segmentstake the quiz http://www.udacity.com/view#Course/ep245/CourseRev/1/Unit/219001/Nugget/288004 Presentation What are the pain killers, gain creators and key features? What is the resulting MVP? Propose experiments to test your value proposition What constitutes a pass/fail signal? See http://www.slideshare.net/sblank/tagged/i-corps for examples of whats needed in tomorrows presentation Talk to at least 5 potential customers Post-discovery narratives

Presentation Guidelines

Slide 1: Cover slide Slide 2: Current Business Model Canvas with any changes marked Slide 3 What were your experiments to test value proposition? Slide 4: Diagram of value proposition pain/gain/features and MVP Slide 5-n: What did you learn about your value proposition from talking to your first customers? Hypothesis: Heres what we thought Experiments: So heres what we did Results: So heres what we found Iterate: So heres what we are going to do next

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LEAN LAUNCHPAD EDUCATORS TEACHING HANDBOOK Steve Blank & Jerry Engel January 2013

Reading for Next Week

BMG pp. 146-150, 161-168 and 200-211 SOM pp. 85-97, 112-125, 203-217 problem understanding, 218-221 gain customer understanding, 260-266 product/market fit

LeCtUre 2: KeY COnCePt DiAGrAms

LEAN LAUNCHPAD EDUCATORS TEACHING HANDBOOK Steve Blank & Jerry Engel January 2013

Ensure that students understand the 3 components of the Value Proposition

Casually introduce the 3 components of the Customer Segment

Ensure that students understand that product/market fit = Value Proposition + Customer Segment

Ensure that students understand they have to articulate their hypotheses, design experiments, test and hopefully get insights 48

Class 3: Customer Segments

Team presentation based on Value Proposition Lecture Remote Lecture 3: Customer Segments

Teaching Objectives Student Presentations Instructor Critiques How?

Continue the pace of discovery, customer calls, insights and critiques Make sure teams continue to: Annotate the Business Model Canvas with updates Update their blog as a customer discovery narrative Focus your main critique on their understanding of the value proposition Acknowledge youve read their blog Comment on other egregious parts of the canvas as necessary Before they leave, make sure you solve any apparent team dysfunctions Most teams start with a value proposition equal to the feature set Make sure theyve articulated pain killers, gain creators, MVP Use your critiques to drive them to understand what pains their value proposition is solving, 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 Not enough customer calls Vague data from the customer calls (They like our features ...) Little to no insight from the data (we called on 12 customers and heres what they said ) Team thinks the purpose of the class is the execution of their idea vs. the testing of their hypotheses Still confused about the difference between a value proposition and features Confusing features with pain killers or gain creators (the value prop is not a spec sheet) Did not articulate experiments to test their hypotheses Did not articulate pass/fail tests for each hypothesis Missing/forgetting other key value-prop elements (competitive mapping, how customers discover you, current solution and its strengths/weaknesses) Settling for the do you like my product answer and moving on

Common student errors on their 3rd presentation

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

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LEAN LAUNCHPAD EDUCATORS TEACHING HANDBOOK Steve Blank & Jerry Engel January 2013

Lecture 3 Customer Segments Learning Objectives

Students should understand: Value proposition + customer segment = product/market fit Customer pains and gains Customer Jobs to be done Customer archetypes/personas and why they are useful Problem vs. Needs The difference between users, influencers, recommenders, decision makers, economic buyers and saboteurs Who will pay and why? Market Typeexplain the difference between existing, resegmented, new and clone markets 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 https://www.dropbox.com/sh/x26bdshi2gorbv0/WBFzHxL1tF See key lecture concept diagrams below.

LEAN LAUNCHPAD EDUCATORS TEACHING HANDBOOK Steve Blank & Jerry Engel January 2013

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. Remind them that customers are the critical difference between an idea and a successful company Getting out of the building is about first testing their value proposition vs. customer hypotheses. At first its hard and awkward. Market Type influences how much customers can teach them

Lecture 3 Customer Segments

Instructors should emphasize: Customers need to match their value proposition Customer knowledge leads to an archetype/persona 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 BMG pp. 127-133 SOM pp. 98 111, and 332-343, 406-412-Distribution Channels

Reading for next week Assignment for next week

Lecture Watch Lecture 4 Distribution Channels take the quiz http://www.udacity.com/view#Course/ep245/CourseRev/1/Unit/71001/Nugget/79001 Presentation What are the Pains, Gains and Jobs to be done? Draw a diagram of the customer workflow What is the resulting Customer Archetype? Draw a diagram How do they solve this problem(s) today? Does your value 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, and how are they individually evaluated within that organization, and how will this buying decision be made? See http://www.slideshare.net/sblank/tagged/i-corps for examples of whats needed in tomorrows presentation Talk to at least 10 potential customers Post discovery narratives

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Presentation Guidelines

Slide 1: Cover slide Slide 2: Current Business Model Canvas with any changes marked Slide 3 What were your experiments to test your customer segment? Slide 4: Diagram of archetype(s) Slide 5-n: What did you learn about your customers segments from talking to customers? Hypothesis: Heres what we thought Experiments: So heres what we did Results: So heres what we found Iterate: So heres what we are going to do next

Did anything change about value proposition?

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LEAN LAUNCHPAD EDUCATORS TEACHING HANDBOOK Steve Blank & Jerry Engel January 2013

LeCtUre 3: KeY COnCePt DiAGrAms

LEAN LAUNCHPAD EDUCATORS TEACHING HANDBOOK Steve Blank & Jerry Engel January 2013

Ensure students understand the 3 components of the Customer Segment

Ensure students understand the 4 Market Types

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Example of a Customer Flow Diagram

Example of a Customer Archetype/ Persona

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LEAN LAUNCHPAD EDUCATORS TEACHING HANDBOOK Steve Blank & Jerry Engel January 2013

Class 4: Distribution Channels

Team Presentation based on Customer Segments Lecture Remote Lecture 4: Distribution Channels

Teaching Objectives Student Presentations Instructor Critiques

Continue the pace of discovery, customer calls, insights & critiques Make sure teams continue to: Annotate the Business Model Canvas with updates Include diagrams of each part of the hypothesis Update their blog as a customer discovery narrative Focus your main critique on their understanding of customer segments Acknowledge youve read their blog Comment on other egregious parts of the canvas as necessary Most students usually think of customers as the users of the product Make sure they understand there might be multiple customer segments (users, payers, etc.) Make sure their presentation included a customer archetype slide and a customer workflow diagram Ask them if they can draw a day in the life of customer. If not, tell them they dont know enough Use your critiques to drive them to understand what pains their customers have, what gains they are looking for and what jobs do they want done? Which features from the value prop will do that? Who specifically is (are) the archetype(s) Give complements to teams that drew archetypes and customer flow Do not be polite to those who havent. If you cant draw it you dont understand it. 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 Did not articulate pass/fail tests for each hypothesis

How?

LEAN LAUNCHPAD EDUCATORS TEACHING HANDBOOK Steve Blank & Jerry Engel January 2013

Common student errors on their 4th presentation

Optionally, this lecture is online. All students need to watch it before class.
Lecture 4 Students should understand: Definition of a distributions channel Distribution Channels Direct, indirect and OEM Difference between physical and virtual channels Types of physical and virtual channels Learning Objectives Distribution channel vs. product complexity Distribution channel economics See key lecture concept diagrams below. Why?

Scientists and engineers think of sales as a tactic a salesperson uses Most entrepreneurs confuse channels with customers They do not understand the impact a channel can have on its revenue streams The more complex the channel, the smaller the margins will be There is a costbenefit analysis made when choosing channels Channels are a strategy; discovering the right channel fit is an art

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Lecture 4

Instructors should emphasize: Channels need to match their customer segments Distribution Channels Channels need to match the product (and support) complexity Channel economics need to match revenue goals Founders need to sell and close the first few orders to prove the channel Reading for next week Assignment for next week

SOM pp. 126-168 customer relationships hypotheses, pp. 296-351 Get/Keep/Grow

Lecture Watch Lecture 5: Customer Relationshipstake the quiz http://www.udacity.com/view#Course/ep245/CourseRev/1/Unit/219002/Nugget/321004 Presentation What is the distribution channel? Are there alternatives? Draw the channel diagram Annotate it with the channel economics What were your hypotheses about who/what your channel would be? Did you learn anything different? What was it that made channel partners interested? excited? Did anything change about value proposition or customer segment? See http://www.slideshare.net/sblank/tagged/i-corps for examples of whats needed in tomorrows presentation Talk to at least 10 potential customers and channel partners (Salesmen, OEMs distributors, etc.) Post your discovery narratives

Presentation Guidelines

Slide 1: Cover slide Slide 2: Current Business Model Canvas with any changes marked Slide 3 What were your experiments to test your channels? Slide 4: Diagram of channel Slide 5-n: What did you learn about your channel from talking to customers? Hypothesis: Heres what we thought Experiments: So heres what we did Results: So heres what we found Iterate: So heres what we are going to do next Did anything change about value proposition?

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LEAN LAUNCHPAD EDUCATORS TEACHING HANDBOOK Steve Blank & Jerry Engel January 2013

LeCtUre 4: KeY COnCePt DiAGrAms

LEAN LAUNCHPAD EDUCATORS TEACHING HANDBOOK Steve Blank & Jerry Engel January 2013

Ensure that students understand the Physical Distribution Channels alternatives

Ensure that students understand the Web/Mobile Distribution Channels

56

Ensure that students understand Direct Sales Channel Economics

Ensure that students understand Reseller Channel Economics

Ensure that students understand OEM Sales Channel Economics

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LEAN LAUNCHPAD EDUCATORS TEACHING HANDBOOK Steve Blank & Jerry Engel January 2013

LEAN LAUNCHPAD EDUCATORS TEACHING HANDBOOK Steve Blank & Jerry Engel January 2013
Ensure that students understand Channel vs. Product Complexity

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Class 5: Customer Relationships (Get/Keep/Grow)

Team presentation based on Distribution Channels Lecture Remote Lecture 5: Customer Relationships (Get/Keep/Grow)

Teaching Objectives Student Presentations Instructor Critiques

Pick up the pace of discovery, customer calls, insights & critiques Make sure teams continue to: Annotate the Business Model Canvas with updates Include diagrams of each part of the hypothesis Update their blog as a customer discovery narrative Focus your main critique on their understanding of distribution channel Acknowledge youve read their blog Realize some teams are in the trough of despair Comment on other egregious parts of the canvas as necessary Most students confuse the channel with the users of the product Make sure their presentation included a channel diagram Make sure the channel diagram had the economics on it Use your critiques to drive them to understand: What type of channel theyd 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 marketing/sales roles of each step in the channel? Make sure theyve diagrammed it Do they understand the sales cycle and customer acquisition process? 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 have no 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 This info/feedback is key data for defining sales cycle Most first-time entrepreneurs confuse channels with customers They may not understand: The relationship between a channel and its revenue streams The more complex the channel, the smaller the margins The cost-benefit analysis for choosing channels Did not articulate experiments to test their hypotheses Did not articulate pass/fail tests for each hypothesis

How?

Common student errors on their 5th presentation

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

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LEAN LAUNCHPAD EDUCATORS TEACHING HANDBOOK Steve Blank & Jerry Engel January 2013

Lecture 5 Customer Relationships Get / Keep / Grow Learning Objectives

Students should understand: How teams get customers into their sales channel and move them successfully through the sales cycle How to keep them as customers 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 lifetime value of a customer and how to calculate this figure and incorporate it into their customer acquisition strategies See key lecture concept diagrams below.

Why?

LEAN LAUNCHPAD EDUCATORS TEACHING HANDBOOK Steve Blank & Jerry Engel January 2013

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 strategies, tactics and metrics such as purchase patterns, cohort analysis, complaints and participation in grow efforts, among others Multi-sided markets need separate Get, Keep and Grow strategies (e.g., users and payers) Get/Keep/Grow needs to match their channel and customer segments. Emphasis on repeatable and scalable relationship strategies Sales Funnel (Customer Relationship Life Cycle) Awareness-Interest-Consideration-Purchase-Keep Customers-Unbundle/ Upsell-Cross-sell-Referrals Startups need to understand the sales cycle to Get, Keep and Grow a customer for their relevant market Demand creationdrives customers to chosen sales channels Tactics: earned and paid media & marketing, online tools Customer acquisition costs (CAC) and how to model/calculate Test your way to getting a good handle on CAC; this can put you out of business faster than anything else How do you validate, then scale a bit, then revalidate to be sure you have a business? Customer lifetime value (LTV) Retention strategies and tactics How to create end-user demand Difference between web and other channels Evangelism vs. existing need or category How demand creation differs in a multi-sided market

Lecture 5 Customer Relationships Get / Keep / Grow

Instructors should emphasize:

Reading for next week SOM pp. 180-188 revenue and pricing hypotheses, 260-269 verify business model, 438456 metrics that matter Watch: Mark Pincus, Quick and Frequent Product Testing and Assessment: http:// ecorner.stanford.edu/authorMaterialInfo.html?mid=2313

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Assignment for next week

Lecture Watch Lecture 6: Revenue Streamstake the quiz http://www.udacity.com/view#Course/ep245/CourseRev/1/Unit/73001/Nugget/174002 Presentation Talk to at least 10 potential customers Build demand creation budget and forecast Create objective pass/fail metrics for each Get test/methodology What is your customer acquisition cost? What is your customer lifetime value? Did anything change about value proposition, customers/users, channel? Update your blog and canvas See http://www.slideshare.net/sblank/tagged/i-corps for examples of whats needed in tomorrows presentation

Presentation Guidelines

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LEAN LAUNCHPAD EDUCATORS TEACHING HANDBOOK Steve Blank & Jerry Engel January 2013

Slide 1: Cover slide Slide 2: Current Business Model Canvas with any changes marked Slide 3: What were your experiments to test getting customers? Slide 4: Diagram of Get/Keep/Grow Annotate it with costs to get customers Slide 5-n: What did you learn about how to get, keep and grow customers? Hypothesis: Heres what we thought Experiments: So heres what we did Results: So heres what we found Iterate: So heres what we are going to do next

LeCtUre 5: KeY COnCePt DiAGrAms

LEAN LAUNCHPAD EDUCATORS TEACHING HANDBOOK Steve Blank & Jerry Engel January 2013

Ensure that students understand Get/Keep/Grow Customers on the Web

Ensure that students understand Get/Keep/Grow Customers for Physical Channels

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Ensure that students understand Customer Acquisition Cost (CAC)

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LEAN LAUNCHPAD EDUCATORS TEACHING HANDBOOK Steve Blank & Jerry Engel January 2013

LEAN LAUNCHPAD EDUCATORS TEACHING HANDBOOK Steve Blank & Jerry Engel January 2013

64

Class 6: Revenue Streams

Team presentation based on customer relationships lecture Remote Lecture 6: Revenue Streams

Teaching Objectives Student Presentations Instructor Critiques

Teams should be showing some real progress Realize some teams are in the trough of despair Do not give up on the ones who seem lost; about half of those surprise you Dont 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 Update their blog as a customer discovery narrative Acknowledge youve read their blog Focus your main critique on their understanding of customer relationships Comment on other egregious parts of the canvas as necessary

Common student errors on their 6th presentation

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 customer acquisition and customer activation for web/mobile startups Online marketing is important, even if the product and sales channels are physical

Optionally, this lecture is online. All students need to watch it before class.
Lecture 6 Revenue Streams Learning Objectives Students should understand: Revenue model = the strategy the company uses to generate cash from each customer segment Direct sales, licensing, subscription Within the revenue modelHow do I price the product? Pricing is a tactic Revenue model is the strategy This is not about income statement, balance sheet and cash flow. Those are operating details that are derived after a proven revenue model and pricing. See key lecture concept diagrams below. Lecture 6 Revenue Streams Instructors should emphasize: Types of revenue streams Revenue models Pricing tactics Physical vs. web/mobile revenue models and multi-sided market revenue models SOM pp. 176-179 partners, 257-270 and 429-459

Reading for Next Week

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LEAN LAUNCHPAD EDUCATORS TEACHING HANDBOOK Steve Blank & Jerry Engel January 2013

How?

Ask, What earned media activities do you plan to do for your startup? What do you hope to achieve? Even though they wont have time to do real demand creation, they need to grasp the concepts of Get/Keep/Grow, CAC & LTV Ensure that their diagrams show funnel and real $s for costs Ask, Do you know what your customers read, what trade shows they attend, what gurus they follow, and where they turn for new product information?

Assignment for Next Week

Lecture Watch Lecture 7: Partnerstake the quiz http://www.udacity.com/view#Course/ep245/CourseRev/1/Unit/74001/Nugget/161001 Presentation Talk to at least 10 potential customers. Test pricing in front of 100 customers on the web, 10-15 customers non-web. Whats the revenue model strategy? What are the pricing tactics? Draw the diagram of payment flows What are the metrics that matter for your business model? Did anything change about value proposition, customers/users, channel, customer relations? Update your blog and canvas See http://www.slideshare.net/sblank/tagged/i-corps for examples of whats needed in tomorrows presentation

LEAN LAUNCHPAD EDUCATORS TEACHING HANDBOOK Steve Blank & Jerry Engel January 2013

Presentation Guidelines

Slide 1: Cover slide Slide 2: Current Business Model Canvas with any changes marked Slide 3: What were your hypotheses and experiments to test your revenue model and pricing tactics? Slide 4: Diagram of payment flows Slide 5-n: What did you learn about your revenue model and pricing? Hypothesis: Heres what we thought Experiments: So heres what we did Results: So heres what we found Iterate: So heres what we are going to do next

66

LeCtUre 6: KeY COnCePt DiAGrAms

67

LEAN LAUNCHPAD EDUCATORS TEACHING HANDBOOK Steve Blank & Jerry Engel January 2013

Class 7: Partners
Team presentation based on revenue streams lecture Remote Lecture 7: Partners

Teaching Objectives Student Presentations Instructor Critiques

Teams should be showing some real progress Realize some teams are in the trough of despair Do not give up on the ones who seem lost, about half of those surprise you Dont 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 Update their blog as a customer discovery narrative Acknowledge youve read their blog Focus your main critique on their understanding of revenue models and pricing Comment on other egregious parts of the canvas as necessary Ask:

How?

LEAN LAUNCHPAD EDUCATORS TEACHING HANDBOOK Steve Blank & Jerry Engel January 2013

What is your revenue model? Why did you select it? How do customers buy today? What do they pay today? What do competitors charge? Does it result in a large company? Sufficient profit?

Common student errors on their 7th presentation

Students confuse pricing tactics with revenue model strategy Students price on cost vs. 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 Students should understand:

What is a partner? Types of partners Risks associated with having a partner and how to manage them Suggestions related to selecting a partner as a startup

See key lecture concept diagrams below. Lecture 7 Partners Instructors should emphasize: Who are partners The difference between strategic alliances, competition, joint ventures, buyers, suppliers and licensees While partners are critical for large companies (most companies do not do everything by themselves), strategic alliances and joint partnerships are not needed to serve early evangelists. They are needed for mainstream customers. For startups, partners can monopolize your time Partners must have aligned goals and customers Some examples: Partnership disasters: Boeing 787 Strategic alliances: Starbucks partners with Pepsi, creates Frappuccino Joint business development: Intel partners with PC vendors Coopetition: Automotive suppliers create AIAG Key suppliers: Apple builds iPhone from multiple suppliers

Reading for Next Week 68 SOM pp.169-175 resources, 180-188 revenue and pricing

Assignment for Next Week

Lecture Watch Lecture 8: Resources, Activities and Coststake the quiz http://www.udacity.com/view#Course/ep245/CourseRev/1/Unit/75001/Nugget/77002 Presentation Talk to at least 10 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? Whats the cost of the partnership? Draw the diagram of partner relationships with any dollar flows Did anything change about value proposition or customers/users, channel, demand creation or revenue streams? What are the incentives and impediments for the partners? Update your blog and canvas See http://www.slideshare.net/sblank/tagged/i-corps for examples of whats needed in tomorrows presentation

Presentation Guidelines

Slide 1: Cover slide Slide 2: Current Business Model Canvas with any changes marked Slide 3: What were your hypotheses experiments to test your partners? Slide 4: Diagram of partner relationships Slide 5-n: What did you learn about your partners? Hypothesis: Heres what we thought Experiments: So heres what we did Results: So heres what we found Iterate: So heres what we are going to do next

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LEAN LAUNCHPAD EDUCATORS TEACHING HANDBOOK Steve Blank & Jerry Engel January 2013
LeCtUre 7: KeY COnCePt DiAGrAms

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Class 8: Resources, Activities and Costs

Team presentation based on partners lecture Remote Lecture 8: Resources, Activities and Costs

Teaching Objectives Student Presentations Instructor Critiques How?

This is the last presentation Teams will want to slow down or stop calling customers; dont let them slow down the pace of discovery and customer calls Focus your main critique on their understanding of partners Comment on other egregious parts of the canvas as necessary 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? What economic benefit does this partner provide your business? How many partners are there like this?

Ask:

Optionally, this lecture is online. All students need to watch it before class.
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 startups intellectual property can be protected Add up all the costs. Is this a business worth doing? See key lecture concept diagrams below. Students should understand: Resources: financial, physical, intellectual, human capital Intellectual property protection. The assumed path (patents) may not be the right one to choose at this stage. Activities: Manufacturing? Supply chain? Problem solving? Costs: Fixed costs? Variable costs?

Lecture 8 Resources, Activities and Costs

Assignment

Keep talking to 10 customers a week Final 7-minute presentation and 2-minute video See workshop 3

Video Presentation Guidelines

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Common student errors on their 8th presentation

Students think their business has to do everything and dont 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 successfully closing a partnership deal Students confuse partnership closing with successfully executing partnership Students forget about channel costs and all that is part of channel costs, like SPIFs and stocking allowances

LEAN LAUNCHPAD EDUCATORS TEACHING HANDBOOK Steve Blank & Jerry Engel January 2013
LeCtUre 8: KeY COnCePt DiAGrAms

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Workshop 3: Presentation Skills Training

Teaching Objectives Teams bring their draft final presentations, draft story video, and draft technical video. They refine and polish them throughout the day, changing slides, editing video, reshooting interviews and redoing voice-overs while receiving comments and suggestions from the instructors along the way. The emphasis is on how they present themselves and their material, with a specific focus on telling a clear and 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 that followed these instructions received initial comments and suggestions via email a few days before the workshop. The day of the workshop The first 30-60 minutes is spent talking about storytelling and presentation basics. (The key lecture concepts are in a later section.) Then instructors walk the room and work with the teams, one at a time. Often, a comment or suggestion comes up that all the teams would benefit from hearing. Instructors should get everyones attention and share it. After a break, each team gives their presentation to the instructors and other groups and receives notes in a formal practice session. Assignment Students have two deliverables for the lessons learned class: Story Video: 2-minute video focused on the journey through I-Corps as it relates to their business Lessons Learned Slide Deck (8 minutes for the slide presentation)

LEAN LAUNCHPAD EDUCATORS TEACHING HANDBOOK Steve Blank & Jerry Engel January 2013

Best Practices

Focus every bit of the team presentations (slide deck and videos) on the specifics of the company each team is starting, the specifics of the customers they met, and the specific lessons they as a company learned about their particular product or service. Use diagrams of what was learned: customers, channels, etc. Use updated Business Model Canvases to show the journey Teams that emailed YouTube links to their videos and slide decks several days in advance get much better feedback and have time to act on the feedback. Youtube is the right mechanism for sharing video for email critique; only accept YouTube links. Dropbox, and especially email attachments, bring the entire process to a standstill.

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Story Video Details (2 min.)

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

See all presentations and videos at: http://www.slideshare.net/sblank/tagged/i-corps

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Suggested Story Video Outline What are your names and what is your teams name? Introduce yourselves. Pan the camera around your office so we can see where you work. How many customers did you talk to? Did you find this easy? Hard at first? 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?? Why, specifically, was this your most interesting customer conversation? And how, specifically, did your business model change as a result? 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: City Climber team from City University of New York http://www.slideshare.net/sblank/city-climber-story-video-nsf RedOx team from Yale http://www.slideshare.net/sblank/redox-video-nsf Phi Optics from University of Illinois http://www.slideshare.net/sblank/phi-optics-story-video-nsf Soliculture team from UC Santa Cruz http://www.slideshare.net/sblank/soliculture-story-video-nsf NeonLabs from Carnegie Mellon University http://www.slideshare.net/sblank/neonlabs-story-video-nsf

Lessons Learned PowerPoint Presentation (8 min.)

The lessons learned slide deck is a very short list of definitions and simple declaratives that are intended to increase the quality of the presentations. Here it is, in full: Story Be specific Show me, dont tell me Arcs Beginning, middle, end Character, setting, plot Editing Notes Look before... Practice! Be specific Use (or enhance) the diagrams you developed in weekly presentations to illustrate these points.

LEAN LAUNCHPAD EDUCATORS TEACHING HANDBOOK Steve Blank & Jerry Engel January 2013

Instructors will find plenty of material to work with by looking at the slide decks and video links that are emailed in advance. Spend the morning sessions talking about the common pitfalls in team presentations. Make 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, customer flow, distribution channel, revenue flow. 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: RedOx team from Yale http://www.slideshare.net/sblank/redox-final-nsf-presentation NeonLabs from Carnegie Mellon University http://www.slideshare.net/sblank/lighttipnsf-final-presentation Phi Optics from the University of Illinois http://www.slideshare.net/sblank/phiopticsnsf-final-presentation OmegaChem Iowa State University http://www.slideshare.net/sblank/omegachem-nsffinal-presentation See all presentations and videos at: http://www.slideshare.net/sblank/tagged/i-corps

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Common student errors Presentation and video

Students often make very bland story videos. o They dont naturally hone in and choose very specific details of their technology, their customers and their learning process. This is essential, the more specific the better. o It is only through the specificity of the storytelling that an audience 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 that 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 2-minute video abouta real company that is 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 to get subsequent financing. Students must strive to tell the story of their mistakes, pitfalls discovered and pivots made. Most importantly, students must talk in the most specific terms possible about the customers they actually met, what they actually said, and how that changed their Business Model Canvases. Students dont label their axes on graphs, label their arrows in diagrams or make a legend showing their color-coding scheme. They should.

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Class 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

Collaborative Google Documents

LEAN LAUNCHPAD EDUCATORS TEACHING HANDBOOK Steve Blank & Jerry Engel January 2013

Collaborative Google Documents Instructor Grading Document

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Startu Wisdom Document

Student Peer-Grading Document

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10-Week Syllabus: Sample

ENGR 245: The Lean LaunchPad Course title: Units: Instructors: TAs: Grading: Days and times: Office hours: Technology Entrepreneurship and Lean Startups 34 Steve Blank, Ann Miura-Ko, Jon Feiber Thomas Haymore Letter (ABCD/NP) Tues 4:157:05 p.m. Tues 3:004:00 p.m.

Location: TBD

LEAN LAUNCHPAD EDUCATORS TEACHING HANDBOOK Steve Blank & Jerry Engel January 2013

Web page: Texts:

http://e245.stanford.edu/ Steven Blank, Four Steps to the Epiphany Alexander Osterwalder and Yves Pigneur, Business Model Generation

PrErEQUisitE: Interest in/passion for discovering how an idea can become a real company. 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 its like to actually start a high-tech company. This class is not about how to write a business plan. Its 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. And the course is most definitely not an incubator where you come to build a hot idea. This is a practical classessentially 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. Youll work in teams, learning how to turn a great idea into a great company. Youll learn how to use a business model to brainstorm each part of a company and customer development to get out of the classroom to see whether anyone other than you would want/use your product. Finally, based on the customer and market feedback you gathered, you will use agile development to rapidly iterate your product and turn it into 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.
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See http://steveblank.com/category/lean-launchpad/ for a week-by-week narrative of a past class. Class CUltUrE: Communication in a startup is very different from that in a university or large company. The culture is dramatically different from the university culture most of you are familiar with. At times it can feel brusque and impersonal, but in reality it is focused and oriented to create immediate action in time- and cash-constrained environments. We have limited time, and we push, challenge and question you in the hope that you will quickly learn.We will be direct, open and toughjust like in the real world.We hope you can recognize that these comments arent personal, but part of the process. We also expect you to question us, challenge our point of view if you disagree and engage in a real dialogue with the teaching team.This approach may seem harsh or abrupt, but it is all part of our desire that you learn to challenge yourselves quickly and objectively, and to appreciate 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 20 hours of work each per week. Getting out of the classroom is what the effort is about. Its not about the lectures. You will be spending a significant amount of time between each of the lectures outside your lab talking to customers. If you cant commit the time to talking to customers, this class is not for you. This class is a simulation of what startups and entrepreneurship are like in the real world, with all its chaos,uncertainly, impossible deadlines, conflicting input, etc.This class pushes many people past their comfort zone. Its not about you, but its also not about the class or the teaching team. This is what startups are like (and the class is just a small 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 approved before the class. Team projects can be software, a physical product or a service of any kind. The teams will self-organize and establish individual roles on their own. There are no formal CEOs/VPs. Just the constant parsing and allocating of the tasks that need to be done. Besides the instructors and TAs, each team will be assigned a mentor (an experienced entrepreneur or VC) to provide assistance and support. SUggEstEd ProJEcts: While your first instinct may be a web-based startup we suggest that you consider a subject 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
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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. Teams building a web product need to build the site, create demand and have customers using it. See http://steveblank.com/2011/09/22/how-tobuild-a-web-startup-lean-launchpad-edition/ Your weekly blog is an integral part of your deliverables. (We currently use the Lean LaunchLab.) Its how we measure your progress.

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

LEAN LAUNCHPAD EDUCATORS TEACHING HANDBOOK Steve Blank & Jerry Engel January 2013

Grading CritEria: This course is team-based, and 85% of your grade will come from your team progress and final project. The grading criteria are broken down as follows: 15% 40% Individual participation in class. You will be giving feedback to your peers Out-of-the-building progress as measured by blog write-ups and presentations each week. Team members must: 1) Update Business Model Canvas weekly 2) Identify which team member did which portion of the work 3) Report in detail what the team did each week 4) Send a weekly email detailing team-member participatio The team weekly lesson learned presentation (see appendix for format) The team final report (see appendix for format)

20% 25%

Class Roadmap: Each weeks 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 A lecture on one of the nine building blocks of a business model (see diagram below, taken from Business Model Generation)

Each teams progression in learning, captured by keeping an online journal/ blog/wiki Genius is the ability to make the most mistakes in the shortest amount of time.

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PrE-class PrEparation: Read: Pages 151 of Osterwalders Business Model Generation 2012 Four Steps to the Epiphany, chapters 13

Review the prior class material: http://steveblank.com/category/lean-launchpad/ Teams: Form teams of 4 Come up with a preliminary company/product idea

Idea approval: Attend a meeting with the teaching team in November or December By Monday, January 9, submit your team project to the teaching team for approval

NO ONE WILL BE ADMITTED TO THE CLASS WITHOUT BEING PART OF A TEAM AND HAVING AN APPROVED PROJECT.

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Jan 10 Intro/Business Model/Customer Development

Class Lecture/Out-of-the-Building Assignment: Whats 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 test business model hypotheses? What is market size? How do you determine whether a business model is worth doing? Read: Business Model Generation, pp. 118-119, 135-145, skim examples pp. 56117 Steve Blank, Whats a Startup? First Principles: http://steveblank. com/2010/01/25/whats-a-startup-first-principles/ Steve Blank, Make No Little PlansDefining the Scalable Startup: http:// steveblank.com/2010/01/04/make-no-little-plans--defining-the-scalable-startup/ Steve Blank, A Startup Is Not a Smaller Version of a Large Company: http://steveblank.com/2010/01/14/a-startup-is-not-a-smaller-version-of-alarge-company/

LEAN LAUNCHPAD EDUCATORS TEACHING HANDBOOK Steve Blank & Jerry Engel January 2013

Deliverable for January 17: Write down hypotheses for each of the nine parts of the business model. Come up with ways to test: whether a business worth pursuing (market size) each hypothesis Come up with what constitutes a pass/fail signal for the test. For example, at what point would you say that your hypothesis wasnt even close to correct? Start your blog/wiki/journal

2 Jan 17 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? Whos the competition and how does your customer view these competitive offerings? Wheres the market? Whats the minimum feature set? Whats the market type? What was your inspiration or impetus? What assumptions drove you to this? What unique insight do you have into the market dynamics or into a technological shift that makes this a fresh opportunity? Action:
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Get out of the building and talk to 10-15 customers face-to-face Follow up with Survey Monkey (or similar service) to get more data

Read: Business Model Generation, pp. 161-168 and 226-231 Four Steps to the Epiphany, pp. 30-42, 65-72 and 219-223 The Blue Ocean Strategy, pp. 3-22

Deliverable for Jan 18: Find a name for your team What were your value proposition hypotheses? What did you discover from customers? Market size estimates (TAM, SAM, addressable) Submit interview notes, present results in class Update your blog/wiki/journal

3 Jan 24 Customers/Users/Payers Class Lecture/Out-of-the-Building Assignment: Whos the customer? User? Payer? How are they different? How can you reach them? How is a business customer different from a consumer? Action: Get out of the building and talk to 10-15 customers face-to-face Follow-up with Survey Monkey (or similar service) to get more data

Read: Business Model Generation, pp. 127-133 Four Steps to the Epiphany, pp. 43-49, 78-87, 224-225, and 242-248 Giff Constable, 12 Tips for Early Customer Development Interviews: http://giffconstable.com/2010/07/12-tips-for-early-customer-development-interviews/

Deliverable for Jan 25: What were your hypotheses about who your users and customers are? Did you learn anything different?

Draw the diagram of customer flow Submit interview notes, present results in class. Did anything change about value proposition? What are your hypotheses around customer acquisition costs? Can you articulate the direct benefits (economic or other) that are apparent? If your customer is part of a company, who is the decision maker, how large is the budget they have authority over, what are they spending it on today, how are they individually evaluated within that organization and how will this buying decision be made? What resonates with customers?
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For web startups, start coding the product. Set up your Google or Amazon cloud infrastructure. Update your blog/wiki/journal

4 Jan 31 The Channel Class Lecture/Out-of-the-Building Assignment: Whats a channel? Direct channels, indirect channels, OEM. Multi-sided markets. B-to-B versus B-to-C channels and sales (business to business versus business to consumer). Action: For non-web products, get out of the building talk to 10-15 channel partners If youre building a website, get the site up and running, including minimal features

LEAN LAUNCHPAD EDUCATORS TEACHING HANDBOOK Steve Blank & Jerry Engel January 2013

Read: Four Steps to the Epiphany, pp. 50-51, 91-94, 226-227, 256, 267 Deliverable for Feb 1: For web teams: Get a working website and analytics up and running. Track where your visitors are coming from (marketing campaign, search engine, etc.) and how their behavior differs. What were your hypotheses about your website results? Submit web data or customer interview notes, present results in class. Did anything change about value proposition or customers/users? 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: Interview 10-15 people in your channel (salesmen, OEMs, etc.). Did anything change about value proposition or customers/users? What is your customer lifetime value? Channel incentives: Does your product or proposition extend or replace existing revenue for the channel? What is the cost of your channel and its efficiency versus your selling price. Everyone: Update your blog/wiki/journal What kind of initial feedback did you receive from your users? What are the entry barriers?

5 Feb 7 Customer Relationships/Demand Creation Class Lecture/Out-of-the-Building Assignment:

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How do you create end-user demand? How does it differ on the web versus other channels? Evangelism versus existing need or category? General marketing, sales funnel, etc. Action: If youre building a website: Small portion of your site should be operational on the web Actually engage in search engine marketing (SEM): spend $20 as a team to test customer acquisition cost Ask your users to take action, such as signing up for a newsletter Use Google Analytics to measure the success of your campaign Change messaging on the site during the week to get costs lower; team that gets lowest delta costs wins If youre assuming virality of your product, you will need to show viral propagation of your product and the improvement of your viral coefficient over several experiments If non-web, build demand-creation budget and forecast Get real costs from suppliers

Read: Four Steps to the Epiphany, pp. 52-53, 120-125 and 228-229 Dave McClure, Startup Metrics for Pirates: http://www.slideshare.net/dmc500hats/startup-metrics-for-pirates-seedcamp-2008-presentation Dan Siroker, How Obama Raised $60 Million by Running a Simple Experiment: http://blog.optimizely.com/2010/11/29/how-obama-raised-60-million-by-running-a-simple-experiment/

Watch: Mark Pincus, Quick and Frequent Product Testing and Assessment: http://ecorner.stanford.edu/authorMaterialInfo.html?mid=2313 Deliverable for Feb 8: Submit interview notes, present results in class Did anything change about value proposition or customers/users or channel? Present and explain your marketing campaign. What worked best and why? Update your blog/wiki/journal

6 Feb 14 The Revenue Model Class Lecture/Out-of-the-Building Assignment: Whats a revenue model? What types of revenue streams are there? How does it differ on the web versus other channels?
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Action: Whats your revenue model? How will you package your product into various offerings if you have more than one? How will you price the offerings? What are the key financials metrics for your business model? Test pricing in front of 100 customers on the web, 10-15 customers nonweb. What are the risks involved? What are your competitors doing?

Read: John Mullins & Randy Komisar, Getting to Plan B (2009), pages 133-156 Deliverable for Feb 15:

LEAN LAUNCHPAD EDUCATORS TEACHING HANDBOOK Steve Blank & Jerry Engel January 2013

Assemble an income statement for your business model; lifetime value calculation for customers Submit interview notes, present results in class Did anything change about value proposition or customers/users, channel, demand creation, revenue model? Update your blog/wiki/journal

Draw the diagram of payment flows

8 Feb 21 Partners Class Lecture/Out-of-the-Building Assignment: 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? Whats the cost of the partnership? Talk to actual partners What are the benefits for an exclusive partnership? Assemble an income statement for the your business model Submit interview notes, present results in class Did anything change about value proposition or customers/users, channel, demand creation? What are the incentives and impediments for the partners? Update your blog/wiki/journal

Deliverable for Feb 22:

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9 Feb 28 Key Resources & Cost Structure Class Lecture/Out-of-the-Building Assignment: 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? Importance of cash flows? When do you get paid versus when do you pay others? Action: Whats your expense model? What are the key financials metrics for costs in your business model? Costs vs. ramp vs. product iteration? Access to resources. What is the best place for your business? Where is your cash flow break-even point?

Deliverable for March 1: Assemble a resources assumptions spreadsheet. Include people, hardware, software, prototypes, financing, etc. Draw the diagram ofa finance and operations timeline When will you need these resources? Roll up all the costs from partners, resources and activities in a spreadsheet by time Submit interview notes, present results in class Did anything change about value proposition or customers/users, channel, demand creation/partners? Update your blog/wiki/journal

Guest: Alexander Osterwalder For March 1 or 8: Prepare 30-minute team lessons learned presentation Review: Autonomow, Mammoptics, Agora, and Personal Libraries presentations

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10 March 6 Team Presentations of Lessons Learned (first half of the class) Deliverable: Each team will present a 30-minute lessons learned presentation about their business. 11 March 13 Team Presentations of Lessons Learned (second half of the class) Deliverable: Each team will give a 30-minute lessons learned presentation about their business. Lessons Learned: Demo Day Presentation Format Deliverable: Each team will present a 30-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: Name, background, expertise and role for each team member Slide 3: Business Model Canvas Version 1 (use the Osterwalder Canvas; do not make up your own). Here was our original idea. Slide 4: So heres what we did (explain how you got out of the building) Slide 5: So heres what we found (what was reality), so then, Slide 6: Business Model Canvas Version 2 (use the Osterwalder Canvas; do not make up your own). We iterated or pivoted ; explain why and what you found. Slide 7: So heres what we did (explain how you got out of the building) Slide 8: So heres what we found (what was reality), so then, Slide 9: Business Model Canvas Version 3 (use the Osterwalder Canvas; do not make up your own). We iterated or pivoted ; explain why and what you found. Every presentation requires at least three Business Model Canvas slides. Slide 10: So heres 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.

LEAN LAUNCHPAD EDUCATORS TEACHING HANDBOOK Steve Blank & Jerry Engel January 2013

Final slides: Click through each one of your Business Model Canvas slides.

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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. To be enrolled, the entire team must attend the first class. The class list and any wait-listed students will be posted online by midnight January 4. Theres a mandatory student mixer prior to the class, on Wednesday, December xx and yy, at 5 p.m. at the Treehouse. Students will form teams and select their preferred mentors. ENGR 245 is open only to graduate students at Stanford, from any school or department. Nongraduates and nonstudents can serve as advisors to the teams, but our priority is to provide a learning environment for Stanford graduate students. Each team must have at least four Stanford graduate students. Exceptions to team size and external members will be made on a caseby-case basis. Note your special team needs on your application form. We will let you know on day one of the class. There are no remote options for this courseyou must take ENGR 245 on campus. You may not audit ENGR 245. You must take the course for credit. This is very intense class with a very high workload. We expect you to invest at least 5-10 hours per week. You cannot miss the first class without prior approval.

Company Ideas Is 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. Only condition is that you have to get the site up and deliver the minimum product feature set during the quarter. Team Formation Do 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 ENGR 245? Yes.
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Students

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. Attendance and Participation You cannot miss the first class without prior approval If you cannot commit to 15-20 hours a week outside the classroom, this class is not for you. The startup culture at times can feel brusque and impersonal, but in reality is focused and oriented to create immediate action in time- and cash-constrained environments. If during the quarter you find you cannot continue to commit the time, immediately 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 youre getting bored, tired or inattentive, step outside for some air. If we see you reading email or browsing the web, we will ask you to leave the class. We ask that you use a name card during every session of the quarter.

LEAN LAUNCHPAD EDUCATORS TEACHING HANDBOOK Steve Blank & Jerry Engel January 2013

Intellectual Property Who owns the intellectual property tested in the business model? 1. You own any intellectual property (patents, hardware, algorithms, etc.) you brought to class with you. No one has claim to anything you brought to class. 2. Your whole team owns any intellectual property developed for the class (such as code for a web-based project). If your team is working with a Stanford-related technology (i.e. research from one of the team members or a Stanford patent), you must check with the Stanford Office of Technology & Licensing (OTL) to better understand any Stanford licensing and royalty issues. 3. You and your team members need to disclose to each other what IP/licensing rights any company youve worked at has to inventions you make at school. 4. If any individual on your team decides to start a company based on the class, the team as a whole owns only what was written and completed in the class. It has no claim on individual work done before or after the class quarter. 5. 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.
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All team members are free to start the same company, without the permission of the others. (We would hope that a 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? This is more than likely the wrong class to take. Anything you do and learn in the class is public. Your slides, notes and findings will be publicly shared. Your team owns everything done in class. Discuss intellectual property rights with your team from the beginning. If you cant come to agreement with the team, join another team, pick another project or drop the class. Will my intellectual property rights be protected when I discuss my ideas with the class?

This class is not an incubator. At times you will learn by seeing how previous classes solved the same kind 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 the learning, discovery and execution. (Thats the purpose of this class.) Therefore you must be prepared to share your ideas openly with the class. It is a forum for you to bounce your ideas off your peers. What if Im not comfortable sharing what I learn with others? Dont 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. Theyve 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 face-to-face at least every two weeks. You can email them or meet more often if they have time. Can I talk to a mentor not assigned to my team? By all means. All the mentors are happy to help. However, a different mentor cannot support your team full time unless your own decides to swap places with them.

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NO. This is an open class. There are no non-disclosures. Your presentations, customer discovery and validation notes, Business Model Canvas, blogs and slides can, and likely will, be made public.

I have a busy schedule, and my mentor cant meet when I want them to. Mentors have day jobs. Asking them to meet with or reply to you ASAP is not acceptable. So plan ahead and allow for a reasonable amount of time for a reply or meeting. Be concise with your request and be respectful of their time. I need help now. You first stop is your TA. Email or sit down with them during the week if you have a problem. Your professors have office hours every Tuesday at 3 p.m. If you need something resolved sooner, email us. Who are the mentors? See the mentor list at the end of this document and on the class website. Team Dynamics

LEAN LAUNCHPAD EDUCATORS TEACHING HANDBOOK Steve Blank & Jerry Engel January 2013

What roles are needed in each team? Traditionally, each team member is part of the customer development team. You have to figure out how to allocate the work. What if my team becomes dysfunctional? Prepare to work through difficult issues. If the situation continues, approach the teaching team. Do not wait until the end of the quarter to raise the issue. What if one of my teammates is not pulling their weight? Try to resolve it within your team. If the situation continues longer than a week, please approach the teaching team. Final grades will also reflect individual participation and contribution. Grading How do you determine our grade? 15% Individual participation in class. You will be giving feedback to your peers 40% Out-of-the-building progress, measured by weekly blog write-ups Team members must: 1) Update Business Model Canvas weekly 2) Identify which team member did which portion of the work 3) Report in detail what the team did each week 4) Send a weekly email of team member participation 20% Team weekly lessons learned summaries (see appendix for format) 25% Team final report (see appendix for format) Does everyone on the team get the same grade? No. Individual participation and contribution are also considered. You get to grade your team members on their contribution What kind of feedback can I expect? Continual feedback weekly. Substandard work will be immediately brought to your attention.
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Can I take this class pass/no credit? No. Letter grade only. Teaching Team Steve Blank, lecturer, Stanford Technology Ventures Program [email protected] @sgblank 415-999-9924 Jon Feiber, general partner, Mohr Davidow [email protected] 650-302-0011 Ann Miura-Ko, general partner, Floodgate Teaching Assistants Bhavik Joshi, Better Place, Bus Dev Asia, co-founder, Berkeley Stanford Cleantech Conference Series [email protected] @joshi_bhavik 650-644-8183

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SteveBlank After 21 years in eight high-technology companies, Steve retired in 1999. He co-founded his last company, E.piphany, in his living room in 1996. His other startups include two semiconductor companies, Zilog and MIPS Computers; a workstation company, Convergent Technologies; a consulting stint for a graphics hardware/software spinoutof Pixar; a supercomputer firm,Ardent; a computer peripheral supplier, SuperMac; a military intelligence systems supplier,ESL; and a video game company,Rocket Science Games. After he retired, Steve wrote a book about building early stage companies calledFour Steps to the Epiphany. He moved from being an entrepreneur to teaching entrepreneurship to both undergraduate and graduate students at UC Berkeley, Stanford University and the Columbia University/Berkeley Joint Executive MBA program.

Jon Feiber It was a chance meeting that brought Jon Feiber into the venture industry. Jon, then a vice president at Sun Microsystems, was considering leaving Sun for a startup. After a preliminary discussion about the startup at Mohr Davidow, he got an offer to join the firm. Today, he is among Mohr Davidows most senior partners and is responsible for many of the firms successful investments. Most of Jons investments harness emerging technology. I like the intersection of emerging technology and big markets geeky projects, he admits.

LEAN LAUNCHPAD EDUCATORS TEACHING HANDBOOK Steve Blank & Jerry Engel January 2013

He began his career as a software programmer for mainframe maker Amdahl Corp. I tend towards In 2009, Steve was awarded the Stanford University entrepreneurs who have real insight into hard problems and a sense of their need by customers. Undergraduate Teaching Award in the Department of Management Science and Engineering. In Mohr Davidow, he believes, will remain one of 2010, he was awarded the Earl F. Cheit Outstandthe technology industrys most successful invesing Teaching Award at UC Berkeley Haas School of tors because of its faith in and commitment to Business. entrepreneurs. This firm has always been known for being direct and open in its relationships with Steve followed his curiosity about why entrepreentrepreneurs, he explains. Our enthusiasm for neurship blossomed in Silicon Valley and was the entrepreneur is matched by depth of knowlstillborn elsewhere. It has led to several talks on edge and experience in the areas that we choose The Secret History of Silicon Valley. to invest in. In 2007 the governor of California appointed Steve to serve on the California Coastal Commission, the Being a venture capitalist is one of the greatest public body that regulates land use and public ac- jobs you can have, he continues. I get to hang cess on the California coast. Hes also on the board out with the smartest people in the world and help them turn their ideas into world-class compaof Audubon California (and its past chair). In 2009 nies. he joined the board of theCalifornia League of Conservation Voters (CLCV). Jon holds a bachelors degree in computer sciSteve was the commencement speaker at Philadel- ence and mathematics and astrophysics from the University of Colorado. phia University in 2011.

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5-DAY SYllABUS: ExAmplE

Columbia B7739-002: Advanced Entrepreneurship InstrUctors: Steve Blank, Bob Dorf and Alexander Osterwalder CrEdits: 3 TAs: Christopher Fong and Dennis Kwon DaYs and TimEs: MondayFriday, 9:00 a.m.5:00 p.m. Location: MondayThursday: Warren 309; Friday: Warren 310 TEXts: Steve Blank and Bob Dorf, The Startup Owners Manual Alexander Osterwalder & Yves Pigneur, Business Model Generation

Pre-class Assignments: Read pp. 14-49 of Business Model Generation Read pp. 22-84 of The Startup Owners Manual Review course strategy at http://steveblank.com/category/lean-launchpad/ Review team presentations at http://www.slideshare.net/sblank/tagged/icorps and http://www.slideshare.net/sblank/tagged/stanford (Note the number of customer contacts each team made over the course.) Each team comes into the first day of class: With a Business Model Canvas; you will present for 3 minutes on day 1 Prepared to make 4 or more customer/industry contacts in New York when class is 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 its like to actually start a scalable company. This class is not about how to write a business plan. Its 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 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. Youll work in teams, learning how to turn a great idea into a great company. Youll learn how to use a business model to brainstorm each part of a company and customer development to get out of the classroom to see whether anyone other than you would want/use your product. Each day
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Prerequisite: Interest in/passion for discovering how an idea can become a real company.

will 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. See http://steveblank.com/category/lean-launchpad/ for a narrative of a past class. Class CUltUrE: Communication in a startup is very different from that in a university or large company. The culture is dramatically different from the university culture most of you are familiar with. At times it can feel brusque and impersonal, but in reality it is focused and oriented to create immediate action in time- and cash-constrained environments. We have limited time, and we push, challenge and question you in the hope that you will quickly learn.We will be direct, open and toughjust like in the real world.We hope you can recognize that these comments arent personal, but part of the process. AmoUnt of Work: This 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, with all its chaos,uncertainty, impossible deadlines, conflicting input, etc. TEam OrganiZation: This 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-organize and establish individual roles on their own. There are no formal CEOs/VPs. Just the constant parsing and allocating of the tasks that need to be done. Class Roadmap Each days 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. A lecture on one of the nine building blocks of a business model (see diagram below, taken from Business Model Generation).

LEAN LAUNCHPAD EDUCATORS TEACHING HANDBOOK Steve Blank & Jerry Engel January 2013

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

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Monday, April 16th Time: 9:0011:30 a.m. Lecture 0: Class Introduction Teaching-team introductions Class goals Teaching philosophy Our expectations of you Team introductions: each of the teams will present its Business Model Canvas

Time: 11:30 a.m.12:30 p.m. Working lunch

Time: 12:301:30 p.m. Lecture 1: Business Model/Customer Development Class Lecture: The Business Model/Customer Development Whats 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 test business model hypotheses?
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Whats getting out of the building? What is market size? How do you determine whether a business model is worth doing? Time: 1:303:00 p.m. Lecture 2: Customer Discovery: The Art Class Lecture: How to Talk to Customers Understand the problem, understand the solution. Why its different than selling. Time: 3:005:00 p.m. (start may be delayed) Get out of the building! We expect you to have set up meetings to talk to potential customers in the New York area.

LEAN LAUNCHPAD EDUCATORS TEACHING HANDBOOK Steve Blank & Jerry Engel January 2013

Read: The Startup Owners Manual, pp. 195-199 Giff Constable, 12 Tips for Early Customer Development Interviews: http://giffconstable.com/2010/07/12-tips-for-early-customer-development-interviews/

In a startup there is no spare time. Deliverables for tomorrow, Tuesday, April 17: Read: Business Model Generation, pp. 86-111, 135-145 The Startup Owners Manual, review pp. 53-84, 195-199 Steve Blank, Whats a Startup? First Principles: http://steveblank. com/2010/01/25/whats-a-startup-first-principles/ Steve Blank, Make No Little Plans: Defining the Scalable Startup: http:// steveblank.com/2010/01/04/make-no-little-plans--defining-the-scalablestartup/ Steve Blank, A Startup Is Not a Smaller Version of a Large Company: http://steveblank.com/2010/01/14/a-startup-is-not-a-smaller-version-of-alarge-company/

You will be presenting your results tomorrow morning. Team presentation for tomorrow, Tuesday, April 17: Market size Type of business: IP, licensing, startup, unknown Proposed experiments to test customer segment, value proposition, channel and revenue model of the hypotheses What constitutes a pass/fail signal for each test? For example, at what point would you say that your hypothesis wasnt even close to correct?

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Tuesday, April 17 Time: 9:0011:00 a.m. Team Presentations: 5 minutes each (all teams) Slide 1: Cover slide (appendix A, slide 1) Slide 2: Current Business Model Canvas with any changes marked Slide 3: Tell us about your market size (TAM/SAM/target) Slide 4: What type of business are you building? IP, licensing, startup, unknown Slide 5: What are your proposed experiments to test customer segment, value proposition, channel and revenue model of the hypotheses:

Time: 11:00 a.m.12:30 p.m. 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? Whos the competition and how does your customer view these competitive offerings? Wheres the market? Whats the market type? What was your inspiration or impetus? What assumptions drove you to this? What unique insight do you have into the market dynamics or into a technological shift that makes this a fresh opportunity? Whos the customer? User? Payer? How are they different? Why do they buy? How can you reach them? How is a business customer different from a consumer? Whats a multi-sided market? Whats segmentation? Whats an archetype? Time: 12:301:30 p.m. Working lunch

Time: 1:302:00 p.m. Lecture 4: Business Model Canvas Examples Class Lecture: Best-Practice Examples in the Evolution of Business Models Time: 2:003:00 p.m. Lecture 5: Corporate EntrepreneurshipPart I Class Lecture: The Startup Inside of a Company Sustaining versus disruptive innovation. Impediments to innovation.
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What constitutes a pass/fail signal for each test? For example, at what point would you say that your hypothesis wasnt even close to correct?

Time: 3:30 (approx.) Get out of the building! We expect you to have set up meetings to talk to potential customers in the New York area. Deliverable for Wednesday, April 18: Read: Business Model Generation, pp. 127-133, 146-150, 161-168 and 200-211 The Startup Owners Manual, pp. 85-111 and 189-255, 406-412 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 18 What did potential customers think about your value proposition hypotheses? Follow up with Survey Monkey (or similar service) to get more data

Team Presentation for tomorrow, Wednesday, April 18:

LEAN LAUNCHPAD EDUCATORS TEACHING HANDBOOK Steve Blank & Jerry Engel January 2013

Wednesday, April 18 Time: 9:00 a.m.12:30 p.m. Team presentations: Maximum 10 minutes each (all teams) Slide 1: Cover slide Slide 2: Current Business Model Canvas with any changes marked Slide 3-n: What did you learn about your value proposition from talking to your first customers? Hypothesis: Heres what we thought Experiments: So heres what we did Results: So heres what we found Iterate: So heres what we are going to do next

Lecture 6: Channels/Get, Keep, Grow/Revenue Model Class Lecture: Distribution Channels/Customer Relationships/Revenue Model Whats a channel? Physical versus virtual channels. Direct channels, indirect channels, OEM. Multi-sided markets. B-to-B versus B-to-C channels and sales (business to business versus business to consumer). How do you get, keep and grow customers? How does it differ on the web versus other channels? Evangelism versus existing need or category? General marketing, sales funnel, etc. How does demand creation differ in a multi-sided market?

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Whats 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 multisided market? Time: 12:301:30 p.m. Working Lunch

Time: 1:302:00 p.m. Lecture 7: Business Model Canvas Examples Class Lecture: Best-Practice Examples

Time: 2:003:30 p.m. Lecture 8: Corporate EntrepreneurshipPart II Class Lecture: The Startup Inside of a company Sustaining versus disruptive innovation. Impediments to innovation.

Time: 3:305:30 p.m. Get out of the building! We expect you to have set up meetings to talk to potential customers in the New York area. Deliverable for Thursday, April 19: Read: The Startup Owners Manual, pp. 227-256, 277-342 Team Presentation for Thursday, April 19: Get out of the building and talk to 10-15 potential channel partners faceto-face (salespeople, OEMs distributors, etc.) What were your hypotheses about who/what your channel would be? Did you learn anything different? Present and explain your marketing campaign. How will you get customers? Did anything change about your value proposition?

Thursday, April 19 Time: 9:0010:30 a.m. Team Presentations Team presentations: 10 minutes each (all teams) Slide 1: Cover slide Slide 2: Current Business Model Canvas with any changes marked Slide 3: What did you learn about your value proposition from talking to your first customers? Hypothesis: Heres what we thought
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Experiments: So heres what we did Results: So heres what we found Iterate: So heres what we are going to do next

Time: 10:3011:30 a.m. Guest Speaker: Fred Wilson, Union Square Ventures

Time: 11:30 a.m.12:30 p.m. Team presentations (continued): 10 minutes each (all teams)

Time: 12:301:30 p.m. Working lunch

Time: 1:302:30 p.m.

LEAN LAUNCHPAD EDUCATORS TEACHING HANDBOOK Steve Blank & Jerry Engel January 2013

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?

Time: 2:303:00 p.m. Lecture 10: Business Model Canvas Examples Class Lecture: Best-Practice Examples

Time: 3:005:00 p.m. Get out of the building! We expect you to have set up meetings to talk to potential customers in the New York area. Deliverable for Friday, April 20: Read: Business Model Generation, pp. 200-211 The Startup Owners Manual, pp. 406-412 Get out of the building and talk to 10-15 customers

Final Team Presentation for Friday, April 20:

Friday, April 20 Time: 9:00 a.m.12:00 p.m. Team Final Presentations Team presentations: Maximum 15 minutes each (all teams)
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Slide 1: Cover slide Slide 2: Current Business Model Canvas with any changes marked

Slide 3: What did you learn about your value proposition from talking to your first customers? Hypothesis: Heres what we thought Experiments: So heres what we did

Results: So heres what we found Iterate: So heres what we are going to do next

Time: 12:001:00 p.m. Lunch Time: 1:002:00 p.m. Team Final Presentations (continued)

Lecture 11: Costs and Metrics that Matter Class Lecture: Importance of cash flows. When do you get paid versus when do you pay others? 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.

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Time: 2:003:00 p.m.

MENTOR HANDBOOKSAmplE
E245 The Lean LaunchPad Mentor and Advisor Handbook http://stanford.edu/group/e245/cgi-bin/2012/ Classes meet 4:157:05 p.m. Yang and Yamazaki Environment and Energy (Y2E2) building, room 111

LEAN LAUNCHPAD EDUCATORS TEACHING HANDBOOK Steve Blank & Jerry Engel January 2013

Professors: Steve Blank [email protected] Jon Feiber [email protected] Ann Miura-Ko [email protected] Teaching assistant: Thomas Haymore [email protected]

Welcome as a team mentor or advisor in the ENGR 45 Lean Launchpad course in Stanford School of Engineering. Mentors play an active role in weekly coaching of a specific team. Advisors are on-call resources for the entire class. The Role of Mentors As a mentor, you are an extension of the teaching team, responsible for the success or failure of one team with four students. In 10 very short weeks your team has to 1) get outside the classroom and test all their business model hypotheses, and 2) if its a web-based business, get it up and running, or if its a physical product, build a prototype. Heres what you are signing up for:
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Offering your team strategic guidance and wisdom: Offer business model suggestions Identify and correct gaps in the teams business knowledge Providing your team with weekly tactical guidance:

Reviewing your teams weekly presentation before they present Commenting weekly on your teams customer discovery progress blog Responding to the teaching teams critique of your team Rolodex helpWhy dont you call x? Let me connect you. Pushing the teams to make 510 customer contacts/week Meeting one-on-one with your team at least twice during the class Check in with teaching team at classes 3 and 7 to discuss student progress

The mentor briefing is Tuesday, January 10, from 3-4 p.m. Y2E2 building, room 111. The first class follows, from 4-7 p.m. If you cant commit to the time to be a mentor, consider being an advisor. The Role of Advisors As an advisor, you are a class resource for your particular domain expertise. Heres what you are signing up for: Response to student emails/phone calls within 24 hours Skype calls with one/two teams a week, as needed

Invitations to Both Mentors and Advisors You are welcome to attend any and all lectures Youre invited to speak at a class for 10 minutes on a subject of general interest

Course Goal: Lean Startups Provide an experiential learning opportunity to see how entrepreneurs really build companies. In 10 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 to test each element of their business model. The goal is not a business plan, revenue plan, five-year forecast, etc. BTW, this is the class that the National Science Foundation has standardized on to teach 100 of their best scientists and engineers. See http://steveblank.com/2011/07/28/eureka-a-new-era-for-scientists-and-engineers/ Mentors and Getting Out of the Building The 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. And since there are no facts inside the building, they need to get outside. This means that 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 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 with.
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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 dont you look at company z and see what their business model is and compare it to yours? or Here are some names of domain experts in the field, you should talk to them. Try to avoid specifically telling them what to do. Remember: The class is not trying to be YCombinator. We are trying to give students models, heuristics and experience they can apply when they leave Berkeley/Columbia. The class is about what they learned on the journey. Mentors and Web-Based Startups If your team is building a web-based business they need to get the site up and running during the semester. The goal is not a finished or polished site but a vehicle for testing their assumptions about minimum feature set, demand creation, virality, stickiness, etc. Students Admission to the class is by interviews of preformed teams of graduate students. Well take 1012 teams. The students are typically working on a masters or PhD in engineering 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 CEOs/VPs. Just the constant parsing and allocating of the tasks that need to be done. 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 between classes. It is an integral part of their deliverables. Its how we measure their progress (along with inclass PowerPoint presentations.). Each time they post, they must notify you. Please look at their posts between classes and give them feedback. Lean Launchpad Course Organization The course is organized around Alexander Osterwalders Business Model Canvas and Steve Blanks customer development process. (See the syllabus for details.) Each weeks class is organized around: A lecture on one of the nine building blocks of a business model Student-team presentations of their lessons learned from getting out of the building and iterating or pivoting their business model Session 1: Jan 10 velopment Course introduction, business models, customer de-

LEAN LAUNCHPAD EDUCATORS TEACHING HANDBOOK Steve Blank & Jerry Engel January 2013

The Ten (3-Hour) Class Sessions:

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Session 2: Jan 17 Session 3: Jan 24 Session 4: Jan 31 Session 5: Feb 7

Value proposition Customer segment Channels Demand creation

Session 6: Feb 14 Revenue model Session 7: Feb 21 Partners Session 8: Feb 28 Resources and costs Session 9: Mar 6 Lessons learned presentations Session 10: Mar 13 Lessons learned presentations continued

Schedule Classes meet 4:157:05 p.m. Yang and Yamazaki Environment and Energy (Y2E2) building, room 11 Office hours are held before class Textbooks Alexander Osterwalder & Yves Pigneur, Business Model Generation: http://www.businessmodelgeneration.com/order.php Steven Blank, Four Steps to the Epiphany: http://www.stevenblank.com/ books.html
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Getting Prepped The best way for you to get a feel of the course is to: 1. Read the blogs about the previous class: http://steveblank.com/category/ lean-launchpad/ If you cant read all the posts, at least read this one: http://steveblank.com/2010/12/07/the-lean-launchpad--teaching-entrepreneurship-as-a-management-science/ And this one: http://steveblank.com/2011/05/10/the-lean-launchpad-at-stanford--thefinal-presentations/ 2. Download and look over the explanation of Osterwalders Business Model Canvas:

LEAN LAUNCHPAD EDUCATORS TEACHING HANDBOOK Steve Blank & Jerry Engel January 2013

http://www.businessmodelgeneration.com/downloads/businessmodelgeneration_preview.pdf 3. Look at the students weekly and final presentations: http://www.slideshare.net/sblank/tag/stanford And the National Science Foundation presentations: http://www.slideshare.net/sblank/tag/i-corps 4. Read the class syllabus: http://www.slideshare.net/sblank/e245-syllabusrev15 And class website: http://stanford.edu/group/e245/cgi-bin/2012/ Thanks once again for your support and participation. Steve, Jon and Ann

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