Giving Credit Where Credit Is Due

Help Awarding Steve Blank Nobel Prize In Entrepreneurial Economics!

“While existing companies execute a business model, start-ups look for one” — Steve Blank

BROAD STROKES GIVEAWAY

With the above opening statement — Steve Blank turned 50 years of Entrepreneurial Science on its head. For years, Venture Capital (VC) industry insisted on funding well rounded business plans — even at the earliest seed-stage financing. As Steve Blank frequently explains to all who would listen: “startups were simply viewed as a smaller version of a larger enterprise”. And since large companies knew how to write a detailed business plan — startups had to follow suit.

And yet, it was also clear to all entrepreneurial practitioners for the last 50 years — that this approach doesn’t work. For too long, ugly success-rate statistics of even the best funded startups — were shrugged-off. The general assumption prevailed: it’s just the cost of doing business! VCs were quick to point, that nobody comes to their party in shorts — if you want to fund startups, you better wear long pants!

For the last 20 years, Steve Blank started to blog, teach and publish books on a subject. Although he revolutionized entrepreneurship more than any other contemporary scholar, no world-class recognition of his genius — ever materialized.

But it’s NEVER too late to give credit where credit is due! I have no doubts that such prize could go to Steve Blank — one of the most influential mentors, thought-leaders & innovators of Entrepreneurial Economics in 21st Century!

So, please join me in a campaign leading to a nomination for Steve Blank to receive Nobel Prize in Entrepreneurial Economics!

PROBLEM

In my previous posts about Venture Capital (VC) — I spoke at length about dismal success-rates of VC backed startups. You can find additional coverage on this in:

· Corporate Venture Capital — The Most Underutilized Factor Endowment Of Corporate Giants

· Plan B Ventures — The Last Call…

· 3 Tips To Avoid Startup Funeral — And A Story Of How Not To Paint Yourself Into A Corner

· How To Turn Corporate Venture Capital Into A Magnet For Raising SEED CAPITAL

Recently, CBInsights published a set of infographics depicting detailed statistics about over 1,000 startups. All companies were tracked from the moment they raised seed investment.

It clearly shows: over 70% of startups that went through a rigorous VC process, and were funded — failed to exit, or raise a follow-on investment.

Now, nobody likes losing money — it’s a given. And VCs are no different from you and me. Yet, pushing for financing of even more startups, with the ever-growing seed-stage financing rounds — didn’t help, either. So, it became painfully clear to all entrepreneurial practitioners — that the current approach doesn’t work!

Lies, Damned Lies, and Statistics

Mark Twain attributed the above statement to the British Prime Minister Benjamin Disraeli. For years, however, ugly success-rate statistics of even the best funded startups — were shrugged-off. The popular beliefs prevailed: it’s just the cost of doing business! And VCs were quick to point-out, that nobody comes to their party in shorts. If you want to fund startups, you better wear long pants! And better be prepared to stomach big losses, too!

Until a new sheriff came to town! Steve Blank baldly proclaimed that all business plans prepared by early-stage startups are fiction, and that “dreaming them up is almost always a waste of time”. He then pioneered Lean Startup Methodology (LSM) and opened world’s eyes to the fact that: “while existing companies should be executing a business model, start-ups should look for one”

Videos, Books, Articles, Posts, Presentations — you name it!

As per Wikipedia, Steve Blank began teaching entrepreneurship in 2002 at UC Berkeley, and has since taught entrepreneurship to both undergraduate and graduate students. He currently teaches at Stanford, the University of California Berkeley, NYU, and Columbia.

All Steve Blank’s blogs and archives — are available online since 2009. You can’t escape the feeling, however, that it would probably take you more than one full year, to read it all. My “nike-esque” advice: just do it! Yes, read it, and fully understand Steve’s gift to the world: The LSM Body of Knowledge (BOK).

Despite publishing 4 books since 2005, the biggest recognition of Steve Blank’s work materialized after his article: Why the Lean Start-Up Changes Everything was published by HBR in 2013. It took Steve only 12 pages, to change how startups are built around the world, and how entrepreneurship is taught ever since! LSM is thought today not only at 51 universities around the world, but also at some of the largest conglomerates, such as GE.

The most widely quoted paragraphs from this article, include the following:

“Launching a new enterprise — whether it’s a tech startup, a small business, or an initiative within a large corporation — has always been a hit‐or‐miss proposition. According to the decades‐old formula, you write a business plan, pitch it to investors, assemble a team, introduce a product, and start selling as hard as you can. And somewhere in this sequence of events, you’ll probably suffer a fatal setback. The odds are not with you: As new research by Harvard Business School’s Shikhar Ghosh shows, 75% of all startups fail.

But recently an important countervailing force has emerged, one that can make the process of starting a company less risky. It’s a methodology called the “lean startup,” and it favors experimentation over an elaborate planning; customer feedback over intuition; and iterative design over traditional “big design up front” development. Although the methodology is just a few years old, its concepts — such as “minimum viable product” and “pivoting” — have quickly taken root in the startup world, and business schools have already begun adapting their curricula to teach them.”

The ever-growing list of LSM adopters, includes: National Science Foundation, U.S. Department of Defense and Intelligence Community — as well as other federal research agencies, such as: NIH, DOE, HHS, NSA, and more. To date, over 800 teams of scientists and engineers have gone through the program. And they all define a startup, as: “a temporary organization designed to search for a repeatable and scalable business model. The emphasis on the search for a business model versus execution of a plan is the heart of the Lean Startup methodology”.

So, this is how Lean Startup Methodology was born. It is based on 3 fundamental principles:

• Guessing (or “stating your hypotheses):

“Rather than engaging in months of planning and research, entrepreneurs accept that all they have on day one is a series of untested hypotheses — basically, good guesses. So instead of writing an intricate business plan, founders summarize their hypotheses in a framework called a business model canvas. Essentially, this is a diagram of how a company creates value for itself and its customers”.

• Listening To Customers:

“Lean startups use a “get out of the building” approach called customer development to test their hypotheses. They go out and ask potential users, purchasers, and partners for feedback on all elements of the business model, including product features, pricing, distribution channels, and affordable customer acquisition strategies.

The emphasis is on nimbleness and speed: New ventures rapidly assemble Minimum Viable Products (MVP) and immediately elicit customer feedback. Then, using customers’ input to revise their assumptions, they start the cycle over again, testing redesigned offerings and making further small adjustments (iterations), or more substantive ones (pivots) to ideas that aren’t working”

• Internet-Age Development Speed:

“Lean startups practice something called agile development, which originated in the software industry. Agile development works hand‐in‐hand with customer development.

Unlike typical yearlong product development cycles that presuppose knowledge of customers’ problems and product needs, agile development eliminates wasted time and resources by developing the product iteratively and incrementally. It’s the process by which startups create the minimum viable products they test”

How Big A Deal Is It, Anyway?

It’s too early to measure the exact impact of LSM’s methodology on world’s economics. Realizing, however, the sheer magnitude of annual investments made by VC & PE firms — we are talking about hundreds of $billions!

For example, in 2016 — Global VC Investments exceeded $133B. And in US alone, Private Equity clocked-in 4,000+ deals — worth in excess of $680B. As Everett Dirksen once said: “A billion here, a billion there, and pretty soon you’re talking about real money”.

SOLUTION

So, when I thought about the amount of LSM’s economic influence — my questions were as follows:

· How can the world show true appreciation of Steve Blank’s incredible genius?

· What is the appropriate award that reflects Steve’s overwhelming contribution to entrepreneurial evolution?

The answer: The Nobel Prize, of course!

The Prize, is a set of “annual international awards bestowed in several categories by Swedish and Norwegian institutions — in recognition of academic, cultural or scientific advances”. To date, this prestigious award for outstanding contributions in chemistry, economics, literature, peace, physics or physiology or medicine — has been awarded to 900+ recipients.

“Nomination forms are sent by the Nobel Committee to about 3,000 individuals, usually in September the year before the prizes are awarded. These individuals are generally prominent academics working in a relevant area”.

Process of Nomination and Selection

As per Nobel Prize rules, The Economic Sciences Prize Committee sends confidential forms to persons who are competent and qualified to nominate. The right to submit proposals for the award, is reserved to:

· Swedish and foreign members of the Royal Swedish Academy of Sciences;

· Members of the Prize Committee for the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel;

· Persons who have been awarded the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel;

· Permanent professors in relevant subjects at the universities and colleges in Sweden, Denmark, Finland, Iceland, and Norway;

· Holders of corresponding chairs in at least six universities or colleges, selected for the relevant year by the Academy of Sciences with a view to ensuring the appropriate distribution between different countries and their seats of learning; and

· Other scientists from whom the Academy may see fit to invite proposals.

Since I had the pleasure to work with hard-working Swedish entrepreneurs in the past — I am optimistic! There are no better champions to advance my cause — and I call for their support!

Almost 20 years ago, one of my AI startups: International Neural Machines Inc. — developed award-winning Optical Character Recognition (OCR) software, based on back-propagation neural network. The code was ported on an ARM processor, and the resulting firmware was extremely small and compact. And yet, it was very accurate!

Lund-based Swedish company, C-Technologies, licensed our software — and received Product of the Year award by EU. Thanks to our recognition engine, their business-card scanner, C-Pen, was EXTREMELY accurate, too. It was praised — all around the world.

Now, unfortunately, I have no longer academic contacts at Lund University, or entrepreneurial links to any other startup, or university in Sweden. Hence, I decided to turn to Social Media, and invite all the like-minded entrepreneurial enthusiast — to join in my quest!

THE BOTTOM LINE

One more thing… It is not too common to see a true visionary that demonstrates both: Competence AND Integrity. And we all know, that Competence without Integrity — makes you deal with a self-serving professional. Yet, Integrity without Competence — means that you’re being served by a well-meaning, but inept individual.

In addition to his teaching accomplishments, Steve Blank often takes moral stand on serious Social Issues. He frequently raises concerns about growing inequality in North America, Silicon Valley bubble — and a widening gap between Main Street & Wall Street.

Steve understands and speaks against irrational exuberance surrounding the hunt for billion dollars unicorns in La La Land. And he knows that enriching only select few at the cost of so many — can’t hide a true concern about the disappearing middle class.

I wish Steve Blank many more productive and fulfilling years — and look forward to celebrating his Nobel Prize nomination!

Oleg Feldgajer is President & CEO of Canada Green ESCO Inc. Oleg is positioning the company to become a leader in financing AI enhanced green energy projects and ventures. CGE’s mission is to guide DISRUPTIVE businesses in ENERGY & TRANSPORTATION toward profitable business models. Oleg is passionate about such mission, and firmly believes that without AI based innovation, we will all prematurely choke on polluted air and dirty water. CGE delivers 100% financing (levered and unlevered) to its clients — and utilizes large equity pools, and non-recourse debt. Oleg offers creative, fresh ideas to open-minded businesses — that embrace both: logic AND opportunistic intuition. CGE stands against mediocrity & its modus operandi is quite simple: If CGE is not invited to join your BOD, or Advisory Board — we failed!