In the late 1970s, when Silicon Valley was still young, an equally youthful entrepreneur named Steve embarked on a long and fruitful technology career.
No, not that Steve.
As much as the legacy of late Apple co-founder Steve Jobs towers over the tech world, I’m talking here about Steve Blank – the serial entrepreneur, author, academic and so-called Godfather of Silicon Valley – whose influence within the global startup movement is difficult to overstate.
Blank, who will headline the Waterloo Innovation Summit this September and take a deep dive into the Waterloo Region startup ecosystem, started his entrepreneurial career in 1978, and would go on to be a founder or team member at eight Silicon Valley startups, to varying degrees of success.
After he retired as an entrepreneur in 1999, he went on to write two seminal books – Four Steps to the Epiphany and The Startup Owner’s Manual: The Step-By-Step Guide for Building a Great Company – and to teach entrepreneurship at the University of California, Berkeley; Stanford University; Columbia University; New York University and University of California, San Francisco.
Blank’s teachings are credited with launching the Lean Startup movement, the methodical and fast-paced approach to starting companies that’s been adopted from Boston to Berlin to Bangalore and everywhere in between.
With its emphasis on experimentation and iterative thinking, the Lean model enables startup founders to launch quickly, course-correct on the fly and reduce risk through evidence-based decision-making – a much nimbler approach than traditional business methods allowed.
Those old ways, rooted in the all-important business plan, don’t suit today’s world, in which anyone with an Internet connection has the potential to launch a billion-dollar enterprise, and can disrupt decades-old industries in a matter of months.
Blank recently wrote of the age of upheaval under way in the corporate world, as a new wave of entrepreneurship sweeps the planet.
“Every existing company will have to deal with this common economic problem: how do you build an effective organization in a time of continuous disruption – one where the old rules and structures no longer work,” he wrote in the foreword of the 2015 Compass Global Startup Ecosystem Ranking, released July 27. “Companies will need to adapt a new strategy that embraces disruption, sustaining innovation, and execution. Crucially, they need to build new organizational structures that embrace those changes.”
Large corporations everywhere, along with the communities in which they operate, are grappling with this shift, and turning to entrepreneurship hubs such as Communitech to help them.
From Sept. 16-18, Blank will address attendees at the Waterloo Innovation Summit, size up some local startup entrepreneurs and tour an ecosystem that Compass found to be among the top five producers of startup talent in the world. That distinction is due, in large part, to the University of Waterloo and its co-op programs, whose reputation as a key source of Silicon Valley brain power continues to climb.
At the same time, Waterloo Region and other Canadian ecosystems lost ground in the Compass study, as big exits stagnated amid a lack of scale-up activity.
In a phone interview with Communitech News, Blank shared some pointed observations about Canada's investment landscape, and told us why he’s willing to get on a plane and check out the Waterloo Region ecosystem in person.
Q – What do the world’s best regional startup ecosystems have in common?
A – Entrepreneurs, and people to fund entrepreneurs.
Q – Silicon Valley is the global gold standard of startup ecosystems. What mistakes do other communities make in trying to copy its success? Is there a danger in fixating on the Valley to the exclusion of other ecosystems?
A – Copying the Valley means that you’re going to start as a military weapons valley, because that’s how Silicon Valley started.
Most people look at [what’s being done in] the Valley today and think that’s all they need to do, and they’re typically wrong.
The thing I typically suggest people look at is, what are the strengths of the local ecosystem? Is there anything unique about current industry or manufacturing or location or schools or government support? And then, how do you get a risk culture for both entrepreneurs and capital in place?
Q – What can startups do for regional ecosystems that traditional businesses cannot?
A – Create well-paying jobs, and create a culture of other startups that can be the seeds of something much bigger.
The other thing is, they can attract very different intellectual capital into the region.
I mean, Waterloo is an example of a cluster that has exploded with lots of startups but it’s not clear the risk capital culture has scaled to match it. I don’t mean seed rounds, but the large follow-on rounds necessary for scale. At times, the risk-capital culture in Canada feels like talking to the Swiss National Bank.
The reason why Silicon Valley took off in the 70s and 80s wasn’t just our entrepreneurs being crazy; it was that the investors (were also crazy).
Let me give you an analogy: In the late 1970s, it wasn’t clear whether Boston or Silicon Valley was going to become the centre of entrepreneurship for the U.S. They both had world-class universities, with MIT versus Stanford; they were both funded with military weapons systems; one had semiconductors, the other had mini-computers.
But the difference was that, in Boston, the venture capitalists continued to act like bankers, and in Silicon Valley, they decided to act like pirates. And the pirates won.
In Canada, the impression I get is that the investors still act like 19th-century bankers. That’s not what venture capital is about. There’s a word called ‘risk’ involved here. And failure seems to be something beaten out of the culture, where here, a failed entrepreneur is considered experienced.
Q – Corporate innovation is a growing phenomenon as startup culture spreads through the business world. How can startups and lean thinking help big companies stave off disruption?
A – It turns out that, for the last couple of years, large companies were trying to adopt some of the lean startup techniques, and the result almost always looked like what I call innovation theatre. Meaning, it would look good to your board and you could get some press releases out of it, but it really didn’t change the trajectory.
What people now are beginning to understand – and this is not new; theorists have been talking about this for the last couple of decades – is the ambidextrous organization. That is, you need to be able to chew gum and walk at the same time; you need to be able to execute your current business model, but you also need to be able to spin out a whole set of innovation initiatives.
We now have the tools to do 10 times the number of new startups in a fifth of the amount of time. That’s a 50x improvement, and that’s a pretty big change, that folks now know how to do.
Q – You’re in Silicon Valley, the centre of the innovation universe, to many minds. What is it about the Waterloo innovation ecosystem that convinced you to get on a plane and go there this September?
A – Waterloo kind of holds this mythical spot among U.S. entrepreneurs; it’s this place in Canada where stuff kept coming out of, obviously for RIM and for others, and I knew nothing about it.
So, I thought I might as well go to the source.
I think the thing I’m really looking forward to is to understand the innovation network. I know about the Waterloo Innovation Summit and I know about some of the events that are going on, but I’d really like to understand the investment community.
You can build the engine for the car, but unless you have the gas, it just sits there and doesn’t go anywhere. To be honest, that’s the difference between a winning cluster and a stillborn one – are people with money stepping up, or are they going elsewhere?
The other part is, government always has a role in starting a cluster, and I truly know nothing about the Canadian national or provincial efforts in kick-starting this cluster. Maybe it’s because they haven’t; I don’t know, but I hope to find out.
Q – As just one example, there was an announcement this month where the federal government kicked in almost $10 million to fund Waterloo Region accelerators and incubators that are helping companies to scale up.
A – I did a video called The Secret History of Silicon Valley on YouTube. It describes the role of the U.S. government in funding Silicon Valley. And they didn’t put $2 million a year; they probably put $200 million a year into Silicon Valley, for lots of other reasons that might surprise some of your readers.
Anthony Reinhart is Communitech’s Director of Editorial Strategy and senior staff writer. View from the ‘Loo looks at the issues, people and events that shape Waterloo Region’s technology sector
