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Chile 1208 generating innovation hubs 2010
The document provides a summary of the history of Silicon Valley and the factors that contributed to its emergence as a major hub of innovation. It discusses several key events and individuals: 1) Frederick Terman's role as Stanford professor and provost in encouraging collaboration between academia and industry, including supporting HP's founding. 2) Stanford's focus on electronics during WWII and the Cold War, bringing defense funding and spinouts like Varian Associates. 3) William Shockley founding Shockley Semiconductor which led to the "Traitorous 8" founding Fairchild Semiconductor and initiating the chip industry. 4) The rise of venture capital firms like Draper Gaither & Anderson and later Kleiner Per
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Chile 1208 generating innovation hubs 2010
- 1. Generating High GrowthInnovation HubsSteve Blankwww.steveblank.comTwitter: sgblank
- 2. A Few ShortStoriesSilicon Valley HistoryAll Startups Are Not the SameWhy Startups and Companies DifferE- School Versus B-School
- 3. To predict thefuture you need to understand the past
- 4. InternetPersonalComputersIntegratedCircuitsFruitOrchardsFruitOrchardsFruitOrchardsThe Popular Viewof Silicon Valley HistoryMarc AndreessenSteve JobsMoore/NoyceHewlett & PackardInnovation Networks1910196019701980200019901930194019501920
- 5. InternetPersonalComputersIntegratedCircuitsMicrowaves/DefenseTestEquipmentVacuumTubesThe Real Storyof Silicon Valley HistoryVenture CapitalInnovation Networks1910196019701980200019901930194019501920
- 6. Story 1: WWII The First Electronic War
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- 11. Flewat 15 - 25 thousand feetStrategic Bombing of Germany The Combined Bomber OffensiveBritish bombed at NightArea BombingLancaster'sHalifaxFlew at 7 - 17 thousand feet
- 12. Math ChallengeFor every100 bombers on a mission 4 - 20% would not returnCrews had to fly 25 mission to go home
- 13. Story 2: TheElectronic Shield – Electronic Warfare
- 14. Harvard Radio ResearchLab (RRL) Signals Intelligence and Electronic WarfareReduce losses to fighters and flakFind/understand German Air Defense Electronic and Signals IntelligenceJam/confuse German Air DefenseRadar Order of BattleChaffJammersTop Secret 800 person lab
- 15. Electronically Blind GermanRadarJam the Radars with NoiseMANDRELJammerPut Jammers on AirplanesJam and shut down Early Warning RadarsAnti-aircraft RadarsFighter RadarsGround Control RadarsBuilt over 30,000 jammersDINAJammer
- 16. Who Ran thisSecret Lab and became the Father of Electronic Warfare?Harvard Radio Research LabRan all electronic warfare in WWII 800 peopleDirector: Fredrick Terman - Stanford
- 17. Fredrick Terman“the Fatherof Silicon Valley”Stanford Professor of engineering 1926encouraged his students, William Hewlett and David Packard to start a companyDean of Engineering 1946Provost 1955
- 18. Story 3: StanfordAnd The Cold War
- 19. WWII Office ofScientific Research and Development (OSRD)$450 million spent on weapons R&D MIT $117 millionCaltech $83 millionHarvard and Columbia ~ $30 millionStanford ~ $50K
- 20. Terman’s PostwarStrategyFocus onmicrowaves and electronicsNot going to be left out of gov’t $’s this timeRecruits 11 members of war lab as facultyBy 1950 Stanford was the MIT of the WestStudents came from all over the U.S.
- 21. Stanford Spinouts -Microwave ComponentsMicrowave Tube Startups:Klystrons, BWO’s, & TWT’sEitel-McCullough (1934)Varian Associates (1948)Litton Industries (1946)Huggins Laboratories (1948)Stewart Engineering (1952) Watkins-Johnson (1957)Microwave Electronics Co. (1959)
- 22. The Cold Warand StanfordThe Cold War battlefield moves 500 miles eastCountermeasures, ELINT become criticalStanford becomes a center of excellence for the CIA, NSA, Navy, Air Force400-person weapons lab in engineering department
- 23. Lockheed Comes toTown - 1956Polaris missile SLBMBuilt by Lockheed Missiles Division in Sunnyvale20,000 employees by 1960 From 0 in 4 yearsHP: 3,000 employees 1960
- 24. Stanford Spinouts -Military Systems Sylvania Electronics Defense Laboratory (1953)GE Microwave Laboratory (1956)Granger Associates (1956)Applied Technology (1959)Electronic Systems Laboratories (ESL) (1964)Argo Systems (1969)Advent Systems (1972)
- 25. Terman Changes theStartup/University RulesSilicon Valley as We Know it Starts HereGraduate students encouraged to start companiesProfessors encouraged to consult for companiesTerman and other professors take board seatsTechnology transfer/IP licensing easyGetting out in the real world was good for your academic careerFailure was accepted as part of the culture
- 26. EntrepreneursWeaponsFinanceCrisisProfitMotivationCustomer DevelopmentMgmt ToolsAgileDevelopmentBusinessModelDesignDesign ThinkingStanford and the Cold War Silicon Valley’s 1st WaveRisk TakingCultureEntrepreneurialOutward-FacingTech UniversitiesFree flow ofPeople/InfoInfrastructure24/7 UtilitiesPredictableEconomic SystemStableLegal SystemResearchUniversities
- 27. Story 4: 1956 - The Year it Becomes Silicon Valley
- 28. Meanwhile, on theOther Side of Town…The Head of Radar Bombing training for Air Force starts a Company
- 29. InternetPersonalComputersIntegratedCircuitsMicrowaves/DefenseTestEquipmentVacuumTubesThe Real Storyof Silicon Valley HistoryVenture CapitalInnovation Networks1910196019701980200019901930194019501920
- 30. William Shockley“The OtherFather of Silicon Valley”Director of Navy anti-submarine warfareHead of Radar Bombing training for Air ForceCo-inventor of the transistor Nobel Prize in 1956Founded Shockley Semiconductor 1956
- 31. William Shockley“Great Researcher,Awesome Talent Spotter, Horrible Manager”Unintended consequences: “The traitorous 8” leave Shockley found Fairchild Semiconductor1st VC-backed startupNoyce & Moore leave Fairchild to start Intel65 other chip companies in the next 20 years
- 32.
- 33. Story 5: TheRise of VentureCapital
- 34. InternetPersonalComputersIntegratedCircuitsMicrowaves/DefenseTestEquipmentVacuumTubesThe Real Storyof Silicon Valley HistoryVenture CapitalInnovation Networks1910196019701980200019901930194019501920
- 35. The Rise ofRisk CapitalFamily Money 1940’s - 1960’sJ.H. Whitney 1st family office 1946Laurance RockefellerDraper Gaither & Anderson (1st limited Partnership) 1958Spun out as Venrock in 1969BessemerEast Coast focusWide variety of industries
- 36. The Valley AttractsFinancial AttentionThe 1st West Coast IPO’s1956 Varian 1957 Hewlett Packard1958 Ampex
- 37. The Rise ofRisk CapitalSBIC Act of 1958Cold war program – Sputnik motivatedGov’tmatch of private investments 3:1700 SBIC funds by 1965 75% of all VC funding in 19687% in 1988Replaced by the Limited Partnership
- 38. The Rise ofVenture CapitalThe Limited PartnershipRaise money from pension funds, private universities, wealthy individuals – the limited partnersInvestment professionals manage the fund – the general partners i.e. the VC’sCompensate the general partners via the “2 and 20”2% management fee, 20% carried interest (i.e. of the profits)Draper Gaither & Anderson 1958
- 39. Rock andDavis 1961
- 40. Sutter Hill 1964
- 41. Patricof & Co. 1969
- 42. Kleiner Perkins 1972
- 43. Sequoia Capital 1972The Rise of Risk Capital1978/1979 - A WatershedCapital gains slashed (1978)49.5% to 28%Employee Retirement Income Security Act (1979) Pension funds can invest
- 44. EntrepreneursVentureFinanceCrisisProfitMotivationCustomer DevelopmentMgmt ToolsAgileDevelopmentBusinessModelDesignDesign ThinkingVenture CapitalSilicon Valley’s 2nd WaveRisk TakingCultureEntrepreneurialOutward-FacingTech UniversitiesFree flow ofPeople/InfoInfrastructure24/7 UtilitiesPredictableEconomic SystemStableLegal SystemResearchUniversities
- 45. Story 6:Entrepreneurship asa Management ScienceNot All Startups Are Equal
- 46. Companies Get EducatedGov’tcharted companies ~1600’sModern corporations ~1800’sBusiness Schools to educate corporate execsOrganize body of knowledgeFirst Harvard MBA – 1908
- 47. Startups Get EducatedEverycompany began as a startupModern startups ~ 1950’sVenture funded startups ~1970’sEntrepreneurship Schools to educate foundersOrganize body of knowledgeEmerging now
- 48. Wait a Minute…Aren’tStartups Small Versions of Large Companies?50 Years of Experience Says NO
- 49. Story 7:Not AllStartups Are EqualSmall BusinessScalable StartupsLarge Company Innovation
- 50. Small BusinessStartupExit CriteriaBusiness Model found- Profitable business Existing team< $1M in revenueSmall Business Startupsknown customer known product
- 51. Feed the familySmallBusiness Startup:Internet EditionSmall BusinessStartup- Business Model found- Profitable business Existing team< $10M in revenueThe Internet allows a new class of Small Businesses
- 52. Not all businesseson the Internet are “Scalable Startups”ScalableStartupLarge Company>$100M/yearExit CriteriaTotal Available Market > $500m
- 53. Can growto $100m/year
- 54. Business modelfound
- 55. Focused onexecution and processScalable StartupExecuteSearchA Startup is a temporary organization used tosearch for a scalable business model
- 56. ScalableStartupLarge Company>$100M/yearTotal AvailableMarket > $500m
- 57. Can growto $100m/year
- 58. Business modelfound
- 59. Focused onexecution and process
- 60. Typically requires“risk capital”Scalable StartupExecuteSearch In contrast a scalable startup is designed to grow big
- 61. Typically needsrisk capital
- 62. What SiliconValley means when they say “Startup”What VC’s Don’t Tell You:The Transition – Founders LeaveBuildExecuteSearchScalableStartupTransitionLarge CompanyFounders depart
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- 65. Beginning ofscaleLarge Company Sustaining InnovationSustaining InnovationTransitionScalableStartupLarge CompanyExisting Market / Known customer
- 66. Known product featureneedsLarge Company Disruptive InnovationNew DivisionTransitionLarge CompanyDisruptive Innovation New Market / Unknown customer needs
- 67. New tech/ Unknown product features
- 68. Looks likea scalable startupStory 8:Why Startups Are Not Small Versions of Large Companies
- 69. Startups Search, CompaniesExecuteThe Search for the Business ModelScalableStartupTransitionLarge CompanyBusiness Model found customer needs/product features found i.e. Product/Market fit Found by founders, not employees
- 70. Repeatable salesmodel- Managers hired
- 71. Startups Search, CompaniesExecuteThe Execution of the Business ModelThe Search for the Business ModelScalableStartupTransitionLarge Company- Cash-flow breakeven- Profitable- Rapid scale- New Senior Mgmt~ 150 peopleBusiness Model found
- 72. Product/Market fit-Repeatable sales model- Managers hired
- 73. Customer Validation VersusSalesThe Execution of the Business ModelScalableStartupTransitionLargeCompanySalesSales Organization
- 74.
- 75. Price List/DataSheets
- 76. Revenue PlanCustomerValidation Versus SalesThe Search for the Business ModelThe Execution of the Business ModelScalableStartupTransitionLargeCompanyCustomer Validation Early Adopters
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- 78. Not yetrepeatable
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- 80. Done byfoundersSales Sales Organization
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- 82. Price List/DataSheets
- 83. Revenue PlanEngineeringVersus Agile DevelopmentThe Execution of the Business ModelScalableStartupTransitionLarge CompanyEngineering Requirements Docs.
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- 86. Tech PubsEngineeringVersus Agile DevelopmentThe Search for the Business ModelThe Execution of the Business ModelScalableStartupTransitionLarge CompanyEngineering Requirements Docs.
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- 89. Tech PubsAgileDevelopment Continuous Deployment
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- 91. Self OrganizingTeams
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- 93. PivotsMetrics VersusAccountingThe Execution of the Business ModelScalableStartupTransitionLargeCompanyTraditional AccountingBalance Sheet
- 94. Cash FlowStatement
- 95. Income StatementMetricsVersus AccountingThe Search for the Business ModelThe Execution of the Business ModelScalableStartupTransitionLargeCompanyStartup Metrics Customer Acquisition Cost
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- 97. Customer LifetimeValue
- 98. Average SellingPrice/Order Size
- 99. Monthly burnrate
- 100. etc. Traditional Accounting Balance Sheet
- 101. Cash FlowStatement
- 102. Income StatementRiskVersus SafetyThe Execution of the Business ModelScalableStartupTransitionLarge CompanyLots to Lose
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- 105. Protect profitsRiskVersus SafetyThe Search for the Business ModelThe Execution of the Business ModelScalableStartupTransitionLarge Company Nothing to lose
- 106. No profitsto risk
- 107. Searching equalsrisk
- 108. Pains in thebutt
- 109. Always lookingat something different
- 110. Doesn’t getwith the programLearning Versus FailureThe Execution of the Business ModelScalableStartupTransitionLarge CompanyFailure impedes execution
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- 112. Reflects onindividual/organization
- 113. Covered upLearningVersus FailureThe Search for the Business ModelThe Execution of the Business ModelScalableStartupTransitionLarge Company Failure = learning
- 114. Normal partof startups
- 115. Not acrisis
- 116. Shared, lessonslearned
- 117. Iterations andPivots
- 118. Pains in thebutt
- 119. Always lookingat something different
- 120. Doesn’t getwith the programStory 9:Plan versus Model
- 121. Business PlanA documentyour investors make you write that they don’t readA useful place for you to collect your guesses about your businessSize of Opportunity
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- 125. Revenue/Expenses/ProfitThe template tolook like everyone else when you present to VC’s/Management
- 126. No Business Plansurvives first contact with customers
- 127. So Search fora Business Model
- 128. What Is aBusiness Model?Diagram of flows between company and customersScorecard of hypotheses testingRapid change with each iteration and pivotFounder-driven* Alex Osterwalder
- 129. 9 building blocksof a business model:
- 130. CUSTOMER SEGMENTSwhich customersand users are you serving? which jobs do they really want to get done?
- 131. VALUE PROPOSITIONSwhat areyou offering them? what is that getting done for them? do they care?
- 132. CHANNELShow does eachcustomer segment want to be reached? through which interaction points?
- 133. CUSTOMER RELATIONSHIPSwhat relationshipsare you establishing with each segment? personal? automated? acquisitive? retentive?
- 134. REVENUE STREAMSwhat arecustomers really willing to pay for? how? are you generating transactional or recurring revenues?
- 135. KEY RESOURCESwhich resourcesunderpin your business model? which assets are essential?
- 136. KEY ACTIVITIESwhich activitiesdo you need to perform well in your business model? what is crucial?74
- 137. KEY PARTNERSwhich partnersand suppliers leverage your model? who do you need to rely on?
- 138. COST STRUCTUREwhat isthe resulting cost structure? which key elements drive your costs?
- 139. value propositioncustomer relationshipskeyactivitiescustomer segmentskey partnerscost structurerevenue streamskey resourceschannels77images by JAM
- 140. sketch out yourbusiness model
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- 143.
- 144. How Do StartupsSearch For A Business Model? The Search is called Customer Development
- 145. The Implementationis called Agile DevelopmentCustomer DevelopmentSolving For Customer Risk
- 146.
- 147. Traditional Product IntroductionModel:Two Implicit AssumptionsCustomer Problem: knownConceptProduct Dev.Alpha/Beta TestLaunch/1st Ship Product Features: known
- 148. More startups failfrom a lack of customers than from a failure of product development
- 149. Story 11:Customer DevelopmentThefounders^Get Out of the Building
- 150. Product DevelopmentConcept/Bus. PlanProductDev.Alpha/Beta TestLaunch/1st ShipCustomerDevelopmentCompanyBuildingCustomerDiscoveryCustomerValidationCustomer CreationCustomer DevelopmentPivot
- 151. Customer DiscoveryCustomerDiscoveryCustomerValidationCompanyBuildingCustomerCreationStop selling,start listeningTest your hypothesesContinuous DiscoveryDone by founders
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- 154. CompetitionTurning Hypothesesto Facts
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- 158. PayerTest Hypotheses:ChannelTestHypotheses:Demand CreationTest Hypotheses:Problem
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- 165. (Problem)Test Hypotheses:ChannelTestHypotheses:Pricing Model / PricingTest Hypotheses:Size of Opportunity/Market
- 166. Validate BusinessModelTest Hypotheses:Demand CreationTest Hypotheses:Problem
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- 169. PayerAgile DevelopmentTestHypotheses:Product
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- 173. (Problem)Customer DevelopmentTeamTest Hypotheses:ChannelTest Hypotheses:Pricing Model / PricingTest Hypotheses:Size of Opportunity/Market
- 174. Validate BusinessModelTest Hypotheses:Demand CreationTest Hypotheses:Problem
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- 177. PayerAgile DevelopmentTestHypotheses:Product
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- 181. (Problem)Customer DevelopmentTeamTest Hypotheses:ChannelTest Hypotheses:Pricing Model / PricingTest Hypotheses:Size of Opportunity/Market
- 182. Validate BusinessModelThe PivotThe heart of Customer Development
- 183.
- 184. Fast, agile andopportunisticEntrepreneursAngel / VentureFinanceCrisisProfitMotivationCustomer DevelopmentMgmt ToolsAgileDevelopmentBusiness ModelDesignDesign ThinkingEntrepreneurship as A Mgmt ScienceSilicon Valley’s 3rd WaveRisk TakingCultureEntrepreneurialOutward-FacingTech UniversitiesFree flow ofPeople/InfoInfrastructure24/7 UtilitiesPredictableEconomic SystemStableLegal SystemResearchUniversities
- 185. Story 12:Entrepreneurship asa Management ScienceE-School instead of B-School
- 186. Business School VersusEntrepreneurship SchoolBusiness SchoolScalableStartupTransitionLarge CompanyExecution
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- 191.
- 192. AdministrationBusiness School VersusEntrepreneurship SchoolEntrepreneurship SchoolBusiness SchoolScalableStartupTransitionLarge CompanyHypothesis testing
- 193. Business Modeltesting
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- 204. AdministrativeBusiness SchoolCourses Versus Entrepreneurship CoursesBusiness SchoolScalableStartupTransitionLarge CompanyCoursesManagerial Finance/Accounting
- 205. Managing Groupsand Teams
- 206.
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- 208. Modeling forOptimization
- 209. Global ValueChain StrategiesBusiness School Versus Entrepreneurship CoursesBusiness SchoolEntrepreneurship SchoolScalableStartupTransitionLarge CompanyCourses Lean Launchpad
- 210.
- 211. Business ModelDesign
- 212.
- 213. Creativity andInnovation
- 214. Entrepreneurial FinanceCoursesManagerial Finance/Accounting
- 215. Managing Groupsand Teams
- 216.
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- 218. Modeling forOptimization
- 219. Global ValueChain StrategiesE-School Will Emerge Entrepreneurial Education will change radically
- 220. E-School Studentsare not B-School Students
- 221. Entrepreneurship asits own management scienceStory 13:Why Accountants Don’t Run Startups
- 222. Inventor of theModern CorporationScalableStartupTransitionLarge Company
- 223. Inventor of theModern CorporationScalableStartupTransitionLarge CompanyAlfred P. Sloan
- 224. Alfred P. SloanScalableStartupTransitionLargeCompanyGeneral Motors, President/Chairman Cost Accounting
- 225. MIT SloanSchool
- 226.
- 227. etc. Founderof General MotorsScalableStartupTransitionLarge Company
- 228. Founder of GeneralMotorsScalableStartupTransitionLarge CompanyBilly Durant
- 229. Billy DurantScalableStartupTransitionLarge CompanyLeader in horse-drawn buggy’s
- 230. Fired by board,starts Chevrolet
- 231. Regains controlof GM
- 232. Fired by board,GM ~$3.6 billion** GM Net sales in 1921 $304.5M = $3.6 Billion today
- 233.
- 234. Durant Versus SloanDies,rich, honored and famousDurant Versus SloanDies managing a bowling alley
- 235. Dies, rich,honored and famousDurant Versus SloanAccountantDies managing a bowling alley
- 236. Dies, rich,honored and famousYou are hereScalableStartupTransitionLarge Company
- 237. EntrepreneursAngel / VentureFinanceCrisisProfitMotivationCustomerDevelopmentMgmt ToolsAgileDevelopmentBusiness ModelDesignDesign ThinkingWhere is Chile?Risk TakingCultureEntrepreneurialOutward-FacingTech UniversitiesFree flow ofPeople/InfoInfrastructure24/7 UtilitiesPredictableEconomic SystemStableLegal SystemResearchUniversities
- 238. Lessons LearnedCulture needsto support and encourage riskFailure is integral to the startup processTechnology hubs must be magnets for engineers But they cluster around industry specialtiesIn what area will Chile build a world-class hub?E-School reduces early stage startup riskHealthy Venture Capital industry = large profitsChilean market not large enough Teach startups how to go global early
- 239. I Write aBlog www.steveblank.com
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