Steve Blank Innovation and Entrepreneurship

Why Large Organizations Struggle With Disruption, and What to Do About It

Posted on July 30, 2024 by steve blank

Seemingly overnight, disruption has allowed challengers to threaten the dominance of companies and government agencies as many of their existing systems have now been leapfrogged. How an organization reacts to this type of disruption determines whether they adapt or die.

I’ve been working with a large organization whose very existence is being challenged by an onslaught of technology (AI, autonomy, quantum, cyberattacks, access to space, et al) from aggressive competitors, both existing and new. These competitors are deploying these new technologies to challenge the expensive (and until now incredibly effective) legacy systems that this organization has built for decades. (And they are doing it at speed that looks like a blur to this organization.) But the organization is also challenged by the inaction of its own leaders, who cannot let go of the expensive systems and suppliers they built over decades. It’s a textbook case of the Innovators Dilemma.

In the commercial world creative destruction happens all the time. You get good, you get complacent, and eventually you get punched in the face. The same holds true for Government organizations, albeit with more serious consequences.

This organization’s fate is not yet sealed. Inside it, I’ve watched incredibly innovative groups create autonomous systems and software platforms that rival anything a startup is doing. They’ve found champions in the field organizations, and they’ve run experiments with them. They’ve provided evidence that their organization could adapt to the changing competitive environment and even regain the lead. Simultaneously, they’ve worked with outside organizations to complement and accelerate their internal offerings. They’re on the cusp of a potential transformation – but leadership hesitates to make substantive changes.

**The “Do Nothing” Feedback Loop
**I’ve seen this play out time and again in commercial and government organizations. There’s nothing more frustrating for innovators than to watch their organization being disrupted while its senior leaders hesitate to take more than token actions. On the other hand, no one who leads a large organization wants it to go out of business. So, why is adapting to changed circumstances so hard for existing organizations?

The answer starts at the top. Responding to disruption requires action from senior leadership: e.g. the CEO, board, Secretary, etc. Fearful that a premature pivot can put their legacy business or forces at risk, senior leaders delay deciding – often until it’s too late.

My time with this organization helped me appreciate why adopting and widely deploying something disruptive is difficult and painful in companies and government agencies. Here are the reasons:

Disconnected Innovators – Most leaders of large organizations are not fluent in the new technologies and the disruptive operating concepts/business models they can create. They depend on guidance from their staff and trusted advisors – most of whom have been hired and promoted for their expertise in delivering incremental improvements in existing systems. The innovators in their organization, by contrast, rarely have direct access to senior leaders. Innovators who embrace radically new technologies and concepts that challenge the status quo and dogma are not welcomed, let alone promoted, or funded.

Legacy – The organization I’ve been working with, like many others, has decades of investment in existing concepts, systems, platforms, R&D labs, training, and a known set of external contractors. Building and sustaining their existing platforms and systems has left little money for creating and deploying new ones at the same scale (problems that new entrants/adversaries may not have.) Advocating that one or more of their platforms or systems are at risk or may no longer be effective is considered heresy and likely the end of a career.

The “Frozen Middle” – A common refrain I hear from innovators in large organizations is that too many people are resistant to change (“they just don’t get it”.) After seeing this behavior for decades, I’ve learned that the frozen middle occurs because of what’s called the_“_Semmelweis effect” – the unconscious tendency of people to stick to preexisting beliefs and reject new ideas that contradict them – because it undermines their established norms and/or beliefs. (They really don’t get it.) This group is most comfortable sticking with existing process and procedures and hires and promotes people who execute the status quo. This works well when the system can continue to succeed with incremental growth, but in the face of more radical change, this normal human reaction shuts out new learning and limits an organizations’ ability to rapidly adapt to new circumstances. The result is organizational blinders and frustrated innovators. And you end up with world-class people and organizations for a world that no longer exists.

Not everyone is affected by the Semmelweis effect_._ It’s often mid-grade managers / officers in this same “middle” who come up with disruptive solutions and concepts. However, unless they have senior champions (VP’s, Generals / Admirals) and are part of an organization with a mission to solve operational problems, these solutions die. These innovators lack alternate places where the culture encourages and funds experimentation and non-consensus ideas. Ironically, organizations tend to chase these employees out because they don’t conform, or if forced to conform, they grow disillusioned and leave for more innovative work in industry.

Hubris is managerial behavior of overconfidence and complacency. Unlike the unconscious Semmelweis effect, this is an active and conscious denial of facts. It occurs as some leaders/managers believe change threatens their jobs as decision-makers or that new programs, vendors or ideas increase the risk of failure, which may hurt their image and professional or promotional standing.

In the organization I’ve been working with, the internal engineering group offers senior leaders reassurances that they are responding to disruption by touting incremental upgrades to their existing platforms and systems.

Meanwhile because their budget is a zero-sum game, they starve innovators of funds and organizational support for deployment of disruptive new concepts at scale. The result is “innovation theater.” In the commercial world this behavior results in innovation demos but no shipping products and a company on the path to irrelevance or bankruptcy. In the military it’s demos but no funding for deployments at scale.

Fear of Failure/Risk Aversion – Large organizations are built around repeatable and scalable processes that are designed to be “fail safe.” Here new initiatives need to match existing budgeting, legal, HR and acquisition, processes and procedures. However, disruptive projects can only succeed in organizations that have a “safe-to-fail” culture. This is where learning and discovery happens via incremental and iterative experimentation with a portfolio of new ideas and failure is considered part of the process. “Fail safe” versus “safe-to-fail” organizations need to be separate and require different culture, different people, different development processes and risk tolerance.

**Activist Investors Kill Transformation in Commercial Companies
**A limit on transformation speed unique to commercial organizations is the fear of “Activist Investors.” “Activist investors” push public companies to optimize short-term profit, by avoiding or limiting major investments in new opportunities and technology. When these investors gain control of a company, innovation investments are reduced, staff is cut, factories and R&D centers closed, and profitable parts of the company and other valuable assets sold.

Unique Barriers for Government Organizations
Government organizations face additional constraints that make them even slower to respond to change than large companies.

To start, leaders of the largest government organizations are often political appointees. Many have decades of relevant experience, but others are acting way above their experience level. This kind of mismatch tends to happen more frequently in government than in private industry.

Leaders’ tenures are too short – All but a few political appointees last only as long as their president in the White House, while leaders of programs and commands in the military services often serve 2- or 3-year tours. This is way too short to deeply understand and effectively execute organizational change. Because most government organizations lack a culture of formal innovation doctrine or playbook – a body of knowledge that establishes a common frame of reference and common professional language – institutional learning tends to be ephemeral rather than enduring. Little of the knowledge, practices, shared beliefs, theory, tactics, tools, procedures, language, and resources that the organization built under the last leader gets forwarded. Instead each new leader relearns and imposes their own plans and policies.

Getting Along Gets Rewarded – Career promotion in all services is primarily driven by “getting along” with the status quo. This leads to things like not cancelling a failing program, not looking for new suppliers who might be cheaper/ better/ more responsive, pursuing existing force design and operating concepts even when all available evidence suggests they’re no longer viable, selecting existing primes/contractors, or not pointing out that a major platform or weapon is no longer effective. The incentives are to not take risks. Doing so is likely the end of a career. Few get promoted for those behaviors. This discourages non-consensus thinking. Yet disruption requires risk.

Revolving doors – Senior leaders leave government service and go to work for the very companies whose programs they managed, and who they had purchased systems from (often Prime contractors). The result is that few who contemplate leaving the service and want a well-paying job with a contractor will hold them to account or suggest an alternate vendor while in the service.

Prime Contractors – are one of our nation’s greatest assets while being our greatest obstacles to disruptive change. In the 20th century platforms/weapons were mostly hardware with software components. In the 21st century, platforms/weapons are increasingly software with hardware added. Most primes still use Waterfall development with distinct planning, design, development, and testing phases rather than Agile (iterative and incremental development with daily software releases). The result is that primes have a demonstrated inability to deliver complex systems on time. (Moving primes to software upgradable systems/or cloud-based breaks their financial model.)

As well_,_ prime contractors typically have a “lock” on existing government contracts. That’s because it’s less risky for acquisition officials to choose them for follow-on work– and primes have decades of experience in working through the byzantine and complex government purchasing process; and they have tons of people and money to influence all parts of the government acquisition system—from the requirements writers to program managers, to congressional staffers to the members of the Armed Services and Appropriations committees. New entrants have little chance to compete.

Congress – Lawmakers have incentives to support the status quo but few inducements to change it. Congress has a major say in what systems and platforms suppliers get used, with a bias to the status quo. To keep their own jobs, lawmakers shape military appropriations bills to support their constituents’ jobs and to attract donations from the contractors who hire them. (They and their staffers are also keeping the revolving door in mind for their next job.) Many congressional decisions that appear in the National Defense Authorization Act (NDAA) and in appropriations are to support companies that provide the most jobs in their districts and the most funds for their reelection. These come from the Prime contractors.

**What to Do About It?
**It starts at the top. Confronted with disruptive threats, senior leaders must actively work to understand:

The timing of the threat – disruption never comes with a memo, and when it happens its impact is exponential. When will disruption happen that will make our core business or operating concepts/force design obsolete? Will our competitors get there first?
The magnitude of the threat – will this put a small part of our business/capabilities at risk or will it affect our entire organization?
The impact of the threat – will this have a minor impact or does it threaten the leadership or the very existence of the organization. What happens if our competitors/adversaries adopt this first?
The response to the threat- Small experiments, department transformation, and company or organization-wide transformation – and its timeline.

_Increase Visibility of Disruptive Tech and Concepts/Add Outside Opinions
_

To counter disruptive threats, the typical reporting relationship of innovators filtered through multiple layers of management must be put aside.
- Senior leaders need a direct and unfiltered pipeline to their internal innovation groups for monthly updates and demos of evidenced-based experiments in operational settings.
- And the new operating concepts to go with it.
Create a “Red Team” of advisors from outside their organization.
- This group should update senior leaders on the progress of competitors
- And offer unbiased assessment of their own internal engineering/R&D progress.
Stand up a strategic studies group that can develop new business models/ new strategic concepts usable at the operational level – ensure its connection with external sources of technical innovation
Create a “sensing” and “response” organization that takes actual company/agency/service problems out to VC’s and startups and seeing how they would solve them
- However, unless senior leaders 1) actively make a point of seeing these first hand (at least biannually), and have the mechanism to “respond” with purchase orders/ OTA’s, this effort will have little impact.

Actively and Urgently Gather Evidence

Run real-world experiments – simulations, war games, – using disruptive tech and operating concepts (in offense and defense.)
See and actively seek out the impact of disruption in adjacent areas e.g. AI’s impact on protein modeling, drones in the battlefield and Black Sea in Ukraine, et al.
Ask the pointy end of the organization (e.g the sales force, fleet admirals) if they are willing to take more risk on new capabilities.

These activities need happen in months not years. Possible recommendations from these groups include do nothing, run small experiments, transform a single function or department, or a company or organization-wide transformation.

What Does Organization-wide Transformation look like?

What outcome do we desire?
When do we need it?
What budget, people, capital equipment are needed?
- What would need to be divested?
How to communicate this to all stakeholders and get them aligned?
In the face of disruption/ crisis/ wartime advanced R&D groups now need a seat at the table with budgets sufficient for deployment at scale.
- Consider organizing as an ambidextrous organization (e.g. SpaceX Falcon 9 operational execution versus Starship disruptive experimentation) (see this HBR article.)
- In addition to mangers of process, create rapid innovation teams (technologists, visionaries, senior champions)
Finally, encourage more imagination. How can we use partners and other outside resources for technology and capital?

Examples of leaders who transformed their organization in the face of disruption include Microsoft CEO Satya Nadella and Steve Jobs from Apple, in defense, Bill Perry, Harold Brown and Ash Carter. Each dealt with disruption with acceptance, acknowledgment, imagination and action.

Much more to be said about transformation in future posts.

Filed under: Innovation Doctrine, National Security | 4 Comments »

Lean LaunchPad @Stanford 2024 – 8 Teams In, 8 Companies Out

Posted on June 27, 2024 by steve blank

This post previously appeared in Poets and Quants.

We just finished the 14th annual Lean LaunchPad class at Stanford. The class had gotten so popular that in 2021 we started teaching it in both the winter and spring sessions.

During the quarter the eight teams spoke to 919 potential customers, beneficiaries and regulators. Most students spent 15-20 hours a week on the class, about double that of a normal class.

In the 14 years we’ve been teaching the class, we had something that has never happened before – all eight teams in this cohort have decided to start a company.

This Class Launched a Revolution in Teaching Entreprenurship
Several government-funded programs have adopted this class at scale. The first was in 2011 when we turned this syllabus into the curriculum for the National Science Foundation I-Corps. Errol Arkilic, the then head of commercialization at the National Science, adopted the class saying, “You’ve developed the scientific method for startups, using the Business Model Canvas as the laboratory notebook.”

Below are the Lessons Learned presentations from the spring 2024 Lean LaunchPad.

Team Neutrix – Making Existing Nuclear Reactors More Profitable By Upgrading Their Fuel

If you can’t see the Neutrix video, click here

If you can’t see the Neutrix Presentation, click here

**I-Corps at the National Institute of Health
**In 2013 I partnered with UCSF and the National Institute of Health to offer the Lean LaunchPad class for Life Science and Healthcare (therapeutics, diagnostics, devices and digital health.) In 2014, in conjunction with the National Institute of Health, I took the UCSF curriculum and developed and launched the I-Corps @ NIH program.

Team Virgil – Capturing Memoirs of Loved Ones (and Using AI to Do It Profitably)

If you can’t see the Virgil video, click here

If you can’t see the Virgil Presentation, click here.

**I-Corps at Scale
**I-Corps is now offered in 100 universities and has trained over 9,500 scientists and engineers; 7,800 in 2,546 teams in I-Corps at NSF (National Science Foundation), 950 participants at I-Corps at NIH in 317 teams, and 580 participants at Energy I-Corps (at the DOE) in 188 teams.

Team Claim CoPilot – Overturning Denied Healthcare Claims

If you can’t see the Claim Pilot Presentation, click here

If you can’t see the Claim CoPilot video of their demo click here

$4 billion in Venture Capital For I-Corps Teams
1,380 of the NSF I-Corps teams launched startups raising $3.166 billion. Over 300 I-Corps at NIH teams have collectively raised $634 million. Energy I-Corps teams raised $151 million in additional funding.

Team Emy.ai – Using Brainwaves to Biohack Moods

If you can’t see the Emy.ai video, click here

If you can’t see the Emy.ai Presentation, click here

**Mission Driven Entreprenurship
**In 2016, I co-created both the Hacking for Defense course with Pete Newell and Joe Felter as well as the Hacking for Diplomacy course with Jeremy Weinstein at Stanford. In 2022, Steve Weinstein created Hacking for Climate and Sustainability. This fall Jennifer Carolan will launch Hacking for Education at Stanford.

Team TeachAssist – Automating Student Assessments for Special Education Teachers

If you can’t see the TeachAssist video, click here

If you can’t see the TeachAssist Presentation, click here

**Design of This Class
**While the Lean LaunchPad students are experiencing what appears to them to be a fully hands-on, experiential class, it’s a carefully designed illusion. In fact, it’s highly structured. The syllabus has been designed so that we are offering continual implicit guidance, structure, and repetition. This is a critical distinction between our class and an open-ended experiential class.

_Guidance, Direction and Structure
_For example, students start the class with their own initial guidance – they believe they have an idea for a product or service (Lean LaunchPad/I-Corps) or have been given a clear real-world problem (Hacking for Defense). Coming into the class, students believe their goal is to validate their commercialization or deployment hypotheses. (The teaching team knows that over the course of the class, students will discover that most of their initial hypotheses are incorrect.)

Team Maurice.ai – A Home Robot for the GPT Era

If you can’t see the Maurice.ai video, click here

If you can’t see the Maurice.ai Presentation, click here

**The Business Model Canvas
**The business/mission model canvas offers students guidance, explicit direction, and structure. First, the canvas offers a complete, visual roadmap of all the hypotheses they will need to test over the entire class. Second, the canvas helps the students goal-seek by visualizing what an optimal endpoint would look like – finding product/market fit. Finally, the canvas provides students with a map of what they learn week-to-week through their customer discovery work.

I can’t overemphasize the important role of the canvas. Unlike an incubator or accelerator with no frame, the canvas acts as the connective tissue – the frame – that students can fall back on if they get lost or confused. It allows us to teach the theory of how to turn an idea, need, or problem into commercial practice, week by week a piece at a time.

Team Waifinder – Personalized Guidance For High School Students to Effectively Apply to College

If you can’t see the Waifinder video, click here

If you can’t see the Waifinder Presentation, click here

Lean LaunchPad Tools
The tools for customer discovery (videos, sample experiments, etc.) offer guidance and structure for students to work outside the classroom. The explicit goal of 10-15 customer interviews a week along with the requirement for building a continual series of minimal viable products provides metrics that track the team’s progress. The mandatory office hours with the instructors and support from mentors provide additional guidance and structure.

Team PocketDot – Gamified Braille Self-Learning Solution for Braille Learners

If you cant see the PocketDot video click here.

If you can’t see the PocketDot Presentation, click here

**It Takes A Village
**While I authored this blog post, this class is a team project. The secret sauce of the success of the Lean LaunchPad at Stanford is the extraordinary group of dedicated volunteers supporting our students in so many critical ways.

The teaching team consisted of myself and:

Steve Weinstein, partner at America’s Frontier Fund, 30-year veteran of Silicon Valley technology companies and Hollywood media companies. Steve was CEO of MovieLabs, the joint R&D lab of all the major motion picture studios.
Lee Redden – CTO and co-founder of Blue River Technology (acquired by John Deere) who was a student in the first Lean LaunchPad class 14 years ago!
Jennifer Carolan, Co-Founder, Partner at Reach Capital the leading education VC
Shawn Carolan Partner at Menlo Ventures.

Our teaching assistants this year were Chapman Ellsworth, Francesca Bottazzini and Ehsan Ghasemi.

Mentors helped the teams understand if their solutions could be a commercially successful business. Thanks to Lofton Holder, Bobby Mukherjee, Steve Cousins, David Epstein, Kevin Ray, Rekha Pai, Rafi Holtzman and Kira Makagon. They were led by Todd Basche.

**Summary
**While the Lean LaunchPad/I-Corps curriculum was a revolutionary break with the past, it’s not the end. In the last decade enumerable variants have emerged. The class we teach at Stanford has continued to evolve. Better versions from others will appear. AI is already having a major impact on customer discovery and validation. And one day another revolutionary break will take us to the next level.

But today, we get to celebrate – 8 teams in – 8 companies out.

Filed under: Customer Development, Lean LaunchPad | 3 Comments »

Hacking for Defense @ Stanford 2024 – Lessons Learned Presentations

Posted on June 24, 2024 by steve blank

We just finished our 9th annual Hacking for Defense class at Stanford.

What a year.

Hacking for Defense, now in 60 universities, has teams of students working to understand and help solve national security problems. At Stanford this quarter the 8 teams of 40 students collectively interviewed 968 beneficiaries, stakeholders, requirements writers, program managers, industry partners, etc. – while simultaneously building a series of minimal viable products and developing a path to deployment.

At the end of the quarter, each of the teams gave a final “Lessons Learned” presentation. Unlike traditional demo days or Shark Tanks which are, “Here’s how smart I am, and isn’t this a great product, please give me money,” the Lessons Learned presentations tell the story of each team’s 10-week journey and hard-won learning and discovery. For all of them it’s a roller coaster narrative describing what happens when you discover that everything you thought you knew on day one was wrong and how they eventually got it right.

Here’s how they did it and what they delivered.

**New for 2024
**This year, in addition to the problems from the Defense Department and Intelligence Community we had two problems from the State Department and one from the FBI.

**These are “Wicked” Problems
**Wicked problems refer to really complex problems, ones with multiple moving parts, where the solution isn’t obvious and lacks a definitive formula. The types of problems our Hacking For Defense students work on fall into this category. They are often ambiguous. They start with a problem from a sponsor, and not only is the solution unclear but figuring out how to acquire and deploy it is also complex. Most often students find that in hindsight the problem was a symptom of a more interesting and complex problem – and that Acquistion of solutions in the Dept of Defense is unlike anything in the commercial world.

And the stakeholders and institutions often have different relationships with each other – some are collaborative, some have pieces of the problem or solution, and others might have conflicting values and interests.

The figure shows the types of problems Hacking for Defense students encounter, with the most common ones shaded.

**Guest Speakers: Doug Beck – Defense Innovation Unit, Radha Plumb – CDAO. H.R. McMaster – former National Security Advisor and Condoleezza Rice – former Secretary of State
**Our final Lessons Learned presentations started with an introduction by Doug Beck, director of the Defense Innovation Unit and Radha Plumb, DoD’s Chief of the Digital and AI Office– reminding the students of the importance of Hacking for Defense and congratulating them on their contribution to national security.

H.R. McMaster gave an inspiring talk. He reminded our students that 1) war is an extension of politics; 2) war is human; 3) war is uncertain; 4) war is a contest of wills.

If you can’t see the video of H.R. McMaster’s talk, click here.

The week prior to our final presentations the class heard inspirational remarks from Dr. Condoleezza Rice, former United States Secretary of State. Dr. Rice gave a sweeping overview of the prevailing threats to our national security and the importance of getting our best and brightest involved in public service.

As a former Secretary of State, Dr. Rice was especially encouraged to see our two State Department sponsored teams this quarter. She left the students inspired to find ways to serve.

**Lessons Learned Presentation Format
**For the final Lessons Learned presentation many of the eight teams presented a 2-minute video to provide context about their problem. This was followed by an 8-minute slide presentation describing their customer discovery journey over the 10 weeks. While all the teams used the Mission Model Canvas, (videos here), Customer Development and Agile Engineering to build Minimal Viable Products, each of their journeys was unique.

By the end the class all the teams realized that the problem as given by the sponsor had morphed into something bigger, deeper and much more interesting.

All the presentations are worth a watch.

**Team House of Laws

**Using LLMs to Simplify Government Decision Making

If you can’t see the Team House of Laws 2-minute video, click here

If you can’t see the Team House of Laws slides, click here

Mission-Driven Entrepreneurship
This class is part of a bigger idea – Mission-Driven Entrepreneurship. Instead of students or faculty coming in with their own ideas, we ask them to work on societal problems, whether they’re problems for the State Department or the Department of Defense or non-profits/NGOs or the Oceans and Climate or for anything the students are passionate about. The trick is we use the same Lean LaunchPad / I-Corps curriculum — and the same class structure – experiential, hands-on– driven this time by a mission-model not a business model. (The National Science Foundation and the Common Mission Project have helped promote the expansion of the methodology worldwide.)

Mission-driven entrepreneurship is the answer to students who say, “I want to give back. I want to make my community, country or world a better place, while being challenged to solve some of the toughest problems.”

**Caribbean Clean Climate

**Helping Barbados Adopt Clean Energy

If you can’t see the Caribbean Clean Climate 2-minute video, click here

If you can’t see the Caribbean Clean Climate slides, click here

**It Started With An Idea
**Hacking for Defense has its origins in the Lean LaunchPad class I first taught at Stanford in 2011. I observed that teaching case studies and/or how to write a business plan as a capstone entrepreneurship class didn’t match the hands-on chaos of a startup. Furthermore, there was no entrepreneurship class that combined experiential learning with the Lean methodology. Our goal was to teach both theory and practice.

The same year we started the class, it was adopted by the National Science Foundation to train Principal Investigators who wanted to get a federal grant for commercializing their science (an SBIR grant.) The NSF observed, “The class is the scientific method for entrepreneurship. Scientists understand hypothesis testing” and relabeled the class as the NSF I-Corps (Innovation Corps). I-Corps became the standard for science commercialization for the National Science Foundation, National Institutes of Health and the Department of Energy, to date training 3,051 teams and launching 1,300+ startups.

**Team Protecting Children

**Helping the FBI Acquire LLMs for Child Safety

If you can’t see the Team Protecting Children 2-minute video, click here

If you can’t see the Team Protecting Children slides, click here

**Origins Of Hacking For Defense
**In 2016, brainstorming with Pete Newell of BMNT and Joe Felter at Stanford, we observed that students in our research universities had little connection to the problems their government was trying to solve or the larger issues civil society was grappling with. As we thought about how we could get students engaged, we realized the same Lean LaunchPad/I-Corps class would provide a framework to do so. That year we launched both Hacking for Defense and Hacking for Diplomacy (with Professor Jeremy Weinstein and the State Department) at Stanford. The Department of Defense adopted and scaled Hacking for Defense across 60 universities while Hacking for Diplomacy is offered at JMU and RIT –, sponsored by the Department of State Bureau of Diplomatic Security (see here).

**Team L Infinity

**Improving Satellite Tasking

If you can’t see the Team L∞ 2-minute video, click here

If you can’t see the Team L∞ slides, click here

**Goals for the Hacking for Defense Class
**Our primary goal was to teach students Lean Innovation methods while they engaged in national public service. Today if college students want to give back to their country, they think of Teach for America, the Peace Corps, or AmeriCorps or perhaps the US Digital Service or the GSA’s 18F. Few consider opportunities to make the world safer with the Department of Defense, Intelligence community or other government agencies.

In the class we saw that students could learn about the nation’s threats and security challenges while working with innovators inside the DoD and Intelligence Community. At the same time the experience would introduce to the sponsors, who are innovators inside the Department of Defense (DOD) and Intelligence Community (IC), a methodology that could help them understand and better respond to rapidly evolving threats. We wanted to show that if we could get teams to rapidly discover the real problems in the field using Lean methods, and only then articulate the requirements to solve them, defense acquisition programs could operate at speed and urgency and deliver timely and needed solutions.

Finally, we wanted to familiarize students with the military as a profession and help them better understand its expertise, and its proper role in society. We hoped it would also show our sponsors in the Department of Defense and Intelligence community that civilian students can make a meaningful contribution to problem understanding and rapid prototyping of solutions to real-world problems.

**Team Centiment

**Information Operations Optimized

If you can’t see the Team Centiment 2-minute video, click here

If you can’t see the Team Centiment slides, click here

**Mission-Driven in 50 Universities and Continuing to Expand in Scope and Reach
**What started as a class is now a movement.

From its beginning with our Stanford class, Hacking for Defense is now offered in over 50 universities in the U.S., as well as in the UK and Australia. Steve Weinstein started Hacking for Impact (Non-Profits) and Hacking for Local (Oakland) at U.C. Berkeley, and Hacking for Oceans at both Scripps and UC Santa Cruz, as well as Hacking for Climate and Sustainability at Stanford. Hacking for Education will start this fall at Stanford.

**Team Guyana’s Green Growth

Water Management for Guyanese Farmers**

Screenshot

If you can’t see the Team Guyana’s Green Growth 2-minute video, click here

If you can’t see the Team Guyana’s Green Growth slides, click here

**Go-to-Market/Deployment Strategies
**The initial goal of the teams is to ensure they understand the problem. The next step is to see if they can find mission/solution fit (the DoD equivalent of commercial product/market fit.) But most importantly, the class teaches the teams about the difficult and complex path of getting a solution in the hands of a warfighter/beneficiary. Who writes the requirement? What’s an OTA? What’s color of money? What’s a Program Manager? Who owns the current contract? …

**Team Dynamic Space Operations

Cubesats for Space Inspection Training**

Screenshot

If you can’t see the Team Dynamic Space Operations 2-minute video, click here

If you can’t see the Team Dynamic Space Operations slides, click here

**Team Spectra Labs

**Providing real-time awareness of ..

This team’s presentation is available upon request.

If you can’t see the Spectra Labs slides, click here

**What’s Next For These Teams?
**When they graduate, the Stanford students on these teams have the pick of jobs in startups, companies, and consulting firms. House of Laws got accepted and has already started at Y-Combinator. L-Infinity, Dynamics Space Operations team (now Juno Astrodynamics,) and Spectra Labs are started work this week at H4X Labs, an accelerator focused on building dual-use companies that sell to both the government and commercial firms. Many of the teams will continue to work with their problem sponsor. Several will join the Stanford Gordian Knot Center for National Security Innovation which is focused on the intersection of policy, operational concepts, and technology.

In our post class survey 86% of the students said that the class had impact on their immediate next steps in their career. Over 75% said it changed their opinion of working with the Department of Defense and other USG organizations.

**It Takes A Village
**While I authored this blog post, this class is a team project. The secret sauce of the success of Hacking for Defense at Stanford is the extraordinary group of dedicated volunteers supporting our students in so many critical ways.

The teaching team consisted of myself and:

Pete Newell, retired Army Colonel and ex Director of the Army’s Rapid Equipping Force, now CEO of BMNT.
Joe Felter, retired Army Colonel; and former deputy assistant secretary of defense for South Asia, Southeast Asia, and Oceania; and William J. Perry Fellow at Stanford’s Center for International Security and Cooperation.
Steve Weinstein, partner at America’s Frontier Fund, 30-year veteran of Silicon Valley technology companies and Hollywood media companies. Steve was CEO of MovieLabs, the joint R&D lab of all the major motion picture studios. He runs H4X Labs.
Jeff Decker, a Stanford researcher focusing on dual-use research. Jeff served in the U.S. Army as a special operations light infantry squad leader in Iraq and Afghanistan.

Our teaching assistants this year were Joel Johnson, Malika Aubakirova, Spencer Paul, Ethan Tiao, Evan Szablowski, and Josh Pickering. A special thanks to the Defense Innovation Unit (DIU) and its National Security Innovation Network (NSIN) for supporting the program at Stanford and across the country, as well as Lockheed Martin and Northrop Grumman.

**31 Sponsors, Business and National Security Mentors
**The teams were assisted by the originators of their problems – the sponsors.

Sponsors: Jackie Tame, Nate Huston, Mark Breier, Dave Wiltse, Katherine Beamer, Jeff Fields, Dave Miller, Shannon Rooney, and David Ryan.

National Security Mentors helped students who came into the class with no knowledge of the Dept of Defense, State and the FBI understand the complexity, intricacies and nuances of those organizations: Brad Boyd, Matt MacGregor, David Vernal, Alphanso “Fonz” Adams, Ray Powell, Sam Townsend, Tom Kulisz, Rich Lawson, Mark McVay, Nick Shenkin, David Arulanantham and Matt Lintker.

Business Mentors helped the teams understand if their solutions could be a commercially successful business: Katie Tobin, Marco Romani, Rafi Holtzman, Rachel Costello, Donnie Hassletine, Craig Seidel, Diane Schrader and Matt Croce.

Thanks to all!

Filed under: Corporate/Gov't Innovation, Gordian Knot Center for National Security Innovation, Hacking For Defense | 2 Comments »

You’re Invited: Hacking for Defense and Lean LaunchPad Final Presentations

Posted on June 3, 2024 by steve blank

Join us for the final presentations of our two Stanford classes this Tuesday June 4th and Wednesday June 5th.

Tuesday = Hacking for Defense

Wednesday = Lean Launchpad

The presentations just get better every year. Attend in person or via Zoom.

This year AI seems to be part of almost every team.

Zoom link and RSVP for Hacking for Defense here

Zoom link and RSVP for Lean LaunchPad here

Filed under: Hacking For Defense, Lean LaunchPad | Leave a comment »

Gordon Bell R.I.P.

Posted on May 26, 2024 by steve blank

Gordon Bell passed on this month.

I was a latecomer in Gordon Bell’s life. But he made a lasting impact on mine.

The first time I laid eyes on Gordon Bell was in 1984 outside a restaurant in a Boston suburb when he pulled up in a Porsche. I was the head of Marketing for MIPS Computer, a RISC chip startup. The entire company (all of five of us) were out visiting the east coast to meet Prime Computer who would become our first major customer. (When Gordon was CTO of Encore Computer he encouraged the MIPS founders to start the company, thinking they could provide the next processor for his Multimax computer.)

My West Coast centric world of computing had been limited to custom bit-sliced computers, HP 2100 and 21MX, Interdata 8/32 minicomputers and Zilog microprocessors. Gordon was already a legend – as VP of Research and Development at Digital Equipment Corporation (DEC) he designed some of the early minicomputers and oversaw the creation of the VAX 11-780. His work at DEC revolutionized the computing industry, making powerful computing accessible.

Even so, as we talked over dinner at first I couldn’t understand a word he was saying, until I realized that he had three or four levels of conversation going simultaneously, all interleaved. If you could keep them sorted it was fun to keep up with each thread. By dessert I became another member of the Gordon Bell fan club.

Two years later, on a lunch break in downtown Palo Alto I ran into Gordon again. He was out to attend a Teknowledge board meeting. I invited him over to meet the founding team of Ardent, our new startup, whose founders he knew from DEC. By the end of the day Gordon had joined our team as founding VP of Engineering and another phase in my education was about to begin.

As an entrepreneur in my 20’s and 30’s, I was lucky to have four extraordinary mentors, each brilliant in his own field and each a decade or two older than me. While others taught me how to think, it was Gordon Bell who taught me what to think about. He could see the destination clearer than anyone I’ve ever met. The best part of my day was hearing him tell me about 3 ideas at a time and me do the same back to him. He had an extraordinary instinct for guiding me away from the purely dumb paths that would lead nowhere and nudge me on to the more productive roads. (He had this warm laugh, a kind of a chuckle when he was listening to some of more dumber ideas.)

At Digital Equipment Gordon had developed a heuristic that attempted to predict the evolution of the next class of computers. And when he left DEC he created the Bell-Mason diagnostic to help predict patterns in successful startups. The idea that there was a pattern about startup success and failure would stick in the back of my head for decades and shape the second half of my career. And as he was brainstorming about some of the early ideas about what became his MyLifeBits project I was inspired to start a small version of my own.

For the next 15 years Gordon would help me understand how to think critically about the possibilities over the horizon. Yet at the same time Gordon was looking forward, he was teaching us to respect and learn from the past.

Gordon and his wife Gwen started a computer history museum and by 1983 moved it into renovated warehouse next to the Boston Children’s Museum. In 1986 I spent two weeks making a short movie about the history of high-performance computing at the museum. Gordon and Gwen put me up in their guest bedroom overlooking Boston Harbor and a short walk across the Congress Street bridge to the museum. This not only began my long-term love affair with the museum but also made me realize that computer history and the history of innovation clusters were missing the story of how the military and intelligence community had shaped the trajectory of post WWII technology.

Seven years later, in my next startup, I would end up staying in their apartment again, this time with my wife and two young daughters, to attend the MacWorld trade show. I vividly remember the girls running around their living room decorated with many of the artifacts the museum didn’t have room to display (with Gwen patiently telling them that the Arithmometer and Napier’s Bones weren’t toys.) For the next few years, we’d return (with the artifacts safely hidden away.)

By the time I started my final startup Epiphany, Gordon was at Microsoft, and he became my most valuable advisor.

Gordon was not only a mentor and inspiration to me, but to countless engineers and computer scientists. It was a privilege to know him.

2004

I’ll miss him.

Filed under: Technology | 10 Comments »

The Venture Mindset – Worth A Read

Posted on May 21, 2024 by steve blank

Ilya Strebulaev at the Stanford Graduate School of Business and Director of the Stanford Venture Capital Initiative just came out with a book that should be on your reading list – The Venture Mindset.

The books premise is that Venture Capitalists (who were responsible for the launch of one-fifth of the 300 largest U.S. public companies) have a different mindset then that found in the rest of the business world (and I would add in government agencies.) All these startups could have come from inside an existing company—but they didn’t.

The book answers why that’s so. And why are venture firms good at finding start-ups that turn into unicorns – what are the skills that VC firms have that companies don’t? And most importantly, can you/your company learn those skills?

The Venture Mindset is built around 9 key ideas:

If you’re a founder looking to raise capital, this book will help you understand how VC’s are evaluating your company. (I wish I had read this book at the beginning of my entrepreneurial journey.)

If you’re in a large company or government agency this book will help you understand the difference between “fail-safe” bets needed in sustaining the core business, versus “safe-to-fail” bets, needed in creating new businesses and/or disruptive capabilities.

Definitely worth a read.

Filed under: Venture Capital | 3 Comments »

Secret History – When Kodak Went to War with Polaroid

Posted on May 16, 2024 by steve blank

This part 2 of the Secret History of Polaroid and Edwin Land. Read part 1 for context.

Kodak and Polaroid, the two most famous camera companies of the 20th century, had a great partnership for 20+ years. Then in an inexplicable turnabout Kodak decided to destroy Polaroid’s business. To this day, every story of why Kodak went to war with Polaroid is wrong.

The real reason can be found in the highly classified world of overhead reconnaissance satellites.

Here’s the real story.

In April 1969 Kodak tore up a 20-year manufacturing partnership with Polaroid. In a surprise to everyone at Polaroid, Kodak declared war. They terminated their agreement to supply Polaroid with negative film for Polacolor – the only color film Polaroid had on the market. Kodak gave Polaroid two years’ notice but immediately raised the film price 10% in the U.S. and 50% internationally. And Kodak publicly announced they were going to make film for Polaroid’s cameras – a knife to the heart for Polaroid as film sales were what made Polaroid profitable. Shortly thereafter, Kodak announced they were also going to make instant cameras in direct competition with Polaroid cameras. In short, they were going after every part of Polaroid’s business.

What happened in April 1969 they caused Kodak to react this way?

And what was the result?

Read the sidebar for a Background on Film and Instant Photography

Today we take for granted that images can be seen and sent instantaneously on all our devices — phone, computers, tablets, etc. But that wasn’t always the case.

**Film Photography
**It wasn’t until the mid-19th century that it was possible to permanently capture an image. For the next 30 years photography was in the hands of an elite set of professionals. Each photo they took was captured on individual glass plates they coated with chemicals. To make a print, the photographers had to process the plates in more chemicals. Neither the cameras nor processing were within the realm of a consumer. But in 1888 Kodak changed that when they introduced a real disruptive innovation – a camera preloaded with a spool of strippable paper film with 100-exposures that consumers, rather than professional photographers, could use. When the roll was finished, the entire camera was sent back to the Kodak lab in Rochester, NY, where it was reloaded and returned to the customer while the first roll was being processed. But the real revolution happened in 1900 when Kodak introduced the Brownie camera with replaceable film spools. This made photography available to a mass market. You just sent the film to be developed, not the camera.

Up until 1936 consumer cameras captured images in black in white. That year Kodak introduced Kodachrome, the first color film for slides. In 1942, they introduced Kodacolor for prints.

While consumers now had easy-to-use cameras, the time between taking a picture and seeing the picture had a long delay. The film inside the camera needed to be developed and printed. After you clicked the shutter and took the picture, you sent the film to a drop-off point in a store. They sent your film to a large regional photo processing lab that developed the film (using a bath of chemicals), then printed the photos as physical pictures. You would get your pictures back in days or a week. (In the late 1970s, mini-photo processing labs dramatically shortened that process, offering 1-hour photo development.) Meanwhile…

**Instant Photography
**In 1937 Edwin Land co-founded Polaroid to make an optical filter called polarizers. They were used in photographic filters, glare-free sunglasses, and products that gave the illusion of 3-D. During WWII Polaroid made anti-glare goggles for soldiers and pilots, gun sights, viewfinders, cameras, and other optical devices with polarizing lenses.

In 1948 Polaroid pivoted. They launched what would become synonymous with an “Instant Camera.” In its first instant camera — the Model 95 – the film contained all the necessary chemicals to “instantly” develop a photo. The instant film was made of two parts – a negative sheet that lined up with a positive sheet with the chemicals in between squeezed through a set of rollers. The negative sheet was manufactured by Kodak. Instead of days or weeks, it now took less than 90 seconds to see your picture.

For the next 30 years Polaroid made evolutionary better Instant Cameras. In 1963 Polacolor Instant color film was introduced. In 1973 the Polaroid SX-70 Land Camera was introduced with a new type of instant film that no longer had to be peeled apart.

A Secret Grudge Match

To understand why Kodak tried to put Polaroid out of business you need to know some of most classified secrets of the Cold War.

Project GENETRIX and The U-2 _– Balloon and Airplane Reconnaissance over the Soviet Union_During the Cold War with the Soviet Union the U.S. intelligence community was desperate for intelligence. In the early 1950s the U.S. sent unmanned reconnaissance balloons over the Soviet Union.

Next, from 1956-1960 the CIA flew the Lockheed U-2 spy plane over the Soviet Union on 24 missions, taking photos of its military installations. (The U-2 program was kicked off by a 1954 memo from Edwin Land (Polaroid CEO) to the director of the CIA.)

The U-2 cameras used Kodak film, processed in a secret Kodak lab codenamed Bridgehead. In May 1960 a U-2 was shot down inside Soviet territory and the U.S. stopped aircraft overflights of the Soviet Union. But luckily in 1956 the U.S. intelligence community had concluded that the future of gathering intelligence over the Soviet Union would be with spy satellites orbiting in space.

Air Force – SAMOS – _1st Generation Photo Reconnaissance Satellites_By the late 1950s the Department of Defense decided that the future of photo reconnaissance satellites would be via an Air Force program codenamed SAMOS.

The first SAMOS satellites would have a camera that would take pictures and develop them while orbiting earth using special Kodak Bimat film, then scan the negative and transmit the image to a ground station. After multiple rocket failures and realization that the resolution and number of images the satellite could downlink would be woefully inadequate for the type and number of targets (it would take 3 hours to downlink the photos from a single pass), the film read-out SAMOS satellites were canceled.

Sidebar_– Kodak Goes to The Moon
_

While the Kodak Bimat film and scanner never made it as an intelligence reconnaissance system around the earth, it did make it to the moon. NASA’s Lunar Orbiter program to map the moon

got their Kodak Bimat film and scanner camera

s from the defunct SAMOS program. In 1966 and ‘67 NASA successfully launched 5 Lunar Orbiters around the moon developing the film onboard and transmitting a total of 3,062pictures to earth. (The resolution of the images and the fact that it took 40 minutes to send each photo back was fine for NASA’s needs.)

CIA’s CORONA – _2nd Generation Photo Reconnaissance Satellites
_It was the CIA’s CORONA film-based photo reconnaissance satellites that first succeeded in returning intelligence photos from space. Designed as a rapid cheap hack, it was intended as a stopgap until more capable systems entered service. Fairchild built the first few CORONA cameras, but ultimately Itek became the camera system supplier. CORONA sent the exposed film back to earth in reentry vehicles that were recovered in mid-air. The film was developed by Kodak at their secret Bridgehead lab and sent to intelligence analysts in the CIA’s National Photographic Interpretation Center (NPIC) who examined the film. (While orbiting 94 miles above the earth the cameras achieved 4 ½-foot resolution.) CORONA was kept in service from 1960 to 1972, completing 145 missions.

Film recovery via reentry vehicles would be the standard for the next 16 years.

Sidebar – The CIA versus the National Reconnaissance Office (NRO)

With the CIA’s success with CORONA, and the failure of the Air Force original SAMOS program, the Department of Defense felt the CIA was usurping its role in Reconnaissance. In 1961 it was agreed that all satellite Reconnaissance would be coordinated by a single National Reconnaissance Office (the NRO). For 31 years satellite and spy plane reconnaissance was organized as four separate covert programs:

Program A – Air Force satellite programs: SAMOS, GAMBIT, DORIAN…
Program B – CIA satellite programs: CORONA, HEXAGON, KEENAN…
Program C – Navy satellite programs: GRAB, POPPY …
Program D – CIA/Air Force reconnaissance Aircraft: U-2, A-12/SR-71, ST/POLLY, D-21…

While this setup was rational on paper, the CIA and NRO would have a decades -long political battle over who would specify, design, build and task reconnaissance satellites. The CIA’s outside expert on imaging reconnaissance satellites was… Edwin Land CEO of Polaroid.

The NRO’s existence wasn’t even acknowledged until 1992.

Air Force/NRO – GAMBIT – _3rd Generation Film Photo Reconnaissance Satellites
_After the failure of the SAMOS on-orbit scanning system, the newly established National Reconnaissance Office (NRO) regrouped and adopted film recovery via reentry vehicles.

Prodded by the NRO and Air Force, Kodak put in an “unsolicited” proposal for a next-generation imaging satellite codenamed GAMBIT. Kodak cameras on GAMBIT had much better resolution than the Itek cameras on CORONA. In orbit 80 miles up, GAMBIT had high-resolution spotting capability – but in a narrow field of view. This complemented the CORONA broad area imaging. GAMBIT-1 (KH-7) produced images of 2-4 feet in resolution. It flew for 38 missions from July 1963 to June 1967. The follow-on program, GAMBIT-3 (KH-8), provided even sharper images with resolution measured in inches. GAMBiT-3 flew for 54 missions from July 1966 to August 1984. The resolution of GAMBITs photos wouldn’t be surpassed for decades.

CIA – HEXAGON – _4th Generation Film Photo Reconnaissance Satellites
_Meanwhile the CIA decided it was going to build the next generation reconnaissance satellite after GAMBIT. Hexagon represented another technological leap forward. Unlike GAMBIT that had a narrow field of view, the CIA proposed a satellite that could photograph a 300-nautical-mile-wide by 16.8-nautical-mile-long area in a single frame. Unlike GAMBIT whose cameras were made by Kodak, HEXAGON’s cameras would be made by Perkin Elmer.

**CIA Versus NRO – HEXAGON versus DORIAN
**In 1969 the new Nixon administration was looking to cut spending and the intelligence budget was a big target. There were several new, very expensive programs being built: HEXAGON, the CIA’s school bus-sized film satellite; and a military space station: the NRO/Air Force Manned Orbiting Laboratory (MOL) with its DORIAN KH-10 film-based camera (made by Kodak). There was also a proposed high-resolution GAMBIT-follow-on satellite called FROG (Film Read Out GAMBIT) – again with a Kodak Bimat camera and a laser scanner.

In March 1969, President Nixon canceled the CIA’s HEXAGON satellite program in favor of the Manned Orbiting Laboratory (MOL), the Air Force space station with the Kodak DORIAN camera. It looked like Kodak had won and the CIA’s proposal lost.

However, the CIA fought back.

The next month, in April 1969, the Director of the CIA used the recommendation of CIA’s reconnaissance intelligence panel – headed by Edwin Land (Polaroid’s CEO) to get President Nixon to reverse his decision. Land’s panel argued that HEXAGON was essential to monitoring arms control treaties with the Soviet Union. Land said DORIAN would be useless because astronauts on the military space station could only photograph small amounts of territory, missing other things that could be a few miles away. In contrast, HEXAGON covered so much territory that there was simply no place for the Soviet Union to hide any forbidden bombers or missiles.

Land’s reconnaissance panel recommended: 1) canceling the manned part of the NRO/Air Force Manned Orbiting Laboratory (MOL) and 2) using the DORIAN optics in a robotic system (which was ultimately never built) and 3) urging the President to instead start “highest priority” development of a “simple, long-life imaging satellite, using an array of photosensitive elements to convert the image to electrical signals for immediate transmission.” (This would become the KH-11 KEENAN, ending the need for film-based cameras in space.)

The result was:

Nixon canceled NRO/Air Force Manned Orbiting Laboratory (MOL) and its Kodak DORIAN film-based camera,
Nixon told the CIA to build the HEXAGON satellite with its Perkin Elmer camera.

Over the next two years, Land lobbied against the GAMBIT follow-on called FROG and after a contentious fight effectively killed it in 1971. But most importantly Nixon gave the go-ahead to build the CIA’s KH-11 KEENAN electronic imaging satellite – dooming film-based satellites – and all of Kodak’s satellite business.

Why Did Kodak Go to War With Polaroid?

Finally we can now understand why Kodak was furious at Polaroid. The CEO of Polaroid killed Kodak’s satellite reconnaissance business.

Kodak’s 1970 annual report said, “Government sales dropped precipitously from $248 million in 1969 to $160 million in 1970, a decline of nearly 36 percent.” (That’s ¾’s of a billion dollars in today’s dollars.)

The DORIAN camera on the Manned Orbiting Laboratory and the very high-resolution GAMBIT FROG follow-on were all Kodak camera systems built in Kodak’s K-Program, a highly classified segment of the company. In April 1969 when MOL/DORIAN KH-10 was canceled, Kodak laid off 1,500 people from that division.

Kodak also had 1,400 people in a special facility that developed the film codenamed Bridgehead. With film gone from reconnaissance satellites, only small amounts were needed for U-2 flights. Another 1,000+ people ultimately would be let go.

Louis Eilers had been Kodak president since 1967 and in 1969 became CEO. He had been concerned about Land’s advocacy of the CIA’s programs that shut out Kodak of HEXAGON. But he went ballistic when he learned of the role Edwin Land played in killing the Manned Orbiting Lab (MOL) and the Kodak DORIAN KH-10 camera.

**Kodak’s Revenge and Ultimate Loss
**In 1963 when Polaroid launched its first color instant film — Polacolor – Kodak manufactured Polacolor’s film negative. By 1969 Polaroid was paying Kodak $50 million a year to manufacture that film. (~$400 million in today’s dollars.) Kodak tore up that manufacturing relationship in 1969 after the MOL/DORIAN cancelation.

Kodak then went further. In 1969 they started two projects: create their own instant cameras to compete with Polaroid and create instant film for Polaroid cameras – Polaroid made their profits on selling film.

In 1976 Kodak came out with two instant cameras — the EK-4 and EK-6 –and instant film that could be used in Polaroid cameras. Polaroid immediately sued, claiming Kodak had infringed on Polaroid patents. The lawsuit went on for 9 years. Finally, in 1985 a court ruled that Kodak infringed on Polaroid patents and Kodak was forced to pull their cameras off store shelves and stop making them. Six years later, in 1991, Polaroid was awarded $925 million in damages from Kodak.

**Epilogue
**1976 was a landmark year for both Kodak and Polaroid. It was the beginning of their 15-year patent battle, but it was also the beginning of the end of film photography from space. That December the first digital imaging satellite, KH-11 KEENAN, went into orbit.

After Land’s forced retirement in 1982, Polaroid never introduced a completely new product again. Everything was a refinement or repackaging of what it had figured out already. By the early ’90s, the alarms were clanging away; bankruptcy came in 2001.

Kodak could never leave its roots in film and missed being a leader in digital photography. It filed for bankruptcy protection in 2012, exited legacy businesses and sold off its patents before re-emerging as a sharply smaller company in 2013.

Today, descendants of the KH-11 KENNEN continue to operate in orbit.

Read all the Secret History posts here

Filed under: Corporate/Gov't Innovation, Secret History of Silicon Valley | 7 Comments »

The Secret History of Polaroid CEO Edwin Land

Posted on April 30, 2024 by steve blank

The connections between the world of national security and commercial companies still has surprises.

December 1976 – Vandenberg Air Force Base, U.S. military space port on the coast of California

As a Titan IIID rocket blasted off, it carried a spacecraft on top that would change everything about how intelligence from space was gathered. Heading to space was the first digital photo reconnaissance satellite. A revolution in spying from space had just begun.

For the previous 16 years three generations of U.S. photo reconnaissance satellites (257 in total) took pictures of the Soviet Union on film, then sent the film back to earth on reentry vehicles that were recovered in mid-air. After the film was developed, intelligence analysts examined it trying to find and understand the Soviet Union’s latest missiles, aircraft, and ships. By the mid-1970s these photo reconnaissance satellites could see objects as small as a few inches from space. By then, the latest U.S. film-based reconnaissance satellite – Hexagon – was the size of a school bus and had six of these reentry vehicles that could send its film back to earth. Though state of the art for its time, the setup had a drawback: Pictures they returned might be days, weeks or even months old. That meant in a crisis – e.g. the Soviet invasion of Czechoslovakia in 1968 or the Arab-Israeli war in 1973 – photo reconnaissance satellites could not provide timely warnings and indications, revealing what an adversary was up to right now. The holy grail for overhead imaging from space was to send the pictures to intelligence analysts on the ground in near real time.

And now, finally after a decade of work by the CIA’s Science and Technology Division, the first digital photo reconnaissance satellite – the KH-11, code-named KENNEN – which could do all that, was heading to orbit. For the first time pictures from space were going to head back to the ground via bits, showing images in near real time.

The KH-11/ KENNEN project was not a better version of existing film satellites, it was an example of disruptive innovation. Today, we take for granted that billions of cell phones have digital cameras, but in the 1970s getting a computer chip to “see” was science fiction. To do so required a series of technology innovations in digital imaging sensors, and the CIA funded years of sensor research at multiple research centers and companies. That allowed them to build the KH-11 sensor (first with a silicon diode array, and then the using first linear CCD arrays), which turned the images seen by the satellites’ powerful telescope into bits.

Getting those bits to the ground no longer required reentry vehicles carrying film, but it did require the launch of a network of relay satellites (code named QUASAR (aka SDS, Satellite Data System). While the KH-11 was taking pictures over the Soviet Union, the images were passed as bits from satellite to satellite at the speed of light, then downlinked to a ground station in the U.S. New ground stations were built to handle a large, fast stream of digital data. And the photo analysts required new equipment.

More importantly, like most projects that disrupt the status quo, it required a technical visionary who understood how the pieces would create a radically new system, and a champion with immense credibility in imaging and national security who could save the project each time the incumbents tried to kill it — even convincing the President of the United States to reverse its cancelation.

More detail in a bit. But let’s fast forward, four months later, to a seemingly unrelated story…

**April 1977 – Needham, MA, Polaroid Annual Meeting
**Edwin Land, the 67-year-old founder/CEO/chairman and director of research of Polaroid, the company that had been shipping instant cameras for 30 years, stood on stage and launched his own holy grail – and his last hurrah – an instant film-based home-movie camera called Polavision. At the time, you sent your home movie film out to get developed and you’d be able to view it in days or a week. Land was demoing an instant movie. You filmed a movie and 90 seconds later you could see it. It was a technical tour de force – remember this was pre-digital, so the ability to instantly develop and show a movie seemed like magic. Much like the KH-11/KEENAN it also was a complete system – camera, instant film, and player. It truly was the pinnacle of analog engineering.

But Polavision was a commercial disaster. Potential customers found it uncompelling and its $3,500 price (in today’s dollars) daunting. You could only record up to 2½ minutes of film. And believe it or not, with Polavision you couldn’t record sound with the movies. The 8mm film couldn’t be played back on existing 8mm projectors and could only be viewed on a special player with a 12” projection screen. There was no way to edit the film. It was a closed system. Worse, two years earlier Sony had introduced the first Betamax VCR and JVC had just introduced VHS recorders that could hold hours of video that could be edited. The video recorders looked like a better bet on the future. Polaroid discontinued Polavision two years later in 1979.

For decades Land’s unerring instincts for instant products delighted customers. However, Polavision was the second misstep for Land. In 1972 at Land’s insistence, Polaroid had prematurely announced the SX-70 camera – another technical tour de force – before it could scale manufacturing. In 1975 the board helped Land “decide” to step down as president and chief operating officer to let other execs handle manufacturing and scale.

But the biggest threat to Polaroid came in 1976, a year before the Polavision announcement, when Kodak entered Polaroid’s instant camera and film business with competitive products.

After the Polavision debacle, Land was sidelined by the board, which no longer had faith in his technical and market vision. Land gave up the title of chairman in 1980. He resigned his board seat in 1982, and in 1985, bitter he had been forced out of the company he founded, he sold all his remaining stock, cutting all ties with the company.

Steve Jobs considered Land one of his first heroes, calling him “a national treasure.” (Take a look at part of a 1970 talk by Land eerily describing something that sounds like an iPhone.)

Meanwhile, inside Polaroid Labs, work had begun on two new technologies Land had sponsored: inkjet printing and something called “filmless electronic photography.” Neither project got out the door because the new management was concerned about cannibalizing Polaroid’s film business. Instead they doubled down on selling and refining instant film. Polaroid’s first digital camera wouldn’t hit the market till 1996, by which time the battle had been lost.

**What on earth do these two stories have to do with each other?
**It turns out that the person who had consulted on every one of the film-based photo reconnaissance satellites – Corona, Gambit, and Hexagon – was also the U.S. government’s most esteemed expert on imaging and spy satellites. He was the same person who championed replacing the film-based photo satellites with digital imaging. And was the visionary who pushed the CIA forward on KH-11/KEENAN. By 1977, this person knew more about the application of digital imaging then anyone on the planet.

Who was that?

It was Edwin Land, the Founder/Chairman of Polaroid – the same guy that introduced the film-based Polavision.

Founders Need to Be Ruthless When Chasing Deals

Posted on April 16, 2024 by steve blank

One of the most exciting things a startup CEO in a business-to-business market can hear from a potential customer is, “We’re excited. When can you come back and show us a prototype?”

This can be the beginning of a profitable customer relationship or a disappointing sinkhole of wasted time, money, resources, and a demoralized engineering team.

It all depends on one question every startup CEO needs to ask.

I was having coffee and pastries with Justin, an ex-student, listening to him to complain over the time he wasted with a potential customer. He was building a complex robotic system for factories. “We spent weeks integrating the sample data they gave us to build a functional prototype, and then after our demo they just ghosted us. I still don’t know what happened!”

After listening to how he got into that predicament, I realized it sounded exactly like the mistake I had made selling enterprise software.

**Enthusiasm Versus Validation
**Finding product/market fit is the holy grail for startups. For me, it was a real rush when potential users in a large company loved our slideware and our minimum viable product (MVP). They were ecstatic about the time the product could save them and started pulling others into our demos. A few critical internal recommenders and technical evaluators gave our concept the thumbs up. Now we were in discussions with the potential buyers who had the corporate checkbook, and they were ready to have a “next step” conversation.

This buyer wanted us to transform our slideware and MVP into a demonstration of utility with their actual data. This was going to require our small, overcommitted engineering team to turn the MVP into a serviceable prototype.

When I heard a potential customer offer us their own internal customer data I was already imagining popping Champagne corks once we showed them our prototype. (For context, our products sold for hundreds of thousands of dollars, and lifetime value to each customer was potentially measured in millions.) I rallied our engineering team to work for the next few months to get the demo of the prototype ready. As much as we could, we integrated the customers’ users and technical evaluators into our prototype development process. Then came the meeting with the potential customer. And it went great. The users were in the room, the buyer asked lots of questions, everyone made some suggestions and then we all went home. And the follow up from the potential customer? Crickets…

Even our user advocates stopped responding to emails.

**What did I do wrong?
**In my unbridled and very naive enthusiasm for impressing a potential customer, I made a rookie mistake – I never asked the user champion or the potential buyer what were the steps for turning the demo into a purchase order. I had made a ton of assumptions – all of them wrong. And most importantly I wasted the most precious things a startup has – engineering resources, time, and money.

In hindsight I had no idea whether my potential customer was asking other companies to demo their product. I had no idea whether the buyer had a budget or even purchase authority. If they did, I had no idea of their timeline for a decision. I had no idea who were the other decision-makers in the company to integrate, deploy and scale the product. I didn’t even know what the success criteria for getting an order looked like. I didn’t check for warning signs of a deal that would go nowhere: whether the person requesting the demo was in a business unit or a tech evaluation/innovation group, whether they’d pay for a functional prototype they could use, etc. And for good measure, I never even considered asking the potential customer to pay for the demo and/or my costs.

(My only excuse was that this was my first foray into enterprise sales.)

**Be Ruthless about the Opportunity Costs of Chasing Deals
**After that demoralizing experience I realized that every low probability demo got us further from success rather than closer. While a big company could afford to chase lots of deals I just had a small set of engineering resources. I became ruthless about the opportunity costs of chasing deals whose outcome I couldn’t predict.

So we built rigor into our sales process.

We built a sales road map of finding first product/market fit with the users and recommenders. However, we realized that there was a second product/market fit with the organization(s) that controlled the budget and the path to deployment and scale.

For this second group of gatekeepers we came up with a cheap hack to validate that a demo wasn’t just a tire-kicking exercise on their part. First, we asked them basic questions about the process: the success criteria, the decision timeline, did a budget exist, who had the purchase authority, what were the roles and approval processes of other organizations (IT, Compliance and Security, etc.) and what was the expected rate of scaling the product across their enterprise. (All the rookie questions I should have asked the first time around.)

That was just the starting point to decide if we wanted to invest our resources. We followed up our questions by sending them a fully cancelable purchase order. We listed all the features we had demoed that had gotten the users excited and threw in the features the technical evaluators had suggested. And we listed our price. In big letters the purchase order said, “FULLY CANCELABLE.” And then we sent it to the head of the group that asked us for the prototype.

As you can imagine most of the time the response was – WTF?

**Figure Out Who’s A Serious Prospect
**That’s when the real learning started. It was more than OK with me if they said they weren’t ready to sign. Or they told me there were other groups who needed be involved. I was now learning things I never would have if I just showed up with a prototype. By asking the customer to sign a fully cancelable purchase order we excluded “least likely to close prospects”; those who weren’t ready to make a purchase decision, or those who already had a vendor selected but needed to go through “demo theater” to make the selection seem fair. But most importantly it started a conversation with serious prospects that informed us about the entire end-to-end approval process to get an order- who were the additional people who needed to say yes across the corporation – and what were their decision processes.

Our conversions of demos into orders went through the roof.

Finally, I was learning some of the basics of complex sales.

—

Justin stared at his uneaten pastry for a while and then looked up at me and said smiling, “I never knew you could do that. That’s given me a few ideas what we could do.” And just like that he was gone.

Lessons Learned

In complex sales there are multiple product/market fits – Users, Buyers, etc. — each with different criteria

Don’t invest time and resources in building on-demand prototypes if you don’t know the path to a purchase order

Use polite forcing functions, e.g. cancelable purchase orders, to discover who else needs to say “yes”

Filed under: Customer Development, E.piphany | 10 Comments »

Is a $100 Million Enough?

Posted on March 5, 2024 by steve blank

This article first appeared in Inc.

Capitalism has been good to me. After serving in the military during Vietnam, I came home and had a career in eight startups. I got to retire when I was 45. Over the last quarter century, in my third career, I helped create the methods entrepreneurs use to build new startups, while teaching 1,000’s of students how to start new ventures. It’s been rewarding to see tech entrepreneurship become an integral part of the economy and tech companies become some of the most valued companies in the world.

What has made this happen is the relentless cycle of innovation and creative destruction of old industries driven by new startups with new tech and new business models (network television replaced by streaming services, Nvidia GPUs versus Intel CPUs, electric cars versus the internal combustion engine, film cameras versus smartphones, programmers versus AI), all fueled by venture capital.

It makes me wonder – are startups still founded by people with a passion for creating something new? Or has the motivation changed to accruing the biggest pile of cash?

When I was an entrepreneur, what got me up in the morning was building something amazing that people wanted to grab out of my hands and use. The thought that I might make a $1 million or even $10 million on the way was always in the back of my head, but that wasn’t why I did it.

I wonder if it’s different for today’s entrepreneurs.

Here’s a thought experiment: What if we told every new entrepreneur that regardless of how successful they were, their total compensation would be capped at $100 million.

How many aspiring entrepreneurs would decide it wasn’t worth starting a company? Would Steve Jobs, Jeff Bezos, Elon Musk, et al have quit earlier? Have picked other careers?

How many would decide it wasn’t worth sticking around after their company was large and successful? (Would that be a bad thing?)

Would entrepreneurship suffer? Would we get less innovation? If so, why?

Would the best and brightest move to other countries?

Then let’s run the same thought experiment with Venture Capitalists. Would they pick other careers? Invest less?

At $100 million would capitalism crumble? Would we all be, heaven forbid, be “Socialists” or worse, to even have this conversation?

**Questions
**I’m curious what you think.

Should there be any limit?

If so, why?

Or why not.

What would be the consequences?

Filed under: Family/Career/Culture, Venture Capital | 48 Comments »