Steve Blank on Detroit’s Renaissance and Why Startups Aren’t Cool
Xconomist and startup guru Steve Blank swept into Detroit last night for a sold-out, wide-ranging discussion at the Madison Building. (Kudos to Bizdom, Detroit Venture Partners, Startup Michigan, and Grow Detroit for packing the auditorium with over 100 people on less than 24 hours notice of Blank’s appearance.) Prone to tangents that are no less insightful than the topic at hand, Blank talked about the new entrepreneurship (and why everything you’ve learned in business school is “crap”), Detroit’s impending re-emergence (and why we should honor Billy Durant just as much as Alfred P. Sloan), why anyone who gets involved with a startup because it’s hip or trendy is a fool destined for failure, his program to train research scientists at universities to be world-class entrepreneurs, and much more.
Blank, for those new to his story, arrived in Silicon Valley in the late ’70s after dropping out of college, hitchhiking across the U.S., spending some time repairing fighter planes during the Vietnam War, and working on top-secret defense projects in undisclosed locations. He attended both Michigan State University and the University of Michigan on his way to becoming one of the most heralded entrepreneurial thought leaders in the nation. Before retiring to devote his time to raising his daughters, he founded eight startups, one of which, E.piphany, he characterizes as a “dot.com bubble home run.” He’s also written several books on entrepreneurship, including the best-selling “The Four Steps to the Epiphany.” Earlier this year, the Harvard Business Review named Blank one of its “masters of innovation.”
Blank says his career, not unlike the evolution of Silicon Valley, has been a “series of unintended consequences.” (For more on Blank’s “Secret History of Silicon Valley,” click here.) He described the desire to be an entrepreneur as a calling, similar to that of an artist, and said anyone not feeling an overwhelming drive to create that thing that nobody has heard of is better off getting a standard 9-to-5 job. “Being an entrepreneur is not cool, it’s hard” he said. “If you’re not certifiably insane and willing to risk everything, even your child’s college fund, it’s not for you. If you’re afraid to fail, you’re afraid to get in the game.”
What a startup should be, he said, is a temporary organization designed to search for a repeatable and scalable business idea. A startup founder doesn’t need a five-year business plan, he explained, as long as that person has a strong sense of curiosity, resiliancy, and a willingness to “volunteer for everything.”
As much as Blank believes entrepreneurship is a calling, he also believes it can be taught. In a partnership with the National Science Foundation, Blank has designed the Innovation Corps (I-Corps) program, which teaches university scientists how to think like entrepreneurs and bring their inventions to market faster. Though the program has trained 100 teams since its inception last year in Silicon Valley, the program will now be expanded nationally, with the University of Michigan and Georgia Tech joining Stanford in offering the workshops. The NSF hopes to reach 200 more researchers through its new nodes at U-M and Georgia Tech. “We take professors who have never left the lab, and our goal is to see whether we can turn them into entrepreneurs,” Blank added. “We teach it like you’re in the Marines, except nobody dies. I truly believe that we can teach almost anyone committed to learning, and so far we’ve had great results.”
I-Corps is just one component of what Blank describes as the next wave of entrepreneurship: an innovative combination of financing and incubation where every region has a firm understanding of where it excels. Detroit, he said, is already at the forefront of this school of thought by forming entities like Bizdom and focusing on its strengths, which in Michigan are manufacturing and high-performing universities. “Detroit is the world’s best renaissance story,” he explained. “You’re seeing the leading edge of what VC and entrepreneurship will look like for the rest of the century. You’re doing it first here in Detroit, and you should all feel proud of what you’re part of.” (Blank drew audience applause when he predicted that advanced manufacturing would soon leave China and return to the United States.)
Entrepreneurs, he said, see what others don’t, and the people with exceptional skills to operate in chaos often come out of dysfunctional families. If theory can be enlarged and applied to cities, then Detroit does seem uniquely positioned for innovation and success. Blank told the story behind GM and its founder, Billy Durant, who at one time was the leading horse-drawn buggy manufacturer in Flint, MI. After seeing a horseless carriage whiz past the bar where he was drinking one day, he immediately sold his business and put everything into creating a series of auto companies, which eventually became the startup General Motors.
Blank described Durant as being like Steve Jobs. He was eventually fired by his investors, so he went out and founded another startup called Chevrolet. He used Chevrolet to buy up GM’s stock and fire the board that fired him. He ran GM until 1920, when he was again fired by the board and replaced by the company’s accountant, Alfred Sloan. Sloan used a system of distributed accounting to turn GM’s separate companies into a America’s most profitable corporate machine. Durant went on to be the manager of a bowling alley, eventually dying penniless in Flint.
Despite Durant’s tragic end, Blank said he’s the one who entrepreneurs should be emulating. “There would have been nothing for Sloan to run without Durant,” he said. “The spirit of entrepreneurship is not Alfred Sloan, it’s Billy Durant. It’s all about how we create something out of nothing.”