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The Lean Startup Is Now Helping To Transform Government Funded Science Into Real Businesses

2017 March 15

When Subra Suresh was chosen to lead the National Science Foundation (NSF), in 2010, he saw that many of the pathbreaking discoveries developed through the agency’s grants weren’t finding their way to the marketplace, so he sought to foster better links between government and industry.

This, of course, was not an entirely new idea. Over the years, there have been numerous efforts, ranging from the Bayh-Dole Act of 1980 to numerous initiatives to revamp technology transfer offices within government agencies, but nothing really seemed able to speed new discoveries out of the labs and into the marketplace.

This time, Suresh and his team decided that instead of reorganizing things inside the NSF, they would help scientists become entrepreneurs themselves, using a model that had already worked wonders in Silicon Valley. The result, a program called I-Corps,  has proven to be so effective that  Congress recently ordered its expansion. Here’s the story behind it.

An Idea Takes Shape

Errol Arkilic always knew he wanted to be en entrepreneur, but took an unconventional path to starting companies. Rather than launch a startup in his garage, he got a PhD in microelectromechanical systems at MIT. He then spent 6 years in Silicon Valley before and 8 years at NSF before Suresh tapped him to run the new program. However, Arkilic immediately saw that changes would have to be made to the initial vision.

“The original idea was to get academics and industry types into a room and the ‘magic will happen’ and I never thought that was going to work,” he told me. “I had a front row seat to over 400 commercialization projects and the common cause for failure was that people were creating solutions for problems that nobody cared about. That’s what we needed to change.”

By that time, he had been reading Steve Blank’s blog as well as his book, The Four Steps To The Epiphany, which would later spawn the Lean Startup movement. So he decided to call Steve up to see if he would be willing to help apply his principles to the work done at NSF. Much to Arkilic’s surprise, he found Steve intensely interested in the idea.

Soon, the program began to take shape. They designed an eight-week course to teach graduate students about Steve’s methods. The students would serve as entrepreneurial leads and would go through the course with their professors and a business mentor. Later, they would also partner with VentureWell, a nonprofit that focuses on accelerating innovation

Now they had a plan in place. The only thing left was to see if it would actually work.

From Product Development To Customer Development

One of the core tenets of Steve Blank’s philosophy is that startup founders always begin with a flawed idea. So the key to success is to identify the flaws and fix them before you run out of money. That’s why he advises founders to go out and talk to customers before they start work on building a product that no one wants to buy.

This harsh reality hit home to Adam Tilton of Rithmio on his very first day in the Innovation Corps program. As as a graduate student in the prestigious Coordinated Science Laboratory at the University of Illinois, he had developed algorithms for control systems for things like missiles and satellites that significantly outperformed the current technology.

He was certain his work had great business potential. So he worked hard to prepare his first presentation to the Innovation Corps panel, then practiced and honed it for a week. He fully expected to really wow everyone in the room with the sophisticated the solutions he had spent years designing. Surely, they would see that they had a real winner on their hands.

Unfortunately, the panel was not impressed. Instead, they gave him marching orders, “Go out and interview ten companies in this space and tell us if they really have any interest in buying this software,” they said.

It was a rude awakening. “They were like, ‘You’re not in the lab anymore. This is Silicon Valley. Go out and interview ten companies in this space before tomorrow and tell us if they really have any interest in buying this software,’” Tilton told me.

The Pivot

After that less than auspicious beginning, Tilton and his professor, Prashant Mehta, began working their network of military contractors to find people who were willing to listen to their idea and give them feedback. They worked at a furious pace, conducting 350 interviews over the course of 8 weeks, but couldn’t find anyone interested in it.

“In our our very naive early entrepreneurship days we thought were were going to be able to sell math,” Tilton remembers. “But people would look at the algorithms we developed and say ’great come work for us.’ That’s not what we had in mind.” It slowly dawned on the pair that they would have to come up with another avenue to market their technology.

The turning point came when they saw an announcement for the Motion Tracking Developer’s Conference that was being held in San Francisco during the training program. Having no other ideas, they delayed their flights and bought the $200 tickets. It would prove to be an amazingly wise investment.

As luck would have it, wearable technology was just heating up and the two immediately saw how their algorithms could help create products that were vastly superior to what they saw at the conference. They started work on their new idea as soon as they got on the plane. By the time the flight landed in Chicago, they had already built a simulation of the product they wanted to build on Tilton’s laptop.

Turning A Minimum Viable Product Into An Actual Product

Another pillar of Blank’s method is the minimum viable product. Unlike a traditional prototype, the idea isn’t to build a fully featured version, but rather just something that you can use to test hypothesis. Tilton was able to build one for his wearable product in three weeks. It wasn’t something he could go to market with, but it was good enough to show potential customers.

That allowed him to learn even more about what the market was demanding from wearables. He flew to New York to attend the Wearable Technology Expo and asked questions about who bought wearables, how the sales cycle worked and what technical specifications with regard to power consumption, accuracy and robustness he would need to achieve. Each insight led to a better product.

That spring, Rithmio won the COZAD New Venture Competition and, on the strength of that, was able to secure $650 thousand in angel financing. Later, it received an additional $3 million in seed funding from blue chip investors such as Intel Capital and KGC. What was once a misguided idea that nobody was interested in is now a full fledged company.

Rithmio is just one example of Innovation Corps’ success. Opus12, a cleantech company, won Fortune’s startup competition, while Zephyrus Biosciences was recently acquired by Bio-Techne Corporation. There are countless others, many of which would have never gotten off the ground without the program.

From A Model To A Movement

Today, the Innovation Corps program is running at full steam. According to VentureWell, as of May 2016, it has trained over 700 teams who have raised more than $80 million in funding from venture funding, government grants and other sources. 81% of the teams are still active 13-21 months after taking the course. Those are impressive results.

Building on this success, the program has grown beyond the NSF to include similar programs at agencies like the NIH, the Department of Energy and the Department of Defense, as well as in other countries, such as Australia and Singapore. Clearly, this is a model that is catching on.

Another interesting aspect of the program is that almost 90% of participants say that it changed their approach to the way they do science, with respect to the types of experiments they perform, how they write grant proposals and how they prepare papers for publication. Adam Tilton of Rithmio told me, “Innovation Corps changed my life.”

And I think that underlines something we often miss about the Lean Startup movement. As I point out in my upcoming book, Mapping Innovation, it’s not just a series of hacks or tricks, but a fundamentally different way of thinking that can help anyone launch a new product or venture.

– Greg

 

A previous version of this article appeared in Harvard Business Review.

2 Responses
  1. March 19, 2017

    Basically find out what the customer wants and go from there?

    Greg Satell Reply:

    In a nutshell:-)

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