If you are an entrepreneur, you probably already know who Steve Blank is. If you want to be an entrepreneur, you definitely should know who he is. Described by many as one of the “Godfathers of Silicon Valley,” Steve has had a successful career as a serial entrepreneur-turned-professor who wrote the definitive Startup Owner’s Manual and Four Steps to the Epiphany.
Earlier this year he turned his attention to applying Lean Startup methodology to life sciences enterprises, primarily within four categories: diagnostics, therapeutics, digital health, and devices. The result was a UCSF course called “Lean LaunchPad for Life Sciences.” We had the opportunity to speak with Steve about the class, which he has been regularly covering on his blog.
Shiv Gaglani, Medgadget: What was specific impetus for Lean LaunchPad for Life Sciences class?
Steve Blank: That is a great story actually. I came up with the customer development process over a decade ago and one of the key ideas is to “get out of the building” and speak directly with customers to improve the odds of having a successful business. In the books I wrote about this I made the claim that this strategy would work for everything with the exception of the life sciences. In hindsight I find it funny how mistaken that claim was.
See, at the time my notion was that of the life sciences of the 1980s where you developed a therapeutic compound and needed at least a decade of clinical validation and an absurd amount of money to commercialize the discovery. That’s certainly not the only type of life sciences business, nor is it even the right approach to begin with. Even if you have the most interesting paper in Science or Nature and can raise hundreds of millions of dollars, you may be wasting 8 or 9 years going down the wrong path because you didn’t get out of the building and align your discovery and skill set with real needs.
That’s just background information. UCSF had already realized this and had seen the class I had created for the National Science Foundation on applying lean methodology to scientific commercialization. They approached me about creating a class aimed towards the life sciences two years ago and over that time I kept turning them down due to the mistaken belief that lean methodology would not work in that area. They eventually made the smart decision to put me in front of life sciences venture capitalists who told me that a lean methodology class for the life sciences is much needed and would be very well received – and they were right!
Medgadget: So UCSF got you “out of the building” and challenged your assumptions about the life sciences industry?
Steve Blank: Exactly! I continue learning from the lean methodology and am glad that they were persistent.
Medgadget: Once you decided to create the class, how did you develop the curriculum?
Steve Blank: I began having regular meetings with the UCSF folks and we bounced around ideas for what the objectives and divisions should look like. We decided that it would make sense to model the class after the types of investments made by the venture capital community as opposed to the more than two-dozen divisions that an organization like the National Institutes of Health has. This meant covering four broad topics: devices, therapeutics, digital health, and diagnostics.
One of the innovations underpinning the class is that it actually is not one class, but rather four subclasses run in parallel. It’s structured to begin and end with presentations to the entire group that cover common threads across each of the subclasses, though the meat of the sessions involved breaking into the four cohorts each led by an experienced venture capitalist/instructor: Alan May for devices, Karl Handelsman for therapeutics Abhas Gupta for digital health and Todd Morrill for diagnostics. Their job was to apply lean methodology to each of those domains, for example by explaining what “channels” mean for devices versus therapeutics and who the “customers” are for diagnostics versus digital health.
Medgadget: The class is attended by 110 students who are split into 26 teams. Can you describe some of the teams involved in your class and which have made the most progress?
Steve Blank: I have to say that, “all of my children are my favorite.” We’ll be posting the final presentations of each team so that people can see how much progress they have made since they began the course. I’ve been alluding to many on my blog, such as Tidepool’s realization to shift from cost-based pricing to value-based pricing and to focus on two stakeholders instead of the original plan of targeting five. Overall, I think everyone has made immense progress beyond his or her own expectations.
I have to tell you something funny. As background, I developed a similar course for the NSF in which principal investigators (PIs) and their teams are given around $50,000 to attend and learn how to apply lean methodology to do the most with their grants. Since they received monetary awards they’re obligated to show up, which is one of the reasons the program gives them the stipend. We recently realized that the founders and PIs attending the UCSF Lean LaunchPad class were actually paying us to attend our course and taking even more time out of their schedules to learn lean techniques. We have been pushing them as hard, if not harder, than the NSF teams and at the end they were all still there. We’re making them work 10-15 hours/week outside of the building speaking to customers. And these are busy people.
We worked each of them really hard and challenged their assumptions about their business model every step of the way. During their presentations we drilled them by asking questions such as “show me how you calculated your cost of acquisition of a customer (CAC) and lifetime value (LTV).” I have to tell you that after this class they will never ever be bullshitted by people who pitch to them. They’ve learned not to accept hand waving, but rather to drill down into the assumptions and make sure they’re de-risking the business.
Medgadget: Are there any plans to scale the teachings from this class as you’ve done with the Udacity Lean LaunchPad class?
Steve Blank: Thanks to the National Science Foundation, we’ve filmed a good number of the presentations and will continue to make many of them available online and on my blog. UCSF will offer the Lean LaunchPad for Life Sciences class again next year and will begin accepting applications in the coming weeks. Other extramural institutions such as Columbia Medical Center and the Mayo Clinic are all looking to see if they can replicate this in their schools. The UK Synthetic Biology program will kick it off in April, and various groups in the NIH and HHS are starting to see that this is next step – evidence-based entrepreneurship.
Following the trends towards translational medicine, we’ve been getting smarter over the years on how to move discoveries from the lab to bedside. We had an insight in this class that the current model is to pour money into the first half of the equation: advance the technology and provide training. We’ve now learned that we’ve been missing the second half: commercialization. Our mantra is to teach PIs and founders to “get out of the building” to figure out if what they’re working on is useful and can find customers and partners earlier.
Medgadget: There are a number of tech incubators popping up for health care – BluePrint, Rock, DreamIt, Startup Health, etc. Do you have any thoughts on this trend?
Steve Blank: I think it’s great especially since incubators generally guide their startup companies to iterate quickly and de-risk assumptions – cornerstones of lean methodology. Interestingly, the place you don’t hear about health tech incubators is inside the government. The state of the art in the National Institutes of Health’s (NIH) is the National Center for Advancing Translational Sciences (NCATS) Clinical and Translational Science Awards (CTSA). CTSA has fallen behind what the National Science Foundation knows about innovation. More importantly, the broader health innovation community has iterated faster and it shows by how many incubators and accelerators are being created. Readers should know that we have partnered with the National Collegiate Inventors and Innovators Alliance (NCIIA) to offer a Lean LaunchPad class on how to build incubators and accelerators.
Medgadget: Is there anything you cannot build using lean startup methodology?
Steve Blank: I’m not sure there is. I used to think that about the life sciences sector, but as I mentioned earlier my thinking recently changed and resulted in the UCSF Lean LaunchPad course. Let me tell you a common mistake that people not inside the life sciences world make. “Life sciences” is a really bad label for a series of very distinct industries. The medical device industry is different from the therapeutics industry, as are diagnostics and digital health. Every part of the business model is different: the customers, channels, regulation, etc. But to outsiders we throw around the umbrella label of “life sciences” and it all gets mixed up.
Medgadget: But aren’t the lines blurring between these industries? For example, medical devices are merging with digital health as evidenced by mobile-based technologies?
Steve Blank: That’s a very interesting and astute realization. It’s true that the lines are blurring between devices, therapeutics, diagnostics, and digital health. This is further complicated by the unique nature of the “life sciences” industry. Unlike most commercial industries in life sciences you have the heavy hand of two regulators on business. The obvious one is the FDA, with various classifications such as PMA and 510(k). The FDA just issued its guidance for mobile applications. The second is reimbursement, where the consumer often is not the decision-maker. But with Lean LaunchPad we have found that once you use the business model canvas to describe a startup, clarity will emerge from this confusion. It’s relatively easy to understand the canvas, though much harder to actually execute it.
Steve and UCSF will be putting many of the videos from the course online, one of which is included below and can be accessed through Steve’s blog:
Link: Steve Blank…