Real Entrepreneurs Don’t Write Business Plans
Steve Blank pities those poor professors stuck teaching tired business plan courses. “I’d be embarrassed if I was on a faculty teaching ‘How to Write a Business Plan for New Ventures,’” says the serial entrepreneur turned business school professor.
Blank is at the forefront of a growing movement of B-school professors teaching the next generation of Mark Zuckerbergs. Entrepreneurship, he argues, is about getting out into the world and doing—not simply researching and writing. “Business plan classes and business plan competitions are dead in the water for new ventures,” says Blank, who authored the cover story in the May 2013 issue of Harvard Business Review on the value of experimentation in building a new business. Blank teaches that gospel in a course called Lean LaunchPad at UC Berkeley’s Haas School of Business, Columbia Business School, and Stanford’s engineering school.
The premise of Blank’s course is that aspiring entrepreneurs need to know their customer and must test their hypotheses to have any chance at success. In the three years that he’s taught Lean LaunchPad, Blank has reached about 150 teams of students. The teams start building a product or service at the beginning of the class, and then immediately go out and talk to 10 to 15 people per week to test their theories about business challenges, such as pricing. His students learn from their failures and grasp the true meaning of pivoting or changing to meet the needs of clients, he says. “You used to have a revenue plan, and you’d execute to the plan because it was written down,” Blank says. “When it didn’t work out, you’d fire people. Now, we fire the plan.”
Blank grades students based on weekly presentations about what they’ve learned from their field research. The program is an open-source course, including the student’s presentations, which are filmed and put online as well.
Blank’s ideas about how to teach entrepreneurship are spreading. About 75 professors per quarter get trained on how to teach the Lean LaunchPad course. The National Science Foundation (NSF) adopted the program to help scientists turn their ideas into businesses, and it had Blank teach the first class of 25 teams in October 2011. Now, 11 universities are teaching 400 to 500 teams of scientists a year for the government.
Other professors are also making their own mark on entrepreneurship courses. At the University of Maryland’s Smith School of Business, Brent Goldfarb revamped his introductory entrepreneurship course after he wrote a paper about how no one reads business plans.
In the new course, students pitch business ideas, and their peers vote on which ones to pursue. Students whose ideas are voted down must negotiate a contract with one of the remaining businesses. As the course progresses, businesses are voted off until only a few remain at the end.
In addition, students earn “Karma Points” by participating in challenges, such as one where they must seek out someone with a high Klout score—a measure of social media presence—and ask for advice. The student whose business earns the most money gets an A, as does the one with the most Karma Points. Goldfarb is quick to point out, however, that making money is not the point of the course. Rather, it’s meant to help students realize what starting a business really entails and whether they have the chops for it, he says.
Abigail Zaniel, a first-year student at Smith who took the course, managed Schmoozies, a business that sold customized can insulators. “I learned to actually start a business, you have to live and breathe it 24/7,” she says. “I found myself waking up thinking about how to grow the business.”