How important is innovation to the world, your country, your company, your division, your department, your project, …? Is innovation an art or science? How can you support innovation in your organization? What factors create success in Silicon Valley startups and can this replicated in your organization? You will find answers to these questions and more in this intriguing interview. I have studied their research and found it valuable in creating an entrepreneurial environment and for assessing the potential for success.

Enjoy this dialogue with these two thought leaders and study their report!
Stephen Ibaraki

Bjoern HerrmannOriginally from Germany, Bjoern Herrmann, 25, is a purpose driven entrepreneur. Bjoern is co-founder of blackbox, a next generation seed accelerator for technology startups located in the heart of Silicon Valley. Prior to his latest venture, Bjoern founded and led four companies in Germany, Bangladesh and the United States, as well as worked as an executive in Russia for one year. His personal passion is unleashing human potential, which he exercises in his free time by teaching entrepreneurship and advising numerous startups.

Max MarmerA native of the Bay Area, Max Marmer, 20, is driven by working on the biggest problems he can find. Max co-founded the Startup Genome Project to increase the success rate of startups by turning entrepreneurship into a science when he realized entrepreneurs would increasingly be the biggest drivers of societal progress.

Max is constantly thinking about how to reinvent society’s antiquated structures for a 21st century that will be powered by information technology. Previously he was obsessed with reinventing the education system before realizing empowering entrepreneurs would have more impact. He left Stanford as a freshman last fall to work full time on growing the Startup Genome Project.

To listen to the interview, click on this MP3 file link

DISCUSSION:

Interview Time Index (MM:SS) and Topic

:00:54:
Starting with you Bjoern, followed by Max, can you profile your history prior to your current role and three valuable lessons you wish to share from these roles? Then, can you explain your current role(s)?
:01:07: Bjoern: "....Working on startups....Key lessons: Have the right team, the right people to help you and complement you and make your vision a reality....Think big....The ability of the entrepreneur to let go, to change course based on the feedback of your customers...."
:02:27: Max: "....Lessons: Start from something that is more bottom up rather than top down....Focus. A lot of things make sense in the long term but it's very hard to create something out of nothing with limited resources and just being one person or two people during a startup....Patience. Things can feel like they are moving slow in the short term but keep putting energy in the right place because things can move very quickly in the long term as momentum is accumulated...."

:05:18:
Where do each of you see yourself in the future, in 3, 5, and then 10 years?
:05:25: Bjoern: "....Today I don't care so much about where I see myself in 3, 5, or 10 years. Most important for me is that I have a higher process that I can pursue where I feel I can create impact and make the world a better place. That's really what drives me...."
:06:23: Max: "....The mission that has driven me which I mentioned is increasing the success rate of startups. Underlying that is the belief that startups are the best lever for change in the world, for economic progress for job growth...."

:07:26:
What is the role of entrepreneurship in our economy?
:07:29: Bjoern: "....Jobs and the ability to go beyond current living standards....For very few entrepreneurs it's money, but the majority of entrepreneurs are driven by the impact of making sustainable change in our society or solving a very specific problem...."
:08:15: Max: "....Entrepreneurship is the process by which technology is integrated into the fabric of society so if you can improve that process to make it faster and more efficient, we see that as enabling an explosion of wealth on the horizon...."

:08:51:
Why is there a global explosion of interest in entrepreneurship?
:08:56: Bjoern: "....It's tenfold cheaper to start a company....It is very easy to do and at the same time there is a whole new mindset out there. I think a lot of people think more global and see themselves as part of a global economy and also see entrepreneurship as a way to impact this global economy...."
:09:48: Max: "....I second that...."

:09:58:
How can entrepreneurship be a science?
:10:00: Max: "....I don't think it's a pure science. I think it's more of a management science....."
:11:29: Bjoern: "....The key in any space is really the mix of art and science. Art is describing anything that is new and science describes the learnings from the past and the things and patterns that are repeatable...."

:12:37:
What is the nature of innovation in startups versus large companies?
:12:42: Bjoern: "....The key difference is that most large companies are trying to defend their current position and see innovation as a way to keep something alive, whereas startups by their nature are trying to disrupt something and they have a very different mindset about this....Large companies innovate around something existing and startups come up with new things...."
:13:37: Max: "....One of the key distinctions in the way that people talk about the innovation that startups perform versus large companies is that large companies are ordinarily doing something called sustaining innovation (as defined by Clayton Christensen), and startups are doing more disruptive innovation. Two different approaches require very different mindsets and have different processes and goals...."

:15:14:
What are the Findings/Approaches of the Startup Genome project?
:15:24: Bjoern: "....The key learning of this research is that companies that are highly 'feedback-able' are more successful so the more you are able to structure and understand the feedback that you get from your customers about your product, the faster you are able to implement that feedback of your product, the more successful you will be...."
:16:41: Max: "....A lot of what we describe in the report is how this topology works. How to identify the different types of startups, which helps them assimilate all the information they've gained about how startups work and also the stages these startups move through...."

:20:10:
Have you created a physical framework that people can measure against - something where you can plug in the information and get some form of feedback as a result or are you planning to do that?
:20:25: Bjoern: "....We have a very simple benchmark that people can do on the website, http://www.startupgenome.cc. We are running a few pilots where there will be more detailed feedback and we are also building a product that automizes this process of feedback generation....Entrepreneurs will be able to go on the website, put in their data and get immediate benchmarks on their stats...."

:21:03:
In this framework that you’ve created are you planning to keep this more like an Open Source where people can freely use it, or at some point are you planning to charge?
:21:16: Bjoern: "....We are not planning to charge entrepreneurs; our goal is to empower as many entrepreneurs as possible. The more data we have, the more feedback we can create; our goal is to decrease the hurdle as much as possible. There are a number of ways in the future we can monetize our findings...."

:23:17:
What would you say is your most surprising finding from doing this research?
:23:22: Max: "....They invest more than necessary in the Discovery stage....The hands-on help that investors provide didn't seem to have any operation impact on the company....The Discovery process takes founders two to three times longer than many founders expect...."
:25:37: Bjoern: "....International Property turns out to be much less viable than expected...."

:27:44:
Your initial report lists the 6 stages (Discovery, Validation, Efficiency, Scale, Profit Maximization and Renewal), but the last two are not covered in the report. Are you planning a Part B where you discuss those last 2 stages?
:28:03: Bjoern: "....We will eventually, but at this point our data says companies are at those first four stages and a lot of the companies at stage five and six have already made it. Key problems for most companies lie in those first four stages...."

:28:29:
In your current roles, what are your top challenges and top opportunities?
:28:33: Max: "....One of our key challenges has now been transitioning towards software. A lot of the standardized approaches we developed became Startup Genome and is a great starting point. It has a lot of opportunity as a software product, but now the key challenge is building the team together after we made the pivot towards a new direction...."
:30:37: Bjoern: "....Our key challenge is to build the first product and that's what we're focusing on right now....The big opportunity that we have is that we can build a new framework; a tool that will allow people to measure progress in an entirely new way...."

:32:30:
What specific technologies should business and IT executives be embracing today and into the future?
:32:37: Max: "....We looked at what some of the enabling factors are for startups now that will increasingly be integrated into the larger business and IT departments. Some are:....Rise in importance of Open Source software, transitioning from enterprise software to software as a service, cloud hosting, payment processing, global payment processing in lots of different currencies, utilizing the distribution channels of social media, real time collaboration tools and targeted advertising. A lot of large companies are starting to move in this direction and our focus is more on the customer side, specifically what are the best tools to use to start...."
:34:11: Bjoern: "....A much flatter organization moving much faster....The ability to move faster and be more feedback oriented..."

:35:58:
Bjoern, why is your personal passion about unleashing human potential?
:36:07: Bjoern: "....I was always fascinated by seeing people who unleash their potential but my private enjoyment is to see people grow and go beyond themselves...."

:37:41:
Max, why are you constantly thinking about how to reinvent society’s antiquated structures for a 21st century that will be powered by information technology?
:37:50: Max: "....I think this grows out of the question 'Why are we here and what’s our purpose?' I look at things from a systems perspective and once you start to look at systems you start to see systems within systems. I look at myself and individuals and our goal is to align ourselves with the direction of where the world is evolving...."

:39:42:
For each of you, if you were conducting this interview, what questions would you ask, and then what would be your answers?
:39:56: Max: "....Why are you working on this?....Are we in another technology bubble?....Is there any intrinsic value under what people are looking at?...."
:42:11: Bjoern: "....We have whole new generations of companies that are coming up that are now replacing jobs in areas that before had highly skilled people working, for example doctors....We also have companies, where before things were done by lawyers and teachers, are now starting to be replaced by very smart technology applications or by a few very skilled people that outplace all the other ones...."

:44:24:
If the audience has any questions or feedback, please send email to startupgenome@blackbox.vc