Latest / Lab to Market Leadership with Chris Reichhelm / Challenging Deep Tech Norms: Adopting Lean Principles from Lab to Market | Mark Bjornsgaard

Transcript

Challenging Deep Tech Norms: Adopting Lean Principles from Lab to Market | Mark Bjornsgaard · Lab to Market Leadership with Chris Reichhelm

0:00
Mark Bjornsgaard: So many people kid themselves that ideas are a good thing.
0:03
Mark Bjornsgaard: Ideas are a disaster for the ideas themselves are, are a, a disastrous way to start any entrepreneurial journey.
0:12
Mark Bjornsgaard: But, but it's hard to do anything else because it, it's not intellectually hard.
0:16
Mark Bjornsgaard: Anyone can understand how to define a hypothesis, but, but it's awkward.
0:20
Mark Bjornsgaard: It's, we're back, we're straight back to therapy.
0:22
Mark Bjornsgaard: It's, it's bad on the ego.
0:23
Mark Bjornsgaard: It hurts the ego to be told that you are the thing that you love.
0:28
Mark Bjornsgaard: To actually acknowledge that a thing that you think is brilliant is a brilliant idea.
0:32
Mark Bjornsgaard: Actually at the heart of it's got, it's, it's, there's, there's some fundamental in it.
0:37
Mark Bjornsgaard: Not most people don't wanna know that.
0:40
Chris Reichhelm: Welcome to the Lab to Market Leadership podcast.
0:43
Chris Reichhelm: Too many advanced science and engineering companies fail to deliver their innovations from the lab to the market.
0:50
Chris Reichhelm: We are on a mission to change that.
0:52
Chris Reichhelm: My name is Chris Reichhelm and I'm the founder and CEO of Deep Tech leaders.
0:57
Chris Reichhelm: Each week we speak with some of the world's leading entrepr.
0:59
Chris Reichhelm: Entrepreneurs, investors, corporates, and policy makers about what it takes to succeed on the lab to market journey.
1:07
Chris Reichhelm: Join US Lab to Market Leadership listeners.
1:10
Chris Reichhelm: We are taking Lab to Market Leadership on the road.
1:13
Chris Reichhelm: We're traveling through Europe, we're hitting the us and then we're coming back to the uk.
1:18
Chris Reichhelm: All the while continuing our discussions with entrepreneurs, with corporate executives, with investors, with academics and policymakers trying to understand what it takes to deliver innovation and companies from the lab to the market.
1:31
Chris Reichhelm: Today's episode is gonna be nothing, if not thought provoking.
1:35
Chris Reichhelm: We're talking with a gentleman named Mark Bjornsgaard, who is the founder and CEO of a venture builder called System Two Group and System Two are involved in applying lean management principles and practices to the development of all kinds of businesses, including those in the deep tech universe.
1:57
Chris Reichhelm: Mark has had eight exits all successful, including one of his most recent Deep Green Technologies, which was sold to Octopus Energy for more than 200 million pounds.
2:09
Chris Reichhelm: Whether you can apply fully lean management thinking and practices to the lab to market universe.
2:16
Chris Reichhelm: I'm not sure I'm sceptical, but Mark is very convincing.
2:20
Chris Reichhelm: Let's see how he does.
2:21
Chris Reichhelm: Let's get into it.
2:26
Chris Reichhelm: Mark Bjornsgaard, thank you so much for joining me.
2:30
Chris Reichhelm: No, it's great to be here.
2:30
Chris Reichhelm: Thanks for having me.
2:32
Chris Reichhelm: You are a big proponent and believer.
2:38
Chris Reichhelm: In lean principles and lean thinking in, uh, for the development of businesses and, uh, you're not alone.
2:48
Chris Reichhelm: I think the, the global software industry, the global SaaS industry has certainly grown up practicing a lot of those, uh, those disciplines.
3:01
Chris Reichhelm: Uh, Eric Ries is held in the highest esteem, uh, as a management thinker.
3:08
Chris Reichhelm: And if we compare the kind of 1960s, uh, seventies, eighties view of strategy, development and, and operation in the world that we live in now, or maybe now that we're more finely tuned to what reality is perhaps this, you know, this, this very lean way of thinking and acting when it comes to developing a business is the way to go.
3:36
Chris Reichhelm: My question.
3:38
Chris Reichhelm: Is, and I wanna frame this just at the outset of our discussion today, but my question is, how much of this can we apply to the advanced science and engineering industry, particularly to deep tech?
3:50
Chris Reichhelm: And, and, and I ask that because for most deep tech businesses, they are developing advanced science and engineering platforms.
4:00
Chris Reichhelm: There's a high degree of technology risk.
4:03
Chris Reichhelm: Generally these are, uh, platforms that have been in gestation for years.
4:08
Chris Reichhelm: They tend to be IP rich, and they are, uh, often, particularly when they're spun out of labs or universities, they're often developed with a problem vaguely in mind, but not so clearly in mind.
4:23
Chris Reichhelm: And I think this applies in particular to life sciences.
4:25
Chris Reichhelm: So if we're trying to create a new molecule or protein to combat disease, so we ha, you know, have a very clear understanding of what we're trying to do there.
4:32
Chris Reichhelm: Potentially in medical devices as well.
4:34
Chris Reichhelm: Potentially in the other deep tech industries, non-life science is non-medical.
4:39
Chris Reichhelm: Uh, there perhaps that problem isn't framed as clearly, but nevertheless, because of the length of the technology development cycle and because of the the lab to market journey itself, it makes me wonder whether management teams building those businesses can be as nimble.
5:01
Chris Reichhelm: As experimented, that's the word.
5:04
Chris Reichhelm: Experimenting as lean teaches us to be.
5:08
Chris Reichhelm: So with all of that, and we're gonna have a conversation about this for the next hour, but that's what, you know, I really questioned just how much we can go to that place.
5:18
Chris Reichhelm: But I know you're gonna tell me and I know you're gonna have lots of examples.
5:21
Chris Reichhelm: So before we do that, please.
5:24
Chris Reichhelm: Let's back up.
5:24
Chris Reichhelm: Tell us a little bit about your background, because you've got a really most unusual background, especially within these industries.
5:31
Mark Bjornsgaard: Unusual is often a polite way of saying yes.
5:35
Mark Bjornsgaard: Saying something, something polite.
5:37
Mark Bjornsgaard: I so thank you for having me first of all, and yeah, I'm, I'm very much looking forward to getting into the conversation.
5:42
Mark Bjornsgaard: As you say, businesses that are shuffling molecules or have high degrees of technology risk in them are themselves fascinating in a way that.
5:52
Mark Bjornsgaard: Way that kind of other businesses, when you've got innovation, the business model or you've got innovation in, in, in some other aspects of the, of the model is they're different.
6:01
Mark Bjornsgaard: Uh, my, my background, well, I'd studied history and politics, so that's a trouble maker's degree apparently, and I think.
6:12
Mark Bjornsgaard: I'm not sure I've ever, I certainly haven't taken any sort of structured, um, clever path towards what I was, I've done, I guess I've always just looked for the adventure in life.
6:26
Mark Bjornsgaard: I didn't really have that luxury, I must say, but I just couldn't bear the thought of, of doing something conventional.
6:35
Mark Bjornsgaard: So my first job was working at a record label.
6:38
Mark Bjornsgaard: I worked at record levels all while I was at college and just sort of stuffed jiffies, uh, out with full of CDs at the time.
6:45
Mark Bjornsgaard: And then after that we set up our first startup and it was really that, that it was really that journey that I, we went on, which was, which was just go and find stuff that's interesting, that kind of gnarly pro problems to, to crack.
7:02
Mark Bjornsgaard: I love gray areas.
7:04
Mark Bjornsgaard: I think a lot of people in who are doing this.
7:06
Mark Bjornsgaard: Love resolving.
7:07
Mark Bjornsgaard: I think there's a bit of autism in there somewhere, which is, you can't just can't bear to have the thing unresolved.
7:15
Mark Bjornsgaard: So I think there's a sum of that, but I think like many people doing this, it's uh, we all come from wildly different backgrounds and we also, we learn our craft and we learn our trade in different ways.
7:28
Mark Bjornsgaard: I think one of the most important things.
7:31
Mark Bjornsgaard: I, I think one of the most important things that I ever did, uh, was have therapy and continue to have therapy.
7:38
Mark Bjornsgaard: I think some degree of self-awareness is incredibly important.
7:42
Mark Bjornsgaard: I needed it by the way.
7:43
Mark Bjornsgaard: I, I, um, I needed it, but that's another story.
7:46
Mark Bjornsgaard: But, but I think, yeah, I, I think, I think people find themselves into this, this, this world in different strands.
7:53
Mark Bjornsgaard: But if you've had a, a decent amount of success, the principle.
7:58
Mark Bjornsgaard: That sort of self-awareness that, that, that, trying to model reality, trying to see what's really real and what you are, what you're being either presented with or what you, you might be kidding yourself about.
8:09
Mark Bjornsgaard: That is really, that is really the unlock at a kind of meta level.
8:14
Mark Bjornsgaard: And I guess that's also what lean in its own way.
8:17
Mark Bjornsgaard: Does it?
8:19
Chris Reichhelm: Were there but there no go.
8:21
Chris Reichhelm: Sorry.
8:22
Chris Reichhelm: Were there certain types of, so I've got a couple of questions in that you, you raised.
8:29
Chris Reichhelm: Really interesting point.
8:30
Chris Reichhelm: Were there certain types of problems that you were drawn to?
8:36
Chris Reichhelm: Uh, only ones that you've gotta have commitment and passion for what you're doing.
8:40
Chris Reichhelm: The number of people who are trying to build a star chart, and I always, I just, I can't get past that.
8:48
Chris Reichhelm: I've always won.
8:50
Chris Reichhelm: I've always only been able to do something that my brain has got kind of hooked into with that.
8:56
Chris Reichhelm: Digital distribution of music or a, a, a decentralized care business, whatever it is.
9:01
Chris Reichhelm: I've always, I've had to have something.
9:04
Chris Reichhelm: Commitment is transformative.
9:07
Chris Reichhelm: Uh, and, and so I think that is, I've, I've, I've, I've sort of busied myself and got involved in a whole bunch of different businesses across different sectors, and, and I think the only real, sort of, the only real thread between them is those things that I've got.
9:25
Chris Reichhelm: Just, I've just got interested in personally.
9:28
Chris Reichhelm: Yeah.
9:28
Chris Reichhelm: Was it an idea or was it people or was it something else that acted as a catalyst?
9:36
Chris Reichhelm: I think there was, uh, Michael Li, Michael Lewis on his podcast recently, he said, I just love, I, I can't remember exactly what his phrase was, but he just basically loves going up against something that's bigger, gnarly, and that's difficult.
9:50
Chris Reichhelm: And I think I've always been quite attracted to that.
9:54
Chris Reichhelm: I've never, I've never really sort of been that enthused about what I think of as stripe socks businesses, which is sort of traditional entrepreneurial endeavors, which are to, you know, absolutely no question with them.
10:08
Chris Reichhelm: But I've always tried to find big trouble.
10:11
Chris Reichhelm: 'cause that's sort of where the big adventure is, I guess.
10:13
Chris Reichhelm: Mm-hmm.
10:14
Chris Reichhelm: But that it doesn't always end well.
10:16
Chris Reichhelm: No, no, it doesn't.
10:18
Chris Reichhelm: The, you, you mentioned, and, and, and thank you for sharing, as you mentioned the, the therapy piece too and the importance of emotional awareness.
10:28
Chris Reichhelm: Um, can you talk a little bit about how, how that's, how that's helped you?
10:34
Chris Reichhelm: I'm guessing that's helped you, you mentioned it, it, it's, it's been, I think, yeah, it's been very productive for you.
10:39
Chris Reichhelm: But how so?
10:41
Chris Reichhelm: I think you are you in some way, oddly, when you.
10:47
Chris Reichhelm: When you participate in therapy, you become a much better listener because you're ultimately listening to yourself as well as the advice from a therapist.
10:57
Chris Reichhelm: So I think, I think to some degree, it's, it's understand you, the, the understanding comes through the acknowledgement.
11:03
Chris Reichhelm: The awareness of, of, of what is in your life.
11:08
Chris Reichhelm: And I think that, yeah, so I think it's not so much, uh, it's not so much sort of the big insight.
11:12
Chris Reichhelm: It's not so much removing the blockers in life because there always are, but.
11:17
Chris Reichhelm: It's really more about, I think I wasn't, I'm still not very good at it, but I'm, but you become better at, at listening and, and creating some sort of, uh, uh, some gaps, some sort of mind space in and around whatever you are looking at, which itself is useful because you are so often we just, we just pursue or we continue because that's the, that's the, yeah, that's the trajectory.
11:45
Chris Reichhelm: It's very difficult to ask ourselves whether something's the right thing to do all the time.
11:50
Chris Reichhelm: Yeah, yeah.
11:51
Chris Reichhelm: But, but as an entrepreneur, it, it's, in many ways it's critical.
11:59
Chris Reichhelm: You've got to be asking yourself those questions, I think on a regular basis.
12:05
Chris Reichhelm: Yes.
12:05
Chris Reichhelm: And you've got to, uh, yeah.
12:07
Chris Reichhelm: And you've got, and, and the most important thing of all is you've got to be able to kill your ideas.
12:12
Chris Reichhelm: That is the single biggest, uh, that's, that I think is, I, I, I've been asked this question a bit and I think I've, I've sort of landed on that as perhaps the only thing I really can do very well is that I can be, I can be oddly sociopathic about killing an idea, which doesn't work.
12:32
Chris Reichhelm: Mm-hmm.
12:33
Chris Reichhelm: And I, I dunno whether that's just the character.
12:35
Chris Reichhelm: I may, maybe there is, maybe I score high on the sociopath test, but, but I think that's also an ability.
12:42
Chris Reichhelm: I think just acknowledging when something's wrong and being able to act on it.
12:45
Chris Reichhelm: When you are, the number of times, the number of times, particularly in recent history where I, I dunno, you are, you are very often wrong.
12:54
Chris Reichhelm: You are very, you are very often not wrong when you, uh, there's a, there's a saying that the first person you think, the first time you think about firing somebody, you should fire them.
13:04
Chris Reichhelm: It's kind of the same thing with a business.
13:05
Chris Reichhelm: Yeah.
13:06
Chris Reichhelm: The first thing you, the first time you think about killing it, kill it.
13:09
Chris Reichhelm: Yeah, because that, that whatever has, whatever has made it through from your subconscious is, is usually telling you something you need to hear.
13:18
Chris Reichhelm: How old were you when you took on your first entrepreneurial journey?
13:22
Chris Reichhelm: Or you, sorry, how old were you when you took on your first entrepreneurial role or experience?
13:26
Chris Reichhelm: Yeah.
13:26
Chris Reichhelm: Artist first was our first business.
13:29
Chris Reichhelm: So 27 years ago, uh, nearly.
13:33
Chris Reichhelm: We, uh, yeah.
13:35
Chris Reichhelm: And that, and that was, we made all the, all the same mistakes that everyone makes in a business.
13:40
Chris Reichhelm: We built technology.
13:42
Chris Reichhelm: We believed we didn't test our assumptions, we raised a ton of money.
13:47
Chris Reichhelm: Uh, and maybe you have to go through that.
13:49
Chris Reichhelm: Maybe that rite of passage is something that you have to go through.
13:52
Chris Reichhelm: Mm-hmm.
13:53
Chris Reichhelm: Maybe it is, but I guess since then, I'm reflecting on the good and the bad of that business.
14:00
Chris Reichhelm: You know, that I guess is where, where, where I sort of, I, I differed then that's where I parted ways with a more conventional approach.
14:09
Chris Reichhelm: It was always incredibly frustrating to me that we were doing things that, that we thought were right, but we didn't have any data to suggest they were.
14:17
Chris Reichhelm: So that was the, that was the, that was the kernel of it.
14:21
Chris Reichhelm: Was that, did that lead to you, did that lead you to start exploring.
14:28
Chris Reichhelm: Lean, lean principles were people talking in those days of this type of different approach?
14:36
Chris Reichhelm: I think we knew, we were writing software, so we kind of understood the principles as sort of good software development, which, which lean kind of leans on if you like.
14:46
Chris Reichhelm: So, yeah, I guess for me, lean always had the problem and the challenge that it started with build, it started with building something and you.
14:56
Chris Reichhelm: Hadn't necessarily declared, declared what you're trying to learn.
14:59
Chris Reichhelm: So that was, and I always went back to my kind of, you know, GCFE early kind of, you know, school, uh, science teacher who was, whether you define a hypothesis, you, you, you, you have an aim.
15:13
Chris Reichhelm: You, you're trying to figure out what you're trying to learn and then you build an experiment to, to, to do that.
15:19
Chris Reichhelm: So for me, that's where I think we started.
15:22
Chris Reichhelm: I started to diverging my thinking.
15:24
Chris Reichhelm: Which for the, the whole Lean Startup thing, it seemed too co to me.
15:28
Chris Reichhelm: It seemed too focused on, on EE even.
15:33
Chris Reichhelm: It needed to go one step back, if you like.
15:36
Chris Reichhelm: It needs to abstract itself one step further, but the challenge with doing that is that it becomes, on the surface, life becomes very dull because if you can talk about building an MVP, then it's super exciting.
15:48
Chris Reichhelm: It's fun, and it's, but.
15:50
Chris Reichhelm: No one really wants to be told they have to define a hypothesis, which is, which is what I've written a book about.
15:58
Chris Reichhelm: There's no, there's no book in the Amazon bookstore with hypothesis in the title 'cause it's unfathomably dull.
16:03
Chris Reichhelm: You know, no one, uh, no one wants to go back to their, their, their, their school chemistry because, uh, well not many people do anyway.
16:12
Chris Reichhelm: But I, but yeah, when, a long time ago, we figured out that actually if we got more and more disciplined about what we were trying.
16:20
Chris Reichhelm: The test, we then realized that actually there was, that was completely wooly and that everyone is wooly about that.
16:27
Chris Reichhelm: So when we talk about ideas, we are actually talking about these random bundles of assumption and, and actually the discipline, the approach is, is taking everything that you've got rattling around in your head, getting it out on a whiteboard and breaking it down systematically.
16:45
Chris Reichhelm: And it doesn't have to, doesn't have to take very long.
16:48
Chris Reichhelm: But it is so that, that's, that was our unmark.
16:52
Chris Reichhelm: Okay.
16:53
Chris Reichhelm: Is, does, does currently in thinking, assume that this process you are referring to right now is baked into build?
17:06
Chris Reichhelm: They, uh, lean assumes that, that the, well, it doesn't really matter where you start, just build something and then you'll get into the learn.
17:13
Chris Reichhelm: Yeah.
17:13
Chris Reichhelm: Build measure, learn loop.
17:14
Chris Reichhelm: Yeah.
17:14
Chris Reichhelm: And that, and that is legitimate.
17:16
Chris Reichhelm: That's legitimate.
17:17
Chris Reichhelm: The trouble is.
17:18
Chris Reichhelm: If you start to build something, you don't necessarily know what you're seeing, what you're trying to learn, you don't necessarily have a, a baseline say, okay, I was trying to learn that and therefore this is next one.
17:28
Chris Reichhelm: So it, it is in itself, in my view, inherently wasteful because you don't, you don't start from position of what someone trying to learn, but the real problem is that you, you don't actually ask yourself a really awkward question right at the beginning of the process, which is.
17:44
Chris Reichhelm: Am I really clear about the product I'm trying to sell and the customer I'm trying to acquire?
17:50
Chris Reichhelm: Mm-hmm.
17:50
Chris Reichhelm: So many people kid themselves that ideas are a good thing.
17:53
Chris Reichhelm: Ideas are a disaster for the ideas themselves are, are a, a disastrous way to start any entrepreneurial journey, but, but it's hard to do anything else because it, it's not intellectually hard.
18:06
Chris Reichhelm: Anyone can understand how to define a hypothesis, but.
18:10
Chris Reichhelm: It's awkward.
18:10
Chris Reichhelm: It's, we're back, we're straight back to therapy.
18:13
Chris Reichhelm: It's, it's bad on the ego.
18:14
Chris Reichhelm: It hurts the ego to be told that you are the thing that you love it to actually acknowledge that a thing that you think is brilliant is a brilliant idea.
18:23
Chris Reichhelm: Actually at the heart of it's got, it's, it's, there's, there's some fundamental straw in it.
18:28
Chris Reichhelm: Not most people don't wanna know that.
18:30
Chris Reichhelm: And so, you know the, I think you're right.
18:34
Chris Reichhelm: I think, and I think it's especially true for.
18:41
Chris Reichhelm: Experienced researchers, and if we think about the deep tech industry, if we think about lab to market journeys, it's generally starting with an academic or a researcher or perhaps an experienced engineer.
18:52
Chris Reichhelm: You know, it's, it's gonna be someone in research.
18:54
Chris Reichhelm: Yeah.
18:54
Chris Reichhelm: Or an experienced technologist of some kind.
18:57
Chris Reichhelm: And the journey generally starts with, I know something, I have an appreciation for a particular area.
19:04
Chris Reichhelm: I've been observing and operating within this area for some time.
19:09
Chris Reichhelm: Here's my observation.
19:11
Chris Reichhelm: This doesn't work.
19:12
Chris Reichhelm: It needs to be solved.
19:14
Chris Reichhelm: It represents a, a good problem and I'm gonna go and try and solve it now.
19:19
Chris Reichhelm: And I think to your point, they, they'll ruminate on that idea.
19:25
Chris Reichhelm: They develop that idea over time and it becomes a center point of their research, perhaps for their PhD, perhaps for.
19:34
Chris Reichhelm: Uh, you know, another piece of research, sometimes it's given to them through a grant and they say, okay, sure.
19:39
Chris Reichhelm: I need to work on this as part of a grant exercise, so I'm gonna go and I'm gonna, I'm gonna build my, my knowledge and skills around this particular problem.
19:48
Chris Reichhelm: But to your point, there's not an awful lot of validation past that point.
19:54
Chris Reichhelm: So they may develop insights.
19:56
Chris Reichhelm: Now they may be very experienced, most generally are not, though they don't have that much experience in the space.
20:03
Chris Reichhelm: They won't, so they're less inclined to go out and start validating, is this a problem worth solving, and how might we approach that problem?
20:12
Chris Reichhelm: Instead, it's let's start developing something.
20:14
Chris Reichhelm: Let's start developing an innovation and see how that goes.
20:18
Chris Reichhelm: Yeah, yeah.
20:20
Chris Reichhelm: That starting with technology is.
20:23
Chris Reichhelm: Counterintuitive, but whenever you're trying to test a hypothesis, pretty much the last thing you wanna do is start with technology.
20:30
Chris Reichhelm: So if you are a deep tech startup and you are by definition anchored in the technology, then you are gonna, it's not, it's, it's very, uh, it's very plausible that you would start with some sort of dilution.
20:42
Chris Reichhelm: You'd start to, to, to build your business.
20:45
Chris Reichhelm: You would think, well, I need the technology, but of course, that's the last thing you need.
20:49
Chris Reichhelm: The absolute last thing you wanna be doing is building any technology.
20:52
Chris Reichhelm: Hardware is hard.
20:54
Chris Reichhelm: Uh, and, and, and the every single assumption.
20:58
Chris Reichhelm: If, if you are, if, if you can be disciplined about what you think is the behavioral driver behind the product or service, which you are trying to offer, if you can be disciplined about that and really understand your user, then 99.9% of the time you don't need to build technology.
21:16
Chris Reichhelm: You don't need it.
21:16
Chris Reichhelm: You, what you need to do is.
21:19
Chris Reichhelm: Find some other faster, quicker, cheaper way of testing the assumption.
21:23
Chris Reichhelm: And that's generally not building any tech, but at some point, but at, at some po.
21:29
Chris Reichhelm: So, so to validate the thinking, to validate the hypothesis.
21:33
Chris Reichhelm: Yes, you may be right on there.
21:36
Chris Reichhelm: Um, yeah, and I've read your presentation and so I know some of the, you know, some of the thinking that goes around this.
21:41
Chris Reichhelm: You can work with partners to kind of help validate some of that thinking as well, but at some point.
21:47
Chris Reichhelm: If you are developing a company that intends to be, uh, an important or play some kind of role in a value chain, which is what most deep tech companies are trying to do, they wanna become a part of a value chain.
21:58
Chris Reichhelm: They wanna contribute to that.
21:59
Chris Reichhelm: They wanna become proper small companies.
22:01
Chris Reichhelm: Uh, they wanna be able to, uh, build product, scale that product and be a supply chain member in a particular domain at some point.
22:09
Chris Reichhelm: That is we're gonna require, especially if it's deep tech technology.
22:14
Chris Reichhelm: But so then is the point.
22:17
Chris Reichhelm: 'cause then what's the value?
22:18
Chris Reichhelm: Well then, but then what's the value they're getting out?
22:21
Chris Reichhelm: What value do they capture in that exercise and how do they capture the value in that exercise?
22:26
Chris Reichhelm: The the trouble is when we start to build a business, we think we're building a business, but we're not, we're testing an assumption.
22:33
Chris Reichhelm: So if you start a business thinking that you are building a business that's inherently wrong.
22:38
Chris Reichhelm: So everyone starts with that assumption exactly as you've described it, but that's wrong.
22:43
Chris Reichhelm: Because if I've got, if I'm trying to, if I, if I think I can create a new molecule to cure cancer and, and yeah, I think it's gonna take me five years, why don't I, why do, and I, and I'm trying to test the assumption that someone will buy that molecule off me.
22:59
Chris Reichhelm: Why don't I just create a piece of paper that says I've done that.
23:02
Chris Reichhelm: I, I've created that molecule, and then lie test whether somebody wants to buy that molecule off me.
23:10
Chris Reichhelm: As, as reef steads all the time.
23:12
Chris Reichhelm: There is only two, there are only two scenarios in that.
23:14
Chris Reichhelm: One, no one will want it, in which case you haven't wasted any time building a molecule.
23:18
Chris Reichhelm: Nobody wanted.
23:20
Chris Reichhelm: Two, everyone bites your arm off for that molecule and and they go, oh my God.
23:25
Chris Reichhelm: They go, Chris, I love this molecule.
23:26
Chris Reichhelm: Please give me this molecule.
23:28
Chris Reichhelm: And you think, brilliant, I'm gonna go, I'm gonna go and make that molecule now.
23:31
Chris Reichhelm: Mm. But the point is there's no.
23:34
Chris Reichhelm: You have to test the desirability assumption before you test the feasibility and the viability.
23:39
Chris Reichhelm: There's no logic to doing anything else otherwise, otherwise you're just, you're just having a pump.
23:46
Chris Reichhelm: Yes, yes, yes.
23:48
Chris Reichhelm: Uh, so I think that is all.
23:51
Chris Reichhelm: So I think that's true.
23:53
Chris Reichhelm: I think that within the life sciences, let's stay in the life sciences, uh, for a moment, which, which has some distinctions from kind of typical deep tech.
24:02
Chris Reichhelm: If you develop a novel molecule that is, uh, is great for, uh, I dunno, treating certain types of lung cancer, um, yeah, there is, you know, generally it's felt that there's gonna be a market for that.
24:17
Chris Reichhelm: Um, now, it may be now just what kind of market there's gonna be for that ultimately is gonna depend, and I, my understanding, again, I don't work in these industries, but we support and advise these industries is that obviously.
24:31
Chris Reichhelm: The, the ultimate customers are not gonna get too excited about anything until they've seen, to your point, more data.
24:38
Chris Reichhelm: So yeah, there are lots of people out there saying, Hey, I might have this and I might have that, and so on.
24:44
Chris Reichhelm: And if this was all easy to build, it would've been built.
24:47
Chris Reichhelm: So they, you know, there are lots of caveats going into their communication.
24:52
Chris Reichhelm: Well, if you were able to create something novel like this and it had efficacy within this range and so on, then yeah, we'd probably bite your arm off.
25:00
Chris Reichhelm: Good luck developing hit.
25:02
Chris Reichhelm: And so, so much of that challenge goes in the development of that, of that.
25:06
Chris Reichhelm: So a hundred percent.
25:08
Chris Reichhelm: But that's why deep tech is not deep tech business.
25:12
Chris Reichhelm: That's why, that's why you've gotta, there's, there's always gonna be that balance, but just asking yourself who those people are, who might want your molecule and why they might want it.
25:24
Chris Reichhelm: Yeah.
25:25
Chris Reichhelm: Stirs you very well before you start building the molecule.
25:29
Chris Reichhelm: Yeah.
25:29
Chris Reichhelm: Now of course there's always a balance between, particularly in life sciences.
25:33
Chris Reichhelm: Yeah.
25:33
Chris Reichhelm: There's always a balance between the r and d process and the business process.
25:37
Chris Reichhelm: Yeah.
25:37
Chris Reichhelm: And that there's, there's always a ying and a yang and a trade off with it.
25:40
Chris Reichhelm: But, but the trouble is a lot of people will do five years, uh, five years on something before they ask themselves, well, hang on, what's actually the behavioral driver?
25:52
Chris Reichhelm: What's really the.
25:54
Chris Reichhelm: The, the human hook in someone's mind that's gonna make them wanna buy this molecule.
26:00
Chris Reichhelm: Yeah.
26:00
Chris Reichhelm: So it's not to say, it's not to say it's for, it's all smoke and mirrors, but there's just always gonna be a balance between that and there's, and that validation, the problem is that most people actually don't want that validation.
26:15
Chris Reichhelm: They are convinced that that molecule is, is amazing and it's become a haw crutch embedded in their soul.
26:22
Chris Reichhelm: Yeah.
26:22
Chris Reichhelm: And the last thing they want is somebody going, but yeah, but who's gonna buy that molecule?
26:27
Chris Reichhelm: And for how much and where.
26:29
Chris Reichhelm: But let's take, let me play devil's advocate.
26:32
Chris Reichhelm: Let's take mRNA, which was a, uh, our way of combating COVID-19.
26:39
Chris Reichhelm: And Kathleen Ko and, uh, her colleague in the us she started working on Mr.
26:46
Chris Reichhelm: mRNA therapies, I think 30 years ago.
26:50
Chris Reichhelm: And for the longest time, she was in the, she was, uh, she was not considered a serious researcher by prestigious academic institutions.
27:02
Chris Reichhelm: She was not given any kind of grant funding.
27:04
Chris Reichhelm: The, the industry, we can call it the industry, regularly looked down on the research she was doing.
27:12
Chris Reichhelm: She knew, she believed she was onto something.
27:15
Chris Reichhelm: And later on, her colleague in the us, and forgive me, I don't forget, I don't remember his name, but, um, but eventually they kind of carried on, uh, their research.
27:23
Chris Reichhelm: He was operating in a field that was considered kind of acceptable.
27:26
Chris Reichhelm: She partnered with him and together they kind of continued and, and this continued up until.
27:32
Chris Reichhelm: We were in the throes of, of COVID-19 when all of a sudden the rest of the world got what she was on about.
27:39
Chris Reichhelm: And they said, oh shit, you were right.
27:42
Chris Reichhelm: And now we desperately need this.
27:43
Chris Reichhelm: Sorry.
27:44
Chris Reichhelm: And, and, and here we go.
27:46
Chris Reichhelm: So I, you know, I think if I think about the mindset of a scientist, yeah, in as far as I can know, uh, one, uh, I think it's, it's, it's with that.
27:58
Chris Reichhelm: In mind that the rest of the market may not always know No.
28:02
Chris Reichhelm: What we know, so no, no.
28:05
Chris Reichhelm: But that, but that, but that example, the market changed and therefore that product became of age.
28:10
Chris Reichhelm: Right?
28:11
Chris Reichhelm: Yeah.
28:11
Chris Reichhelm: I took, I took a lot about, um, the, the, i, I love this idea of the Stockdale paradox, right?
28:17
Chris Reichhelm: Where, where you have to be monk and hitman.
28:20
Chris Reichhelm: Yes, you have to love your idea, but also be prepared to kill it.
28:25
Chris Reichhelm: And I think, yeah, I mean, I'm being pejorative and binary to kind of try and prove a point.
28:29
Chris Reichhelm: But the, the, the reality is it is a balance.
28:32
Chris Reichhelm: There is a balance there.
28:33
Chris Reichhelm: Yeah.
28:34
Chris Reichhelm: I think too many people on the technical deep tech side don't have enough of the, of the.
28:40
Chris Reichhelm: Of the commercial, oh, we know this, but it's not just, they don't have enough of the commercial, but the, the commercial isn't really commercial.
28:47
Chris Reichhelm: It's really being honest enough about the mindset of themselves and their buyers.
28:52
Chris Reichhelm: Yeah.
28:53
Chris Reichhelm: Digging into that, constantly doing the molecule shifting, but also then digging into where you think this thing might fit and with who.
29:02
Chris Reichhelm: Ultimately, all products and services have to be bought by a human.
29:06
Chris Reichhelm: Us humans, we ate so rational, right?
29:08
Chris Reichhelm: There's the reason why we call us a venture capital company, system two, because Kahneman Dki, fathers of behavioral economics, they coined the spray system one, system two, right?
29:17
Chris Reichhelm: You have to engage your system two, and, and, and by the way, all they ever did was just sit, uh, in a room laughing all you apparently, all the stories about them was that you call it, he was just laughing that the di conman, KY was just, and all they did was just set themselves hypotheses in the middle.
29:35
Chris Reichhelm: Yeah.
29:35
Chris Reichhelm: And that was their way of working, which is why we called our business this, because actually we, we didn't even, of course, we didn't even invent this process.
29:43
Chris Reichhelm: It was actually invented by a much greater mind than ourselves, which was just fall in love with trying to find what the behavioral hook is.
29:52
Chris Reichhelm: Yeah.
29:52
Chris Reichhelm: Before you go for a solution.
29:54
Chris Reichhelm: I get it.
29:54
Chris Reichhelm: I get it.
29:55
Chris Reichhelm: It always a balance.
29:56
Chris Reichhelm: Yeah.
29:56
Chris Reichhelm: Can you, can you talk Mark A.
29:56
Chris Reichhelm: Little bit about how you've seen this work well in businesses with which you've been involved?
30:08
Chris Reichhelm: I, I couldn't, I can't get arrested teaching this process.
30:12
Chris Reichhelm: Entrepreneurs hate it.
30:14
Chris Reichhelm: Most entrepreneurs absolutely hate it.
30:17
Chris Reichhelm: The visceral reaction.
30:18
Chris Reichhelm: Most people in corporate, there are about 5% of people who can take the poison.
30:25
Chris Reichhelm: Then come out the other side.
30:26
Chris Reichhelm: It's a bit like whatever happened in June two when they drink the water and they nearly die, most people hate it.
30:33
Chris Reichhelm: 'cause all they, their ego just immediately fires and you are just calling them an asshole, an idiot who's got a shit idea.
30:41
Chris Reichhelm: I mean, by the way, they, it is a shit idea.
30:43
Chris Reichhelm: They're not necessarily calling an asshole, but they're egos can't differentiate between these two.
30:48
Chris Reichhelm: You say your idea's shit, and you actually call you somebody.
30:50
Chris Reichhelm: Shit.
30:51
Chris Reichhelm: So unless you are very tentative in a way that you approach this, most people just cannot deal with this because they say, I've got this great idea and you've got, oh, brilliant.
30:59
Chris Reichhelm: Can you just tell me the hypothesis?
31:01
Chris Reichhelm: What's driving it?
31:01
Chris Reichhelm: It's like, fuck, oh, I, no, I don't want to do that.
31:05
Chris Reichhelm: So the only people who've ever made this work are, are people who've seen it work?
31:11
Chris Reichhelm: Yeah.
31:11
Chris Reichhelm: So we have, uh, and, and we've made it work in different corporate settings in GSK and Barclays and British Gas.
31:19
Chris Reichhelm: Because actually a very small group of people could see it working, but the medicine is proof.
31:27
Chris Reichhelm: I mean, it's, it's incredibly intellectually satisfying with fun and there's a lot of laughter, but it's not, it doesn't look anything like a normal innovation process.
31:35
Chris Reichhelm: So most people, because we humans and we, we assume what we see as the norm is, right?
31:42
Chris Reichhelm: Yeah.
31:42
Chris Reichhelm: We, we reject it.
31:44
Chris Reichhelm: Yeah.
31:44
Chris Reichhelm: So it's very hard to do, weirdly.
31:47
Chris Reichhelm: Yeah.
31:48
Chris Reichhelm: Yeah.
31:48
Chris Reichhelm: Yeah.
31:49
Chris Reichhelm: Did, did you apply it to, uh, deep Green Technology or Deep Green Energy?
31:54
Chris Reichhelm: Nah.
31:56
Chris Reichhelm: Every business that we've done, we has come from an eight week sprint of beating the shit out of, of hypotheses.
32:05
Chris Reichhelm: So, is that right?
32:06
Chris Reichhelm: Wow.
32:06
Chris Reichhelm: Yeah.
32:07
Chris Reichhelm: Every month we've done eight and a half thousand tests, we think across our businesses.
32:12
Chris Reichhelm: We've had eight exits.
32:14
Chris Reichhelm: We've probably done a thousand tests for every exit we've had.
32:19
Chris Reichhelm: And that to test that, not that, that's a hypothesis, which start with a behavioral driver, not a solution.
32:25
Chris Reichhelm: So what we think of as a, because, Chris, because, because I want the, because I, I, I'm bugged by this.
32:33
Chris Reichhelm: Chris will value this.
32:35
Chris Reichhelm: So all of our businesses started like that.
32:38
Chris Reichhelm: I mean, some are, some have come easier than others, you know, some deep green, a 10 year overnight success, whereas others have very, sort of quickly emerged.
32:50
Chris Reichhelm: But it's not so much the ones that have, it's not so much about the ones that have been successful, it's much more about the kill rate.
32:58
Chris Reichhelm: So we, we are really good at killing stuff.
33:02
Chris Reichhelm: So if the, if the data from a hypothesis and an experiment doesn't look good.
33:07
Chris Reichhelm: So many people will just go, oh no, it's fine.
33:09
Chris Reichhelm: It's fine, it's fine.
33:10
Chris Reichhelm: It'll be fine.
33:11
Chris Reichhelm: Just keep going.
33:12
Chris Reichhelm: It's like, no, no, not like a, a noise attenuation for kids' headphones is a shit idea.
33:18
Chris Reichhelm: It's not, it's a shit idea.
33:20
Chris Reichhelm: Because, because 'cause, um, parents don't want their kids to trash their hearing.
33:25
Chris Reichhelm: It's a shit idea.
33:26
Chris Reichhelm: Because if you had a kid to turn their music down and their, their mobile phone only plays their music 70%, now they're gonna buy another mobile phone.
33:33
Chris Reichhelm: Yeah.
33:33
Chris Reichhelm: So you don't have to be, you can be right, but the ir the market can stay irrational, right?
33:39
Chris Reichhelm: Yes.
33:39
Chris Reichhelm: And that's that.
33:40
Chris Reichhelm: That's 90% of this, which is, this is a fucking great molecule.
33:44
Chris Reichhelm: Everyone should buy this.
33:45
Chris Reichhelm: And it's like, you are right, but they don't want it.
33:49
Chris Reichhelm: 70% of people would rather die than exercise.
33:54
Chris Reichhelm: Look, we've got it in our world, right?
33:55
Chris Reichhelm: The 30% of people are morbidly obese, 30% of people are obese.
33:59
Chris Reichhelm: Only 20% of people are healthy.
34:01
Chris Reichhelm: So at least 70% of the population would literally rather die than be healthy.
34:08
Chris Reichhelm: So if that's the case, we can kid ourselves about innocent A.
34:13
Chris Reichhelm: That's interesting.
34:15
Chris Reichhelm: So what you're basically saying is, and this is what.
34:18
Chris Reichhelm: If I think about the boards of companies or the leadership teams of companies when they're in the early days of trying to figure out what markets they're gonna serve and how they're gonna serve those markets and the nature of their offering, they're very, in my observation, they're very rarely thinking about the behavioral drivers that are gonna lead to adoption.
34:42
Chris Reichhelm: And they're starting with a, well, this should slot like that because they do this.
34:47
Chris Reichhelm: And, uh, and, and it's generally based on strategy.
34:51
Chris Reichhelm: So here's their strategy.
34:52
Chris Reichhelm: They're going in this direction, they're deploying these technologies.
34:55
Chris Reichhelm: This is what they're trying to do with that.
34:57
Chris Reichhelm: We could fit like that.
34:58
Chris Reichhelm: But those pieces, nook look nice together on the slide deck and uh, and we can see that working.
35:05
Chris Reichhelm: But I would say that for most, that's probably the extent there might be some kind of digging around in terms of who should we be talking to in the organization, who are the ultimate sign off.
35:16
Chris Reichhelm: Leaders of this, who do we have to influence?
35:18
Chris Reichhelm: What other partners are gonna be around the table that we need to kind of consider and get on side?
35:23
Chris Reichhelm: So it's almost what you're advocating is an extension of those questions.
35:27
Chris Reichhelm: You need to keep going.
35:29
Chris Reichhelm: You need to keep, and you know, and actually, and you may need to get away from that group, but you need to keep asking the questions, what's going to change the behavior.
35:36
Chris Reichhelm: 'cause ultimately it's gonna result in some kind of change of behavior to adopt your solution and not to keep, and not to continue doing what they're doing.
35:44
Chris Reichhelm: Changing behavior.
35:45
Chris Reichhelm: Correct.
35:47
Chris Reichhelm: Even I know changing behavior is really difficult.
35:51
Chris Reichhelm: Yeah.
35:51
Chris Reichhelm: That's what everyone is trying to do when they're trying to launch a new products and services, they're trying to change a behavior and everything you've just listed there is what's wrong about corporate innovation.
36:01
Chris Reichhelm: Everything is, everything is wrong with it.
36:04
Chris Reichhelm: It's all upside down.
36:06
Chris Reichhelm: Research is a disaster.
36:08
Chris Reichhelm: Senior, senior people thinking they, their existing products and services give them a right to play.
36:13
Chris Reichhelm: The idea of ideas, uh, the way that's funded, the fact that they're done all bad.
36:18
Chris Reichhelm: Everything about a corporate innovation process is, is mostly going to, everyone should be involved.
36:25
Chris Reichhelm: It should be a happy, fun process.
36:27
Chris Reichhelm: It should be really quick.
36:28
Chris Reichhelm: And, and there's a winner.
36:29
Chris Reichhelm: I mean, all of these, all of these facets that we think we, mm-hmm.
36:33
Chris Reichhelm: That make up good corporate innovation is why, is why one in 11 businesses succeed?
36:40
Chris Reichhelm: Uh, because it, it, it.
36:43
Chris Reichhelm: It Ultimately, no one, as you say, has, has asked themselves the single question, which is what behavior am I trying to change and, and, and, and have I got a product that will change that behavior?
36:55
Chris Reichhelm: Wow.
36:56
Chris Reichhelm: That's, um, now I know you do work with corporates and I, I've seen from your, you know, your presentation and from the stuff that I've researched that a lot of that seems to be very effective.
37:08
Chris Reichhelm: Can you know, because most deep tech companies are startups, I.
37:12
Chris Reichhelm: At various stages, generally the early stage, how much of this do you think can apply at the very early stage of a company's development?
37:22
Chris Reichhelm: If you take the 30 year development of a of a molecule, why can't you start asking yourself the question right at day one?
37:30
Chris Reichhelm: Now, that doesn't mean that you don't have to do 10 years of molecule shuffling before you've got even got something that from which you could then ethically test an assumption.
37:40
Chris Reichhelm: But yeah.
37:41
Chris Reichhelm: If you are in the business of business, then that's the only question you are ever gonna have to answer.
37:48
Chris Reichhelm: Yeah.
37:48
Chris Reichhelm: If you are in the business of, if you are, it's a bit like an artist.
37:51
Chris Reichhelm: Uh, you know, if you are, if you are in the business of making great art, you don't care that anyone will listen to your music, knock yourself out, you know, record, record a, a chainsaw for 10 minutes and call it art.
38:01
Chris Reichhelm: But if you wanna, if you want to sell any music, then accept the reality of, of what, of, of, of who you're trying to comm, you know, communicate to.
38:10
Chris Reichhelm: So I think everyone can apply the principles all the time.
38:17
Chris Reichhelm: And of course the more you do that and the more you get this balance right, the more likely you are for this bit, the sort of sales bit if you like to start to impact the r and d bit of it.
38:30
Chris Reichhelm: Yeah.
38:30
Chris Reichhelm: So it's like, I thought I, I'm just gonna make this molecule if, if, if you.
38:34
Chris Reichhelm: As you start to unpack an idea and as you start to understand who's buying for what reasons, then that starts to obviously impact the, the, the, the early r and d you are doing.
38:46
Chris Reichhelm: Yeah.
38:46
Chris Reichhelm: So in the case of Deep Green, we were, we were building, we were building, uh, we.
38:51
Chris Reichhelm: Right.
38:51
Chris Reichhelm: 10 years ago, our prototypes were all with, with, with, uh, with crypto miners.
38:55
Chris Reichhelm: We thought, well, of course if crypto's gonna be the next foundational kind of, uh, uh, uh, you know, financial, financial system, then everyone's gonna be delighted by having a crypto miner, uh, in, in their hot water tank.
39:08
Chris Reichhelm: Turns out very bad assumption.
39:10
Chris Reichhelm: So, you know, you can always ask yourself the most awkward question, which is.
39:18
Chris Reichhelm: Am I doing?
39:19
Chris Reichhelm: And, and, and because ev most businesses fail whenever an entrepreneur, any of corporate exec or any r and d deep tech company says, I've got this product.
39:28
Chris Reichhelm: You can, statistically, you can say that they're gonna fail because they, it's, it's statistics says that they are very unlikely to be talking to one in a million who's just nailed it the first time.
39:40
Chris Reichhelm: Yeah.
39:40
Chris Reichhelm: It's by definition wrong.
39:42
Chris Reichhelm: Yeah.
39:43
Chris Reichhelm: Yeah.
39:44
Chris Reichhelm: And I think almost every single, every.
39:47
Chris Reichhelm: We've had a lot of conversations with investors and boards over the years, and they all say something very similar.
39:53
Chris Reichhelm: And, and, and actually I will say that most academics say the same thing, that when it comes to commercialization, when it comes to the type of thinking that's required, uh, for a, around which a company can be developed, that has got to be, that is called commercial thinking.
40:13
Chris Reichhelm: Too often we make the immediate association of sales, well, we gotta sell it, so let's make something and then we'll sell it and hopefully we'll get some revenue from what we've made.
40:20
Chris Reichhelm: And you know, and isn't that what the commercialization process is all about?
40:25
Chris Reichhelm: And actually what you are, I think what you're expanding on beautifully is this, is this notion of why, why is anyone going to change their beha?
40:37
Chris Reichhelm: What will they.
40:40
Chris Reichhelm: Will they be willing to change their behavior in order to accommodate what we have?
40:45
Chris Reichhelm: Or perhaps a better way of framing that is what can we, what can we develop and round which they will be prepared to change behavior and then test that as an option and then test that assumption.
40:59
Chris Reichhelm: Absolutely never.
41:02
Chris Reichhelm: Focus on that and then test that assumption rather than believe you're building a product.
41:07
Chris Reichhelm: Yeah.
41:07
Chris Reichhelm: Yeah.
41:07
Chris Reichhelm: Because if you start the entrepreneurship journey thinking you are an entrepreneur, you are already wrong.
41:13
Chris Reichhelm: You are, you are only a tester of assumption.
41:16
Chris Reichhelm: That's, to be honest, interesting.
41:18
Chris Reichhelm: You are only, you're only ever a tester of assumption.
41:20
Chris Reichhelm: Yeah.
41:20
Chris Reichhelm: But that's where everyone, that's where everyone gets, that's why it's so that's understand that.
41:24
Chris Reichhelm: 'cause it's, it, it's just people think they're a race car driver when they're actually a chef, they're doing something.
41:31
Chris Reichhelm: They, they are, they're trying to do something that is completely different from what, what's what, what, what needs to be done.
41:39
Chris Reichhelm: Can you talk a little bit about that validation process?
41:42
Chris Reichhelm: So let's say I decide with a small group of experimenters, all right, we're not entrepreneurs.
41:49
Chris Reichhelm: We're not gonna fall under that brand.
41:50
Chris Reichhelm: We're going to, you make valid points here.
41:53
Chris Reichhelm: We're gonna become, we have certain types of capability in a particular field.
41:57
Chris Reichhelm: Let's get outta life sciences.
41:58
Chris Reichhelm: Let's say it's, I don't know, it's chemistry or.
42:01
Chris Reichhelm: So let's say it's ai.
42:02
Chris Reichhelm: Okay.
42:03
Chris Reichhelm: And so, uh, we have certain capabilities as a group of engineers and, um, where we we're interested in, we, we could be interested in setting up a business, but we're not sure yet.
42:15
Chris Reichhelm: Yeah.
42:15
Chris Reichhelm: So we see ourselves as this group of experimenters.
42:18
Chris Reichhelm: What do we do to kind of hypothesize and validate?
42:24
Chris Reichhelm: How do we know when we're getting somewhere?
42:27
Chris Reichhelm: How do we know when it's, when we can start kind of.
42:30
Chris Reichhelm: Uh, to involve other parties and get capital and all of that kind of stuff.
42:34
Chris Reichhelm: How do we know when we're, you know, making progress?
42:38
Chris Reichhelm: Well, I get the, the really annoyingly counterintuitive thing about this all is that you must also start doing immediately.
42:45
Chris Reichhelm: You can't spend, I. You can't spend 10 weeks scribbling on a whiteboard, hypothesizing you, you force yourself into the discipline of, or of daily and weekly experimentation.
42:57
Chris Reichhelm: So once you've got a hypothesis, then you test it, get another hypothesis, test it.
43:02
Chris Reichhelm: So to where does the hypothesis come from?
43:05
Chris Reichhelm: It comes, it, it, it literally comes from talking to each other.
43:11
Chris Reichhelm: Now you've got a hypothesis for a business.
43:13
Chris Reichhelm: I, I could, I would, I, we do these workshops, we call them rinsing workshops.
43:18
Chris Reichhelm: And it's, and it's, and whoever volunteers to do them is incredibly brave, but they sit on a stool and they start talking about their business.
43:26
Chris Reichhelm: And we start to immediately say, well, what's, no, no, no.
43:28
Chris Reichhelm: That's the solution.
43:29
Chris Reichhelm: Oh, it's gonna be brilliant'cause it's this No, no, stop.
43:31
Chris Reichhelm: Who's it for?
43:32
Chris Reichhelm: Uh oh.
43:33
Chris Reichhelm: Uh uh.
43:34
Chris Reichhelm: For a lady, I think brilliant because it's, no, no, stop.
43:40
Chris Reichhelm: Stop a solution.
43:41
Chris Reichhelm: You know who it's for.
43:42
Chris Reichhelm: Now, why do they want it?
43:43
Chris Reichhelm: And very quickly, either people stop talking, storm out the room, or you write something on a white wall, which is because I am, I, I'm a lady.
43:53
Chris Reichhelm: I, because I don't want to be patronizing in a car dealership, a lady will value something.
44:00
Chris Reichhelm: So you, you have to just force yourself to never let yourself off.
44:05
Chris Reichhelm: It never even start.
44:07
Chris Reichhelm: Just always start behavior first, and it's crushingly awful, horrible too.
44:14
Chris Reichhelm: So for three weeks, most teams just sit in awful existential pain, somewhere between sort misery and, and, and rage.
44:25
Chris Reichhelm: And, and then, and then a few people go, oh, I get it.
44:29
Chris Reichhelm: I get it.
44:30
Chris Reichhelm: It's like.
44:32
Chris Reichhelm: Because I, because the cup can't spill coffee.
44:36
Chris Reichhelm: Chris will value a thermos with a top on it to go to work, and then, and then you see the penny drop and then you're off.
44:44
Chris Reichhelm: That's all it is.
44:45
Chris Reichhelm: It's just an intellectual.
44:47
Chris Reichhelm: It's just, but, but you've gotta be okay with just, you've gotta die before you die.
44:53
Chris Reichhelm: We are back to therapy.
44:54
Chris Reichhelm: You, it's just Buddha.
44:55
Chris Reichhelm: It's just, it's just don't have any emotional.
45:01
Chris Reichhelm: Attachment to it.
45:02
Chris Reichhelm: Just accept the fact that you are almost certainly wrong.
45:07
Chris Reichhelm: And then the joy in finding something that might be useful mm-hmm.
45:12
Chris Reichhelm: Is immense, of course.
45:14
Chris Reichhelm: Way more joy than you can find in just pursuing a shit.
45:16
Chris Reichhelm: I did.
45:17
Chris Reichhelm: So I give you a really good example.
45:20
Chris Reichhelm: We, uh, which eventually became the eBay's uh, campaign, eBay, it wasn't meant to be a campaign, it was meant be a product, but the.
45:29
Chris Reichhelm: The, the, the hypothesis was because I find it difficult to, uh, find the specific dress I want in a secondhand marketplace where there might be 10,000 dresses on eBay, uh, red dresses.
45:41
Chris Reichhelm: In this case, Miranda will value a service which curates her just the four, which are most suitable for her.
45:49
Chris Reichhelm: If that's your hypothesis, you know, your, your driver is ba a secondhand marketplace is just a wash with stuff, and I, and I, I need somebody to curate it.
45:57
Chris Reichhelm: What you don't then do is build an ai.
45:59
Chris Reichhelm: What you do is you ring up your mate who pretends to be the AI and whoever sends you a tweet saying, I want a red dress.
46:07
Chris Reichhelm: You very, very quickly, as quickly as you can do it with a human, send the link back and then you test how many times they open that link and click on it, and it turns out they, they, it, an unfathomable amount of times have clicked through.
46:20
Chris Reichhelm: But the point is experiment, uh, sorry.
46:22
Chris Reichhelm: Hypothesis experiment.
46:24
Chris Reichhelm: Hypothesis, experiment.
46:25
Chris Reichhelm: This is.
46:26
Chris Reichhelm: You, the counterintuitively must working in this way, you're not allowed to, like Kahneman perky did.
46:34
Chris Reichhelm: You're not allowed to sit there for weeks on end laughing and, and scribbling on a whiteboard.
46:38
Chris Reichhelm: You must get into a cadence of, of scribbling on a Monday, uh mm-hmm.
46:43
Chris Reichhelm: Uh, thinking on a Tuesday, getting it live on a Thursday and and on.
46:47
Chris Reichhelm: And so you are forcing yourself into this discipline of experimentation rather than product development.
46:54
Chris Reichhelm: I get it.
46:55
Chris Reichhelm: Can you, do you have an example Mark in the enterprise space with perhaps more complex solutions, not consumers, where you can kind of do that?
47:06
Chris Reichhelm: Because I'm a procurement director at, I don't know.
47:11
Chris Reichhelm: Yeah.
47:11
Chris Reichhelm: Uh, a big utility.
47:13
Chris Reichhelm: Yeah.
47:13
Chris Reichhelm: And I want to buy a certain types of, of solution.
47:17
Chris Reichhelm: Let's say I'm a procurement director at a gas distribution network.
47:21
Chris Reichhelm: This is topical right now.
47:22
Chris Reichhelm: Yeah.
47:23
Chris Reichhelm: I need to buy a sy I need to buy systems that are going to, uh, that are going to help my gas distribution network, uh, manage itself better, uh, that are gonna allow us to keep our costs contained, that are gonna ensure that there are no blowouts along the network.
47:42
Chris Reichhelm: 'cause those are costly and potentially very dangerous, that are going to fulfill a certain amount of regulations and so on.
47:50
Chris Reichhelm: Are there examples like that where people can also do that kind of quick experimentation of their hypothesis and get the kind of data back that they're gonna need?
47:59
Chris Reichhelm: Well, well firstly, what's really interesting in even what you said there in those four or five short sentences, there are, there are probably 50 ideas and there are probably 5,000 hypotheses in what you've just said.
48:12
Chris Reichhelm: Which is, which is the problem.
48:15
Chris Reichhelm: Is it the fact that I'm trying to detect its gas on the gas line, or is it that I'm trying to save save costs or is it that I'm trying to, so we can't even begin.
48:24
Chris Reichhelm: Let's first of all smash that.
48:26
Chris Reichhelm: Well, what is it?
48:27
Chris Reichhelm: Because each of those ideas have got 20 behavioral drivers, they've got 20 users, and they've got 20 potential solutions.
48:34
Chris Reichhelm: And each of those is an infinite monkey cube of variables that we need to wrestle with before we even then go and test.
48:42
Chris Reichhelm: One of those thing.
48:44
Chris Reichhelm: And therein life's the problem.
48:45
Chris Reichhelm: 'cause it's like, don fucking about Mark.
48:47
Chris Reichhelm: Just get on with it.
48:48
Chris Reichhelm: I want the answer.
48:49
Chris Reichhelm: Of course you do.
48:51
Chris Reichhelm: But that's why you're gonna make a mess of it because you, 'cause we, we really need to do some proper thinking.
48:56
Chris Reichhelm: No research, no cling about with startups seeing nice glass fronted offices, no crapping on about things that innovation exercises proper.
49:08
Chris Reichhelm: System two, thinking in front of a whiteboard, just really quickly, who's, what's the behavioral driver?
49:13
Chris Reichhelm: What is it, what's more important than the, than detecting the leak or the cough thing, but where is it?
49:19
Chris Reichhelm: I, so I'll give you a really, I'll give you a really good example in the B two Bs.
49:22
Chris Reichhelm: I mean, well, deep Green is a really good example, right?
49:25
Chris Reichhelm: Yeah.
49:25
Chris Reichhelm: I mean, 10 years, we didn't build, we didn't build any data center.
49:30
Chris Reichhelm: We just, we just, we just, we just built really shonky prototypes.
49:35
Chris Reichhelm: Until, until we knew there was market fit.
49:38
Chris Reichhelm: So, you know, uh, even, even the final protest, our, our, our car subscription service, we, we put that car subscription service up.
49:47
Chris Reichhelm: We got inundated with requests for EVs.
49:50
Chris Reichhelm: This is about seven years ago.
49:51
Chris Reichhelm: So within 24 hours, we had to buy seven revenues, which arrived on my driveway book.
49:58
Chris Reichhelm: We didn't buy the Reno Zoe, I've got a picture of my wife standing there like that with a transporter outside our house going, where the fuck are these cars gonna go?
50:07
Chris Reichhelm: It's, but it's like, imagine if we bought those seven cars and then put the experiment up and thought, oh shit, no one's, no one, no one needs those cars.
50:17
Chris Reichhelm: The, the, the most challenging B2B one.
50:18
Chris Reichhelm: I know the fact that a defense contractor is doing stands at B2B market stands with products that don't exist.
50:27
Chris Reichhelm: So you're taking stands at B2B at B2B conferences with products that don't exist, but you're testing the market.
50:34
Chris Reichhelm: That's interesting.
50:36
Chris Reichhelm: Right?
50:36
Chris Reichhelm: That's dos really, really interesting.
50:39
Chris Reichhelm: What you, you're a defense contractor and you've got a, you've got, you've got, um, a, a, a, I don't know, whatever.
50:45
Chris Reichhelm: A silent propulsion mechanism.
50:47
Chris Reichhelm: Yeah.
50:47
Chris Reichhelm: And you think it's, well just dashboards.
50:49
Chris Reichhelm: Why would you put a day?
50:51
Chris Reichhelm: Why would you put a day of effort?
50:52
Chris Reichhelm: That's so interesting.
50:52
Chris Reichhelm: Doing.
50:55
Chris Reichhelm: I have a couple of questions.
50:57
Chris Reichhelm: I have a couple of questions based on this.
50:59
Chris Reichhelm: This is really, really interesting.
51:01
Chris Reichhelm: I mean, the first one is funding.
51:05
Chris Reichhelm: So I, I, uh, me and my little band of experimenters wanna start experimenting.
51:13
Chris Reichhelm: Um, yeah, but we don't have much money.
51:16
Chris Reichhelm: We're a young group.
51:17
Chris Reichhelm: How, but we can't say, you know, we, it's going to, we're gonna struggle to build a slide deck.
51:24
Chris Reichhelm: Yeah, we don't know exactly where we're going yet because we haven't been through this exercise.
51:30
Chris Reichhelm: So do you have a view on, on capitalizing exercises like this?
51:36
Chris Reichhelm: If you are, if your intention is to ultimately build a company, we're gonna be a band of experimenters.
51:41
Chris Reichhelm: We're gonna hopefully find what we're gonna do and then we're gonna go forward.
51:45
Chris Reichhelm: Or is the deal that we we're supposed to somehow float ourselves?
51:50
Chris Reichhelm: We have to kind of self-fund ourselves until we get to them.
51:54
Chris Reichhelm: Well, I think there are two answers to the question.
51:57
Chris Reichhelm: First of all, there aren't enough venture capital businesses who are impressed by the results of an experiment relative to the creds of the founders, but that's on us, right?
52:07
Chris Reichhelm: Like you should, you should as, as a, as a small crack team of experimenters with not little be little money, you should get massive brownie points.
52:16
Chris Reichhelm: Who, who needs a 20 page slide deck?
52:18
Chris Reichhelm: I just wanna see, I just wanna see the what, what, what was the result of that experiment?
52:23
Chris Reichhelm: Which hypothesis you were, you were testing, and what was the experiment you should get?
52:27
Chris Reichhelm: So, so capital is wrong in that respect, but the other.
52:32
Chris Reichhelm: But on the other end of the spectrum, you have corporate innovation.
52:34
Chris Reichhelm: You think it's all gonna be fine in 18 months.
52:37
Chris Reichhelm: Guess what?
52:37
Chris Reichhelm: It's not.
52:38
Chris Reichhelm: It's gonna take seven years.
52:39
Chris Reichhelm: So if you are, if you are, and if your average tenure of A CMO or A CEO is only two and a half years.
52:44
Chris Reichhelm: Be, be prepared to be planting trees under which you will never and never feel the shade, whatever.
52:51
Chris Reichhelm: Yeah, yeah, yeah.
52:53
Chris Reichhelm: This is a seven year journey.
52:54
Chris Reichhelm: Yeah.
52:55
Chris Reichhelm: Be honest with yourself about it.
52:56
Chris Reichhelm: It's gonna take five times as long, it's gonna take five times amount, as much money.
53:00
Chris Reichhelm: And so from a corporate point of view, just be realistic about how much and how long, and then when you haven't got much money, uh.
53:11
Chris Reichhelm: Go, go to the venture venture capital and go to money who are impressed by, by your data, not your slide deck.
53:21
Chris Reichhelm: That's a, that's the, that's a seriously interesting point.
53:27
Chris Reichhelm: And I, you know, I kind of, I wonder, I wonder about the kind of people who are gonna be more likely to succeed in that type of exercise.
53:40
Chris Reichhelm: I.
53:40
Chris Reichhelm: So at the top of this discussion, we talked about your background.
53:46
Chris Reichhelm: You've got an unusual background.
53:47
Chris Reichhelm: I don't mean that pejoratively, you've got a great unusual background.
53:51
Chris Reichhelm: I've got an unusual background.
53:53
Chris Reichhelm: Um, and I think some of the most interesting people have unusual backgrounds, but, you know, and if I think about some of the most successful entrepreneurs in deep tech, they've got unusual backgrounds too.
54:05
Chris Reichhelm: Elon Musk, despite what you'd, he'd have you believe.
54:08
Chris Reichhelm: He's got an undergrad degree in economics and he is got an undergrad degree in engineering.
54:12
Chris Reichhelm: He's not a rocket scientist.
54:13
Chris Reichhelm: Yeah, he's not.
54:14
Chris Reichhelm: No.
54:14
Chris Reichhelm: He's a super learner.
54:15
Chris Reichhelm: He's extraordinary at, uh, uh, at, at building companies.
54:20
Chris Reichhelm: He's extraordinary at moving things very, very quickly to get done.
54:23
Chris Reichhelm: He built Colossus XAI supercomputer in 19 days.
54:28
Chris Reichhelm: That generally takes three to four years to build a supercomputer.
54:30
Chris Reichhelm: He did it in 19 days.
54:32
Chris Reichhelm: So, you know, he's got, he, he's got the ability to adapt.
54:36
Chris Reichhelm: Uh, you know, some of the principles that we're discussing, maybe, perhaps they've emerged from him and his way of doing things and, and the way he thinks.
54:43
Chris Reichhelm: Yeah.
54:44
Chris Reichhelm: But, but you know, and I've known other deep tech entrepreneurs who've got backgrounds in finance and who's got, who've got backgrounds in history as well.
54:51
Chris Reichhelm: They're not scientists, they're not engineers.
54:54
Chris Reichhelm: The benefit they have is that when it comes to ideas, they're not wedded to them.
55:02
Chris Reichhelm: They're not like scientists who spent a lifetime so far, 15, 20 years developing a particular topic.
55:07
Chris Reichhelm: And you can see they have got so much writing on it.
55:10
Chris Reichhelm: And so for them not to be right, it's gonna almost be heartbreaking because it makes 'em question, well what the hell have I been doing?
55:16
Chris Reichhelm: And, and, and, you know, and whereas I think there, there might gotten be some superpower and being detached from it.
55:25
Chris Reichhelm: That's almost, you know, that's what we started discussing in.
55:28
Chris Reichhelm: I sense that's what you keep coming back to this idea of don't be so wedded to the ideas.
55:33
Chris Reichhelm: Be wedded to the process.
55:34
Chris Reichhelm: Yeah, yeah.
55:35
Chris Reichhelm: Perhaps be committed to a process, be committed to that.
55:38
Chris Reichhelm: Be committed to the process and, and, and be committed to the data.
55:41
Chris Reichhelm: Stay true to the data.
55:43
Chris Reichhelm: So maybe the whole lesson here is about being, is that commitment to the process as opposed commitment to a particular idea.
55:53
Chris Reichhelm: Yeah, but a a, the paradox, there's always the para, there's always the ying and the yang in everything in life.
55:59
Chris Reichhelm: And so you've still gotta love the idea.
56:01
Chris Reichhelm: You've still gotta love the principle of it.
56:03
Chris Reichhelm: Mm. You, you, but, but remain wed into the process.
56:07
Chris Reichhelm: I think the reality is most death does, uh, most Silicon Valley massively over successful people have figured this out.
56:16
Chris Reichhelm: This is the way they work.
56:18
Chris Reichhelm: I and I, and, and that's probably true of most entrepreneurs throughout history.
56:23
Chris Reichhelm: So I think what you've got now is a really interesting paradigm within, within technology where, where, where single companies with this thinking at their heart and consumed whole sectors, vectors and not, and not die.
56:44
Chris Reichhelm: Had a, we had a natural progression of business over the, over the decades and over the such, capitalism's only 250 years old.
56:50
Chris Reichhelm: Right.
56:50
Chris Reichhelm: But for the last 250 years, we've had this nice cadence where pro, where businesses have come and gone.
56:55
Chris Reichhelm: I think what we are seeing now is we've seen, we're seeing businesses with this thinking at their heart, which, and then rightly or wrongly there, that ability, that that ability to constantly course correct and constantly bring to market the right product.
57:10
Chris Reichhelm: Actually means that they're going to, that's where we are having this concentration of wealth.
57:14
Chris Reichhelm: So actually we, just by this, this, this one sort of little idea becomes actually the kind of focus for geopolitics, which is, which is, which is the centralization of wealth and all of the, all of the, all of the negative as well as the positive things about what we've got from technology, which is if, if you, if you work in this way.
57:36
Chris Reichhelm: The weird thing is you can't ever be wrong because you kill things before they, they cost you too much.
57:41
Chris Reichhelm: And that's what most Silicon Valley businesses have figured out.
57:45
Chris Reichhelm: Yeah, that is, that is really interesting.
57:49
Chris Reichhelm: That is really interesting.
57:51
Chris Reichhelm: Mark, I could talk to you all day.
57:54
Chris Reichhelm: This is, this has been absolutely fascinating.
57:57
Chris Reichhelm: Um, uh, I think so much of what you have, uh, shared with us today makes so much sense.
58:05
Chris Reichhelm: I think you are, uh, I think you are touching on something that is going to resonate for, uh, so many people involved in the development of these businesses, particularly with an advanced science and engineering.
58:19
Chris Reichhelm: And, um, and, uh, and, and I thank you for taking the time to share this with us.
58:25
Chris Reichhelm: Well, no, I, I thoroughly enjoyed the conversation.
58:27
Chris Reichhelm: Yeah, we, we, we'll do it again.
58:28
Chris Reichhelm: See?
58:29
Chris Reichhelm: Yeah.
58:29
Chris Reichhelm: I look forward to that.
58:30
Chris Reichhelm: Mark.
58:31
Chris Reichhelm: Thank you so much.
58:34
Chris Reichhelm: You've been listening to the Lab to Market Leadership Podcast, brought to you by Deep Tech Leaders.
58:40
Chris Reichhelm: This podcast has been produced by bowhouse.
58:43
Chris Reichhelm: You can find out more about us on LinkedIn, Spotify, apple, or wherever you get your podcasts.