Introduction to Lean Startups
Steve Guengerich
May 22, 2014
You are here
How many know or would identify
themselves as a Lean Startup
new product ideas to get 1 successful
product58
change their original plans
drastically66%
Not a better Plan A
But a path to a plan that works.
Lean Startup is a rigorous process for iterating
from a Plan A to a plan that works
Agenda
1. What is a Lean Startup?
2. What does a Lean Startup look like?
3. How can you use Lean to define and measure
pro...
New Idea “Stages of Adoption”
• Ignored
• Misunderstood
• Obvious – now and before
We are Lean because…
• we got a great deal on our furniture…
We are Lean because…
• we got a great deal on our furniture…
• we surveyed all our customers and found
that…
We are Lean because…
• we got a great deal on our furniture…
• we surveyed all our customers and found
that…
• we’ve imple...
A Lean Startup is about speed
Startups that succeed are those that manage to
iterate enough times before running out of
re...
A Lean Startup is about focus
Focus on the right actions that are important to
the startup, and ignore the rest.
Characteristics of a Lean Startup
Business Model vs. Business Plan
Business model hypothesis
1. What is the problem I’m solving?
2. Who is the customer?
3. How – business model
Business Model Canvas (lean edition)
Problem Solution Unique
Value
Proposition
Unfair
Advantage
Customer
Segments
Key
Acti...
Business Model Canvas (nonprofit & lean edition)
Problem Solution Unique
Value
Proposition
Competitive
Advantage
Customer
...
Validate Problem / Solution Fit
Do I have a problem worth solving?
Problem/solution
fit
Product/market
fit
Scale
Problem/Solution Fit - Lean Canvas
P S UVP UA CS
KA CH
C$ R$
Top 3 problems Top 3 features Single, compelling
clear messag...
Achieve Product / Market Fit
Have I built something people want?
Problem/solution
fit
Product/market
fit
Scale
Product development gets in the way of learning
Very little learning
Requirements Development QA Release
Some learning
Mos...
Involve customers throughout product dev
Requirements Continuous
Deployment
Release
Customer
Validation
Customer
Discovery
Product/Market Fit - Lean Canvas
P S UVP UA CS
KA CH
C$ R$
Top 3 problems Top 3 features Single,
compelling clear
message ...
Scale - Lean Canvas
P S UVP UA CS
KA CH
C$ R$
Top 3 problems Top 3 features Single, compelling
clear message
that states w...
After Product / Market Fit
Problem/solution
fit
Product/market
fit
Scale
Validated learning
Pivots
Growth
Optimizations
Start with what matters
P S UVP UA CS
KA CH
C$ R$
Problem #1
Problem #2
Problem #3
Feature #1
Feature #2
Feature #3
Founde...
But also tackle the riskiest part
P S UVP UA CS
KA CH
C$ R$
Problem #1
Problem #2
Problem #3
Feature #1
Feature #2
Feature...
Formulate falsifiable hypotheses
Leap of Faith: Being known as an “expert” will drive early adopters
Hypothesis: Blog post...
Build accessible dashboards
Hypothesis Metrics Week 1 Week 2
Hypothesis Metrics Week 1 Week 2
Hypothesis Metrics Week 1 We...
Make the results auditable
Run board meetings in a lessons learned format
Scale vs. product/market fit
Problem/solution
fit
Product/market
fit
Scale
Validated learning
Pivots
Growth
Optimizations
After product/market fit, some level of success
is almost always guaranteed.
True False
False True
Revenue
No Yes
No
Usage
Yes
Beware the “false positives”
Pivots are about finding a plan that works
Optimizations are about accelerating that
plan
Pivots
Experiments: Validate
Goal: Course
correction
Optimization
Experiments: Refine
Goal: Efficiency
You stand to learn the most when the probability
of the expected outcome is 50%; that is, when
you don’t know what to expe...
Scale - Lean Canvas
P S UVP UA CS
KA CH
C$ R$
Top 3 problems Top 3 features Single, compelling
clear message
that states w...
While revenue is the first form of validation,
retention is the ultimate form of validation
Every process works until you add people; key
is balancing your hiring with equal number of
Experimenters Specialists
Problem/solution
fit
Product/market
fit
Scale
Your goal: Learning
Your investor’s goal: Growth
Your goal: Growth
Your inve...
Leverage your advisors for good advice but
don’t follow it, apply it.
Advice <> judgment or validation
Advice = identifyin...
Thanks!
Steve Guengerich
@sguengerich
703-957-0797
Introduction to Lean Startups with Steve Guengrich
Introduction to Lean Startups with Steve Guengrich
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Introduction to Lean Startups with Steve Guengrich

  1. 1. Introduction to Lean Startups Steve Guengerich May 22, 2014
  2. 2. You are here
  3. 3. How many know or would identify themselves as a Lean Startup
  4. 4. new product ideas to get 1 successful product58
  5. 5. change their original plans drastically66%
  6. 6. Not a better Plan A But a path to a plan that works.
  7. 7. Lean Startup is a rigorous process for iterating from a Plan A to a plan that works
  8. 8. Agenda 1. What is a Lean Startup? 2. What does a Lean Startup look like? 3. How can you use Lean to define and measure progress?
  9. 9. New Idea “Stages of Adoption” • Ignored • Misunderstood • Obvious – now and before
  10. 10. We are Lean because… • we got a great deal on our furniture…
  11. 11. We are Lean because… • we got a great deal on our furniture… • we surveyed all our customers and found that…
  12. 12. We are Lean because… • we got a great deal on our furniture… • we surveyed all our customers and found that… • we’ve implemented continuous deployment…
  13. 13. A Lean Startup is about speed Startups that succeed are those that manage to iterate enough times before running out of resources. - Eric Ries
  14. 14. A Lean Startup is about focus Focus on the right actions that are important to the startup, and ignore the rest.
  15. 15. Characteristics of a Lean Startup
  16. 16. Business Model vs. Business Plan
  17. 17. Business model hypothesis 1. What is the problem I’m solving? 2. Who is the customer? 3. How – business model
  18. 18. Business Model Canvas (lean edition) Problem Solution Unique Value Proposition Unfair Advantage Customer Segments Key Activity Channels Cost Structure Revenue Streams Top 3 problems Top 3 features Single, compelling clear message that states why you are different and worth buying Can’t be easily copied or bought Target customers Activity that drives retention/ revenue Path to customers Customer acquisition costs Distribution costs Hosting People, etc. Revenue model Life time value Revenue Gross margin
  19. 19. Business Model Canvas (nonprofit & lean edition) Problem Solution Unique Value Proposition Competitive Advantage Customer Segments Key Activity Channels Cost Structure Revenue/Outcome Streams Top 3 problems you are trying to solve Top 3 features of your solution Single, compelling clear message that states why you are different and worth buying or investing in Can’t be easily copied or bought Target customers, clients, and stakeholders served Activity(ies) that drives revenue / success Path(s) to reaching/serving customers Customer acquisition costs Distribution costs Hosting People, etc. 1. Financial outcomes • Revenue model • Lifetime value • Revenue • Gross margin 2. Non-financial outcomes • Social impact • Mission-related objectives • Behavior changes Key Resources & Internal Alignment • Degree of board and other critical path stakeholder buy-in • Physical resources needed • People resources needed • Intellectual resources needed
  20. 20. Validate Problem / Solution Fit Do I have a problem worth solving? Problem/solution fit Product/market fit Scale
  21. 21. Problem/Solution Fit - Lean Canvas P S UVP UA CS KA CH C$ R$ Top 3 problems Top 3 features Single, compelling clear message that states why you are different and worth buying Can’t be easily copied or bought Target customers Activity that drives retention/ revenue Path to customers Customer acquisition costs Distribution costs Hosting People, etc. Revenue model Life time value Revenue Gross margin
  22. 22. Achieve Product / Market Fit Have I built something people want? Problem/solution fit Product/market fit Scale
  23. 23. Product development gets in the way of learning Very little learning Requirements Development QA Release Some learning Most learning happens here
  24. 24. Involve customers throughout product dev Requirements Continuous Deployment Release Customer Validation Customer Discovery
  25. 25. Product/Market Fit - Lean Canvas P S UVP UA CS KA CH C$ R$ Top 3 problems Top 3 features Single, compelling clear message that states why you are different and worth buying Can’t be easily copied or bought Target customers Activity that drives revenue/ retention Path to customers Customer acquisition costs Distribution costs Hosting People, etc. Revenue model Life time value Revenue Gross margin
  26. 26. Scale - Lean Canvas P S UVP UA CS KA CH C$ R$ Top 3 problems Top 3 features Single, compelling clear message that states why you are different and worth buying Can’t be easily copied / bought Target customers Activity that drives revenue/ retention Path to customers Customer acquisition costs Distribution costs Hosting People, etc. Revenue model Life time value Revenue Gross margin
  27. 27. After Product / Market Fit Problem/solution fit Product/market fit Scale Validated learning Pivots Growth Optimizations
  28. 28. Start with what matters P S UVP UA CS KA CH C$ R$ Problem #1 Problem #2 Problem #3 Feature #1 Feature #2 Feature #3 Founders Marketers
  29. 29. But also tackle the riskiest part P S UVP UA CS KA CH C$ R$ Problem #1 Problem #2 Problem #3 Feature #1 Feature #2 Feature #3 Founders Marketers Something that can’t be copied or bought Personal authority Website Subscription model: $49 / mo.
  30. 30. Formulate falsifiable hypotheses Leap of Faith: Being known as an “expert” will drive early adopters Hypothesis: Blog post will drive > 100 early sign-ups
  31. 31. Build accessible dashboards Hypothesis Metrics Week 1 Week 2 Hypothesis Metrics Week 1 Week 2 Hypothesis Metrics Week 1 Week 2 CH CS P Personal authority will drive early adopters Early adopters will primarily be pre-product/market fit companies Problem fit Blog post will drive > 100 early sign-ups Number of teaser 72 20 page sign-ups Conduct 30-50 customer interviews within Number of customer 5 9 4 weeks interviews 80% of early adopters will be founders Percentage of 4/5 6/9 interviewees that fit this description 80% of early adopters will vote problem Number of must- 3/3 7/9 as must-have have votes from customer interviews
  32. 32. Make the results auditable
  33. 33. Run board meetings in a lessons learned format
  34. 34. Scale vs. product/market fit Problem/solution fit Product/market fit Scale Validated learning Pivots Growth Optimizations
  35. 35. After product/market fit, some level of success is almost always guaranteed.
  36. 36. True False False True Revenue No Yes No Usage Yes Beware the “false positives”
  37. 37. Pivots are about finding a plan that works Optimizations are about accelerating that plan
  38. 38. Pivots Experiments: Validate Goal: Course correction Optimization Experiments: Refine Goal: Efficiency
  39. 39. You stand to learn the most when the probability of the expected outcome is 50%; that is, when you don’t know what to expect.
  40. 40. Scale - Lean Canvas P S UVP UA CS KA CH C$ R$ Top 3 problems Top 3 features Single, compelling clear message that states why you are different and worth buying Can’t be easily copied / bought Target customers Activity that drives revenue/ retention Path to customers Customer acquisition costs Distribution costs Hosting People, etc. Revenue model Life time value Revenue Gross margin
  41. 41. While revenue is the first form of validation, retention is the ultimate form of validation
  42. 42. Every process works until you add people; key is balancing your hiring with equal number of Experimenters Specialists
  43. 43. Problem/solution fit Product/market fit Scale Your goal: Learning Your investor’s goal: Growth Your goal: Growth Your investor’s goal: Growth Ideal time to raise funding
  44. 44. Leverage your advisors for good advice but don’t follow it, apply it. Advice <> judgment or validation Advice = identifying and prioritizing risk
  45. 45. Thanks! Steve Guengerich @sguengerich 703-957-0797
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