Entrepreneur’s Hazard 11/12/2012 Valley of Death=DEBT!• “Six years of miserable life…” 1• According to the U.S. Census, 48.8 percent of the new businesses were alive at age five.
The Lean Startup:College EditionDr. Amy SauersCollege of BusinessSt. Petersburg College
WIIFM?• Fail forward, not epically• The key to success is failure 11/9/2012• How to fail towards success in a 4-step lean progression 3
WIIFM? • How to fail towards success in a 4-step progression Dream big, start small 11/9/2012 Sell “Minimum Fail more, fail Viable more quickly, Product" and move on (MVP) (pivot) • Feature added is an experiment Learn from and build with customers 4 • Test, adjust, and iterate
Overview Crisis & Paradigm Shift Old Business School VS. New Lean Modeling Theoretical Underpinnings of New Lean 11/9/2012 Paradigm Lean Startup Hypotheses Applied to Course Pretest Results How To: Teaching the Lean Startup in 8 Weeks Post-Test Results Next Steps: Paired-Samples T-Test; Startup 5 Weekend Next
Crisis & Paradigm Shift• Crisis: • 50% batting average 11/9/2012 • New product failure = 75%• Old: Standard business school is inadequate • How to manage people • How to get things done more efficiently • How to cut costs and reduce waste • How to buy advertising for your market • How to budget 6
Crisis &Paradigm Shift• New: Startup = operate 11/9/2012 under conditions of extreme uncertainty• What market? “I never want to make something someone doesn’t want to buy!” – Thomas Edison 8• Pivot before run out of $
Old VS. New• Perfectionism • RERO• Expensive • No to little waste 11/9/2012• “We know what customer’s • Ask customers want” • Believe the sales you actually• Believing our projections make• Strat Plan: Make linear progress • Iterate• Execute the plan • Experiment to find a business• Closed system model that’s valid • Open systemNaïve Business School Lean Business Modeling 10
Theoretical Underpinnings ofNew Lean Paradigm• Crossing the Chasm (1991), Geoffrey Moore • How to cross the valley of death? Win your niche target 11/9/2012 market• The Art of the Start (2004), Guy Kawasaki • Make meaning • Raising money warps you; bootstrap• Business Model Generation (2010), Alexander Osterwalder • Business Model: Render your view of your business on a 11 page
Theoretical Underpinnings of New Lean Paradigm• The Lean Startup (2011), Eric Ries • Pivot 11/9/2012 • Sell Minimum Viable Product (MVP)• Running Lean (2012), Ash Maurya• The Startup Owner’s Manual (2012), Steve Blank • Get outside the building and talk to customers! 12 • Product-market fit
Lean Startup HypothesesApplied to Course• Entrepreneurs will have more success, less wastefully and sooner (than traditional business) if… 11/9/2012• Entrepreneurs do not waste time over-planning in the beginning ->Entrepreneurs start their own business on day 1• Entrepreneurs first ask customers before creating solution -> Get out of the building -> Talk to 3+ customers about their pain point• Entrepreneurs do not assume they know the answer -> Test logical solution to the pain with customers 13
Lean Startup HypothesesApplied to Course• Entrepreneurs will have more success, less wastefully and sooner (than traditional business) if… 11/9/2012• The entrepreneur makes their business model visible and testable -> Map about all business assumptions and test each• Entrepreneurs are not perfectionists: Release early to customer -> Minimum viable product is sold/given to customers to learn from them• Minimum of time and money is spent (while still learning) -> Without making sales, entrepreneurs cannot know what the sales forecast will be 14
Pretest ResultsBefore my Lean Startup Entrepreneurship course:½ of my students got Lean Startup assessment items incorrect: 11/9/2012• Entrepreneurs must risk their entire savings and their livelihoods to be real entrepreneurs.• There is no particular curriculum to teach entrepreneurship.• If you dont have or can get $1 million, you cant really start a company today.• Entrepreneurship requires both dreaming big to motivate oneself and others and then starting small on one executable milestone. 15
How To: Teaching the LeanStartup in 8 Weeks• Startup Spiral• Week 1: Customer Pain Point focus 11/9/2012 • "Get out of the building" and ask target customers their pain points. • Do a first pass filling in of your spiral as a draft. • Pitch it to your class partner, using the Fundability Rubric. • Written Reflection: List assumptions and pivots. 16 • Submit entire (revised) PowerPoint.
How To: Teaching the LeanStartup in 8 Weeks• Week 2: Solution focus 11/9/2012• Quickly mock up 2 different flyers to test possible solutions • Each flyer should start with a different hunch as to the customer pain point• Fill in your Strategic Solution quadrants 17
How To: Teaching the LeanStartup in 8 Weeks• Week 3: Target Market focus 11/9/2012• Research your Niche Target Market.• Send out and collect data from customer surveys.• Include a customer profile story. 18
How To: Teaching the LeanStartup in 8 Weeks• Week 4: Demo & Sell today • Pitch, then plan. 11/9/2012 • Demo the offering (MVP). • Test market through selling.Prospect Contacted Need USP Outcome ofname how selling? 19
How To: Teaching the LeanStartup in 8 Weeks• Week 5: Marketing & Sales 11/9/2012 • Create 3-4 SMART Marketing Goals based on strategy statement.• Create your Top 10 Target Sales Contacts Table - who you will personally ask to join/invite to solve their customer problem.Contact Contact Need USP Start date Outcomename Info – End date of selling?1.2. 203.
How To: Teaching the LeanStartup in 8 Weeks• Week 6: Value Chain Processes 11/9/2012 • Draw your value chain process/distribution flow chart. How Supply of Delivered to transformed product customer into value • Identify your top 5 critical processes • Create a checklist for each of the 5 critical processes • (Often these processes are order taking, security of customer order and information, fulfillment/delivery, customer servicing, after-sales care) 21
How To: Teaching the LeanStartup in 8 Weeks• Week 7: Team & Delegation Customer 11/9/2012 • Create your bottom-up org chart where the customer is at the top. "Management" supports/is under the doers. Customer • Delegate the top 5 processes to the doers. Create a Service Roles and Responsibilities Job Description for each Team Member. • Who is in your support network? Management Support 22
How To: Teaching the LeanStartup in 8 Weeks• Week 8: Revenue Model, Financials and Health Metrics • State your revenue model. 11/9/2012 • Create your 3 financial spreadsheets from a bootstrapping paradigm. • What will your startup capital be (money you have personally saved that you would not mind risking and losing it all). • Key Health SMART Goals with Metrics. • 3 Community Benefit Events held in year 1; 23 • My plan for Giving Back includes ___."
Post-Test Results• 9/10 students got a 100% in a post-course test of Lean Startup concepts. 11/9/2012• Post-Lean Startup Course: student startups are much more feasible.• Student Take-Away Quotes: “Make your startup a story and show your customers that you are ‘one of them’ and want to provide them with a solution to the same pain point that you yourself had. I will use this information to help make my business plan stronger and build a better customer base.” 24
Post-Test Results• Student Take-Away Quote: 11/9/2012 “I think the one big thing that sticks with me …is the idea that anybody can start his or her own business. It doesn’t take someone with tons of green to make a business. The smallest ideas can be started slowly (bootstrapping) and turn into a big ideas that can lead you to a fortune 500 company.” 25
Post-Test Results• Student Take-Away Quote: 11/9/2012 “I think the art of writing a business plan lies in attention to detail but also attainable goals. It is easy to create a great sounding plan on paper, but harder to turn it into a reality. Staying grounded is key.. that is an ideal I will take away from this course.” “This course has helped me with brainstorming and problem resolution, also how to respond to feedback. I liked that we had to adjust our ideas each week based on feedback from partners and the instructor.” 26 Achieving Goal Learning!
Next Steps: Paired-Samples T- Test (for pre- and post- course)Validating questions… 11/9/2012• Which of the following choices best describes the lean, agile startup methodology to this entrepreneurial problem:• "Pablo wants to start a pita sandwich lunch shop. His first step should be… A) Save up $500,000.00 dollars for startup capital. B) Ask target customers about their pain point with this offering. C) Get a co-founder to handle the financial side. D) Write a 50-page business plan. E) Try to get an SBA loan. 27
Review & Call to Action• Crisis & Paradigm Shift• Old/Naïve Business School VS. New/Lean Business Modeling• Theoretical Underpinnings of New Lean Paradigm 11/9/2012• Lean Startup Hypotheses Applied to Course• Pretest Results• How To: Teaching the Lean Startup in 8 Weeks (Spiral)• Post-Test Results• Next Steps: Paired-Samples T-Test; Startup Weekend Next! 28 So take one step today to START LEAN. And teach your students!