The Lean Startup Basics and Intro for Beginners

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The presentation focuses on providing an overview, fundamentals and history of the concept of the lean startup companies.

The presentation very clearly shows why business plans are not that much important anymore, what is waste in business and how to reduce it and why every start-up must be a learning organization.

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The Lean Startup Basics and Intro for Beginners

  1. 1. MASTER OF STARTUPS SERIES LEAN STARTUP INTRO FOR BEGINNERS www.geekhouse.si/en
  2. 2. BLAZ KOS • 10+ years working with start-ups • Management of university incubator, technology park and business angel network • Management of two start-up accelerators and co-working space • PODIM Conference – one of the biggest conferences in Alps-Adriatic region • 600+ lectures in CEE • Mentored over 300 start-ups • Two handbooks about startups, 1500+ pages on two blogs I am on a life mission to make the world a more innovative, organized and transparent place to be by helping individuals, organizations and communities achieve their peak potential and an entirely new level of performance.
  3. 3. www.AgileLeanLife.com An entirely new level of personal performance.
  4. 4. I HAVE AN IDEA.
  5. 5. START:UP
  6. 6. PROTOTYPE
  7. 7. INVESTORS
  8. 8. BUILD THE PRODUCT
  9. 9. MARKETING MATERIALS
  10. 10. LAUNCH DAY
  11. 11. INVITATION TO CONFERENCES
  12. 12. MEDIA
  13. 13. I HAVE A STARTUP.
  14. 14. NO CUSTOMERS
  15. 15. MORE FEATURES
  16. 16. NO CUSTOMERS
  17. 17. YOU DIDN‘T READ
  18. 18. The vast majority of start-ups fail not because they couldn't build a product, but because no one wanted the product. Steve Blank
  19. 19. No business plan survives the first customer contact. – Alexander Osterwalder
  20. 20. SUCCESSFULLY EXECUTING A BAD PLAN You build a product… • on time • on budget • with high quality • and beautiful design But nobody wants it ACHIVING STARTUP FAILURE
  21. 21. THE BIGGEST WASTE OF TIME, MONEY, ENERGY, SKILLS, PASSION, LIFE… IS BUILDING SOMETHING NOBODY WANTS.
  22. 22. THE CHANGE
  23. 23. Land Means of production Information
  24. 24. Welcome to creative capitalism / added value economy Source: Richard Florida, Creative Class
  25. 25. Creative capitalism trends • Individualization and egomania • We want everything and we want it “now” • Shopping and travelling, fun and beauty • Big mobility of nations • Business environment is totally unstable • Global and really tough competition • The world is flat • Total market saturation (in the most countries) • People are more lonely and unhappy being more connected • High level of interactivity • Big demographic changes
  26. 26. Be different… and better
  27. 27. We have to give up the notions that we can: 1) Accurately describe the past 2) Predict the future 3) Manufacture it There is no such thing as a visionary! It‘s only deep understanding of customer!
  28. 28. Innovation comes so quickly these days that one transformation has not reached the mainstream in its lifecycle adoption curve before the next is upon us. •Short life cycle of products •Constant innovation
  29. 29. To prosper through these changes, whether as an individual or a business, you must be • fast, • efficient, • and value-creating.
  30. 30. You must be lean, agile and sexy. You must think quick & act fast.
  31. 31. Lean Entrepreneurs • Scalable start-up founders (the next big thing) • Lifestyle business founders • Intrapreneurs • Educators and Consultants • Government Change Agents • Investors … • Small-business founders • Solo practioners
  32. 32. It‘s easy to talk about „lean“. It‘s hard to be LEAN.
  33. 33. Doing a Startup is a Lesson in Pain & Sacrifice.
  34. 34. Don‘t do a start-up • It‘s not cool • You probably won‘t make any money • You like your quality of life and regular pay check • You love your girlfriend more than your start-up • Your idea probably sucks • You will have to fire people • Someone will sue you • You don‘t know marketing and selling • Are you a loser or a leader? Source: Dave McClure
  35. 35. INTERESTED IS NOT FCUKIN‘ COMMITTED
  36. 36. START:UP LIFESTYLE • DEFAULT OUTCOME: FAILURE • 100% FOCUS • MAIN FOOD IS PIZZA • EMOTIONAL ROLLER COSTER • IT‘S NOT A JOB LEARNING SPEED: 500 KM/H
  37. 37. • Ultra geeks/hustlers, best in their generation • No personal money problems, no worries • (International) experience and leverage • Established team before start-up story • Beginning of the new trend
  38. 38. START-UP A human institution designed to create something new under conditions of extreme uncertainty. Eric Ries
  39. 39. The Lean Startup provides a scientific approach to creating and managing startups and get a desired product to customers’ hands faster. ENTREPRENEURSHIP = MANAGEMENT - Eric Ries
  40. 40. LEAN IS NOT EASY MAGIC COSTLESS WITHOUT FAILURE (OPPOSITE) PAINLES NO QUICK RESULTS
  41. 41. LEAN MYTHS Lean means cheap It‘s about speed It‘s only for IT companies All companies that face uncertainty Small bootstrapped start-ups Ambitious companies that are able to deploy large amount of capital Replace vision with data Driven by a compelling vision, testing everything
  42. 42. • Optimize efficiency in all value-added activities • Eliminate or minimize all non-value-added activities • Fake feeling of progress • LOWER THE RISK • INCREASE SUCCESS RATE
  43. 43. MURA = STANDARD TACT TIME MURI = NO BOTTLE NECS MUDA = TOTALLY USELES (7)
  44. 44. GENERAL PRINCIPLES • Add nothing but value (eliminate waste) • Build quality in • Defer commitment • Deliver fast • Respect people • Optimize the whole, not the parts • Cause and effect • Create knowledge (focus on learning) • Early, rapid feedback ELIMINATE WASTE (FAT) • Reduce time from order to cash
  45. 45. 7 TYPES OF WASTE • In-process inventory • Anything other than the finished product = Partially work done • Over production • Anything produced but not sold / used = Extra features • Extra processing • Rework, reprocessing = Re-learning • Transportation • Unnecessary movement of materials / product = Handoffs • Motion • Every extra step = Task switching • Waiting • Downtime because an upstream activity is late = Delays • Defects • Product not conforming to specifications
  46. 46. TYPICAL CAUSES OF WASTE • Layout (distance) • Long set-up time • Poor work methods • Lack of training • Functional organizations • Technology Gaps • Little understanding of the entire process • Historic supervisory roles • Irrelevant performance measures • Lack of workplace organization • Supplier quality/reliability • Poor communication • Avoidable interruptions • Complexity
  47. 47. Waste in a lean start-up (value economy) are those activities that do not produce learning about the market and customers. INSIGHT! • What is core value? • What solution provides the value? • To whom the value is provided? • How to market, sell and deliver the value? • How to capture the value?
  48. 48. Learning organization • Data before rhetoric • Use data to resolve conflicts • Use data to measure progress • Use data to make inform decisions • Testing before execution -> Experiment to reduce risk • Reduce market and technical risks • Test new ideas • Optimize results • Customers before business plan -> Understand them deeply • Continuously learn • Make data-based decisions • Continuously improve Source: Lean Entrepreneur
  49. 49. The Irony • The Way to go big is to focus small • One of the biggest entrepreneur traps is to be all things to all people MONEY LIVES ON THE FOCUS ISLAND!
  50. 50. • Demand (for your product) • Ability (for your team to make it) • Desire (you have to care!) • You‘re good at • That you want to do • Can make money doing DO SOMETHING FIND INTERSECTION Just do it
  51. 51. DON‘T START A BUSINESS YOU‘RE GOING TO HATE!
  52. 52. BE SURE YOU CAN MAKE MONEY DOING IT!
  53. 53. ELEMENTS OF SUSTAINABLE COMPANIES CLARITY OF PURPOSE: Summarize the company’s business on the back of a business card. LARGE MARKETS: Address existing markets poised for rapid growth or change. A market on the path to a $1B potential allows for error and time for real margins to develop. RICH CUSTOMERS: Target customers who will move fast and pay a premium for a unique offering. FOCUS: Customers will only buy a simple product with a singular value proposition. PAIN KILLERS: Pick the one thing that is of burning importance to the customer then delight them with a compelling solution. THINK DIFFERENTLY: Constantly challenge conventional wisdom. Take the contrarian route. Create novel solutions. Outwit the competition. TEAM DNA: A company’s DNA is set in the first 90 days. All team members are the smartest or most clever in their domain. “A” level founders attract an “A” level team. AGILITY: Stealth and speed will usually help beat-out large companies. FRUGALITY: Focus spending on what’s critical. Spend only on the priorities and maximize profitability. INFERNO: Start with only a little money. It forces discipline and focus. A huge market with customers yearning for a product developed by great engineers requires very little firepower. Source: Sequioa Capital
  54. 54. Source: The Startup Manual
  55. 55. THE LEAN START-UP TOOLKIT • Different start-up types • Different market types and market size • Vision and hypotheses • Build – Measure - Learn • Customer discovery (get out of the building) • Minimum Viable product • Pivot • Innovation accounting • Engines of growth • Business model Canvas / Lean Canvas etc.
  56. 56. (sources and references) Learn More Steve Blank @sgblank http://steveblank.com/ Eric Ries @EricRies http://startuplessonslearned.com/ Ash Maurya @ashmaurya http://ashmaurya.com/ Dave McClure @davemcclure http://davemcclure.com/ Alex Osterwalder @AlexOsterwalder http://alexosterwalder.com Brad Feld @bfeld http://feld.com/

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