The Lean Startup


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This is the talk delivered by Dr G. Tendayi Viki to the Chartered Institute for IT, Kent Branch.

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  • Mark Zuckerberg,
  • The Lean Startup

    1. 1. THE LEAN START-UP G. Tendayi Viki School of Psychology University of Kent twitter: @gtviki
    2. 2. The Lean Thinkers <ul><li>Steve Blank </li></ul><ul><li>( ) </li></ul><ul><li>Brant Copper & Patrick Vlaskovits </li></ul><ul><li>( ) </li></ul>
    3. 3. The Lean Thinkers <ul><li>Alexander Osterwalder </li></ul><ul><li>( / ) </li></ul><ul><li>Ash Maurya </li></ul><ul><li> </li></ul>
    4. 4. The Lean Thinkers <ul><li>Eric Ries </li></ul><ul><li>( ) </li></ul>
    5. 5. Entrepreneurship is a Great Calling
    6. 7. <ul><li>Your Business Idea SUCKS </li></ul><ul><li>Your Start-Up Will Fail </li></ul><ul><li>p<.05 </li></ul>
    7. 8. At launch...
    8. 9. Everybody Wants To Be…
    9. 10. What is the Difference?
    10. 11. The Difference Is…. <ul><li>Most start-ups fail because they don’t have a sustainable business model… </li></ul><ul><ul><li>Building something nobody wants! </li></ul></ul><ul><ul><ul><li>There is no amount of leadership, team work and marketing that can save a start-up selling stuff that nobody wants! </li></ul></ul></ul><ul><ul><ul><li>Engineers can sometimes can too focused on how cool their ideas/inventions are: </li></ul></ul></ul><ul><ul><ul><ul><li>In a technological, rather than commercial sense </li></ul></ul></ul></ul>
    11. 12. The Difference Is… <ul><ul><li>Sometimes it is because of bad technology (only 10%). </li></ul></ul><ul><ul><ul><li>But often there is no sustainable business model (90%). </li></ul></ul></ul>
    12. 13. Most Websites on the Internet….
    13. 14. Established Business vs. Start-Up <ul><ul><li>Known Problem </li></ul></ul><ul><ul><li>Known Solution </li></ul></ul><ul><ul><li>Known Customer. </li></ul></ul><ul><ul><li>Unknown Problem </li></ul></ul><ul><ul><li>Unknown Solution </li></ul></ul><ul><ul><li>Unknown Customer </li></ul></ul><ul><li>Established Business </li></ul><ul><li>Start-Up </li></ul>
    14. 15. A Start-up Is An Experiment <ul><li>This means a start-up is an experiment: </li></ul><ul><ul><li>The founders’ vision is the hypothesis. </li></ul></ul><ul><ul><li>Validating this hypothesis is the task for a start-up. </li></ul></ul><ul><ul><li>The goal is to find a sustainable business model. </li></ul></ul><ul><ul><li>Only when the business model is validated, should money be invested in scaling the start-up. </li></ul></ul>
    15. 16. A Start-up Is An Experiment <ul><li>In other words…. </li></ul>
    16. 17. A Start-up Is An Experiment <ul><li>The business plan, in its conventional form is not a good idea for start-ups. </li></ul><ul><ul><li>Remember, a Start-Up is: </li></ul></ul><ul><ul><ul><li>Unknown problem, Unknown Solution, Unknown Customer. </li></ul></ul></ul><ul><ul><li>So lets just call it what it is… </li></ul></ul><ul><ul><li>A Business Guess! </li></ul></ul>
    17. 18. A Start-up Is An Experiment <ul><li>Interestingly, most start-ups follow the canonical product development model: </li></ul><ul><li>Build in stealth until the launch party! </li></ul><ul><li>Executing the business plan… </li></ul><ul><ul><li>Achieving failure! </li></ul></ul>
    18. 19. Is there a better way? <ul><ul><li>Start-ups need different management principles from established businesses. </li></ul></ul><ul><ul><ul><li>What if we made it explicit that your business idea is a guess? </li></ul></ul></ul><ul><ul><ul><li>Then developed a rigorous method for testing this. </li></ul></ul></ul><ul><li>This is what the Lean Startup is about: </li></ul><ul><ul><li>It is a method for iterating from Plan A , to a plan that works . </li></ul></ul>
    19. 20. After Customer Development
    20. 21. Customer Development <ul><li>Document your Plan A </li></ul><ul><ul><li>This is NOT a Business Plan. </li></ul></ul><ul><ul><li>It is a way to capture your businesses hypotheses. </li></ul></ul><ul><ul><ul><li>Who are the customers, what problems do they have, what solution are you proposing? </li></ul></ul></ul><ul><ul><ul><li>What is the path to your customers, marketing channels, what is your revenue model and cost structure? </li></ul></ul></ul><ul><ul><ul><li>What key metrics are you going to use to measure success? </li></ul></ul></ul><ul><ul><li>All these are hypotheses that will need to be tested and validated. </li></ul></ul>
    21. 26. Customer Development <ul><li>You then systematically test this plan. </li></ul><ul><li>You have to leave the building. </li></ul><ul><ul><li>The founders have to do this! </li></ul></ul><ul><ul><ul><li>Some of us love coding too much! </li></ul></ul></ul><ul><ul><ul><ul><li>Please just let me add one more feature! </li></ul></ul></ul></ul>
    22. 28. Customer Development <ul><ul><li>1) Problem/Solution Fit </li></ul></ul><ul><ul><li>Do you have a problem worth solving? </li></ul></ul><ul><ul><ul><li>Before you build a product, first find out if there is sufficient pain in your customer base to make your business viable. </li></ul></ul></ul><ul><ul><ul><li>This is where you find out if people are going to want what you are proposing to build. </li></ul></ul></ul><ul><ul><ul><li>It is also a chance to discover a minimal feature set. </li></ul></ul></ul><ul><li>Nail the Pain! </li></ul>
    23. 29. Crossing the Chasm (Moore, 1995)
    24. 31. Customer Development <ul><ul><li>2a) Product/Market Fit </li></ul></ul><ul><ul><li>Have you built something people want? </li></ul></ul><ul><ul><ul><li>Once you have a problem worth solving, you can start building the product. </li></ul></ul></ul><ul><ul><ul><li>You have to take this product, as you are building it , to customers for their feedback. </li></ul></ul></ul><ul><ul><ul><li>It is recommended that you build an MVP. </li></ul></ul></ul><ul><ul><ul><ul><li>Not the bells and whistles version. </li></ul></ul></ul></ul><ul><ul><ul><li>Nail the solution!! </li></ul></ul></ul>
    25. 32. Customer Development <ul><ul><li>2b) Product/Market Fit </li></ul></ul><ul><ul><ul><li>This is the time to also test whether your path to customers is scalable. </li></ul></ul></ul><ul><ul><ul><li>This is also the point to test pricing, and actually ask customer to pay for the product. </li></ul></ul></ul><ul><ul><ul><li>Nail the go-to-market strategy </li></ul></ul></ul><ul><ul><ul><li>Nail the business model! </li></ul></ul></ul>
    26. 33. Problems <ul><li>Remember that at any point in customer development you might run into problems. </li></ul><ul><ul><li>People don’t have the problem you were hypothesising. </li></ul></ul><ul><ul><li>People don’t like the solution you built. </li></ul></ul><ul><ul><li>People don’t want to pay for the solution you developed. </li></ul></ul><ul><ul><li>People use the product once and don’t come back. </li></ul></ul>
    27. 34. The Pivot <ul><li>If you run into any of these problems you don’t quit! </li></ul><ul><li>Also don’t just persevere “the plane into the ground”. </li></ul><ul><li>You can do a PIVOT. </li></ul><ul><ul><li>Keep one foot in what you have learnt and then change one other thing and test again! </li></ul></ul><ul><ul><li>This is why the companies that can run these tests quickly and get to a plan that works quickly, are more likely to succeed. </li></ul></ul>
    28. 36. Challenging Myths <ul><li>Hero myth: </li></ul><ul><ul><li>Believing in your product can lead to failure.   </li></ul></ul><ul><ul><ul><li>All too often, founders fall in love with their products or technology, ignore negative feedback from customers, and spend years building a product based on a vision that no one else shares. </li></ul></ul></ul><ul><ul><ul><li>Directly Quoted From: </li></ul></ul></ul><ul><ul><ul><li>Martin Zwilling, </li></ul></ul></ul><ul><ul><ul><li> </li></ul></ul></ul>
    29. 37. Challenging Myths <ul><li>Process myth: </li></ul><ul><ul><li>Why building a product leads to failure.   </li></ul></ul><ul><ul><ul><li>Conventional wisdom is that after a great idea, the next steps are raise some money, build a product, then go sell the product. </li></ul></ul></ul><ul><ul><ul><li>This doesn’t work when attacking unknown problems with untested solutions. </li></ul></ul></ul><ul><ul><ul><li>Directly Quoted From: </li></ul></ul></ul><ul><ul><ul><li>Martin Zwilling, </li></ul></ul></ul><ul><ul><ul><li> </li></ul></ul></ul>
    30. 38. Challenging Myths <ul><li>Money myth: </li></ul><ul><ul><li>Why having too much money leads to failure.   </li></ul></ul><ul><ul><ul><li>The old saying that “it takes money to make money” isn’t so simple. </li></ul></ul></ul><ul><ul><ul><li>Money allows entrepreneurs to execute a flawed business plan far too long, rather than stay focused on the market and adapt. </li></ul></ul></ul><ul><ul><ul><li>Directly Quoted From: </li></ul></ul></ul><ul><ul><ul><li>Martin Zwilling, </li></ul></ul></ul><ul><ul><ul><li> </li></ul></ul></ul>
    31. 39. What About Vision? <ul><li>So are we saying vision is unnecessary? </li></ul><ul><li>Vision is actually critical… </li></ul><ul><ul><li>Customers often don’t know what they what. </li></ul></ul><ul><li>Entrepreneurship should be based on vision. </li></ul><ul><ul><li>Don’t just ship and see what happens… </li></ul></ul><ul><ul><li>You must make explicit your initial assumptions. </li></ul></ul><ul><li>But these have to be validated, before vast resources are poured into scaling. </li></ul>
    32. 40. What About Vision? <ul><li>Methods of validation should be business relevant. </li></ul><ul><ul><li>Get customers to use the product and see what they struggle with. </li></ul></ul><ul><ul><ul><li>It doesn’t have to be perfect before you show it to customers. </li></ul></ul></ul><ul><li>Avoid vanity metrics… </li></ul><ul><ul><li>The number one test is get customers to start paying you for the solution. </li></ul></ul><ul><ul><ul><li>This is when you find out if you really have a business! </li></ul></ul></ul>
    33. 41. Designing Good Research <ul><li>Implementing lean methodology is not simple/easy: </li></ul><ul><ul><li>Design good research questions. </li></ul></ul><ul><ul><li>Analysing and interpreting data. </li></ul></ul><ul><ul><li>Choosing your pivots. </li></ul></ul><ul><li>This is where I think social scientists can add value: </li></ul><ul><ul><li>The School of Psychology has expertise on this. </li></ul></ul><ul><ul><ul><li>Research Methods </li></ul></ul></ul><ul><ul><ul><li>Statistical Analyses </li></ul></ul></ul>
    34. 46. THANK YOU! twitter: @gtviki
    35. 47. The Places to Get More… <ul><li>Steve Blank </li></ul><ul><li>( / ) </li></ul><ul><li>Eric Ries </li></ul><ul><li>( http:// ) </li></ul><ul><li>Ash Maurya </li></ul><ul><li> </li></ul><ul><li>Brant Copper </li></ul><ul><li>(http :// / ) </li></ul><ul><li>Alexander Osterwalder </li></ul><ul><li>( / ) </li></ul>