Startups 2013 - The Five Innovations that have changed Startups, forever

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Presented July 12, 2013 at the Southeast Regional Technology Transfer Directors meeting in Atlanta, GA. Covers five innovations that have changed the startup world forever: the definition of a startup, the advent of the business model canvas, the application of the scientific method for startups, the customer discovery process and Steve Blank's four steps to the epiphany (discovery, validation, creation, and growth), and the lean startup methodologies of minimum viable product and actionable metrics.

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Startups 2013 - The Five Innovations that have changed Startups, forever

  1. 1. Startups 2013 how five innovations have changed the startup world, forever Keith McGreggor Director of VentureLab @
  2. 2. America’s Best Engineering Graduate Schools 2012 1. ! Massachusetts Institute of Technology 2. ! Stanford University 3. ! University of California — Berkeley 4. ! Georgia Institute of Technology 5. ! California Institute of Technology (CalTech) 6. ! University of Illinois — Urbana-Champaign 7.! Carnegie Mellon University 8.! University of Michigan — Ann Arbor 9.! University of Texas — Austin 10.! Cornell University! Eighth Year!
  3. 3. VentureLab ATDC Entrepreneurial Flow
  4. 4. VentureLab ATDC Technology Startup Entrepreneurial Flow
  5. 5. active startups 322+ external investment in 2012 $80M annual revenue of startups $1.37B startup jobs 5345 external investment since 1999 $2.45B ATDC is the world’s oldest and largest university accelerator program just celebrated its 32nd anniversary
  6. 6. April 2010 April 2010
  7. 7. inventions reviewed 250+ new projects 35+ ongoing projects 83 new companies created 30 external investment in new and existing VL companies in 2012 $185M total of angel & VC investments in VL companies $700M+ 2012
  8. 8. 1 Rice Alliance for Technology and Entrepreneurship Rice University United States 2 VentureLab Georgia Tech United States 3 UB Technology Incubator State University of New York, Buffalo United States 4 NDRC LaunchPad Trinity College Dublin Ireland 5 SETsquared Universities of Bath... United Kingdom 6 Innovation Centre University of the Sunshine Coast Australia 7 Tech 20/20 University of Tennessee United States 8 ATP Innovations University of Sydney Australia 9 STING KTH Royal Institute of Technology Sweden 10 NCTU Innovation Incubation Center National Chiao Tung University Taiwan 11 Youngstown Business Incubator Youngstown State University United States 12 I3P Politecnico di Torino Italy 13 Vermont Center for Emerging Technologies University of Vermont United States 14 Jon Brumley Texas Venture Labs University of Texas at Austin United States 15 Startup Sauna Aalto University Finland 16 InNOLEvation Accelerator Florida State University United States 17 TEC University of Alberta Canada 18 ASU Venture Catalyst Arizona State University United States 19 Oxford Entrepreneurs Incubation Centre Oxford University United Kingdom & #1 Engineering/Science Incubator #1 Early Stage Incubator
  9. 9. about startups ...
  10. 10. 1996 1998 2000 2002 2004 2006 2008 2010 2012 NASDAQ 1000 2000 3000 4000 5000
  11. 11. $1,000,000,000,000
  12. 12. we know something now that we didn’t know before ...
  13. 13. we know something now that we didn’t know before we know how to build startups
  14. 14. we know something now that we didn’t know before we know how to build startups engineer
  15. 15. five innovations
  16. 16. what is a company?
  17. 17. A organization which sells a product or service in exchange for revenue and profit
  18. 18. A bit of history...
  19. 19. Dutch West India Company 1620
  20. 20. 1856 - First Org Chart
  21. 21. 1908
  22. 22. Tools for the 20th Century “Century of the Corporation”
  23. 23. ... but what about startups?
  24. 24. Startups are a Smaller Version of a Large Company
  25. 25. Startups are a Smaller Version of a Large Company
  26. 26. Startups are something else.
  27. 27. five innovations what is a startup?
  28. 28. A startup is a temporary organization designed to search for a repeatable and scalable business model. innovation
  29. 29. Startups Search Companies Execute
  30. 30. Business Model Product/Service Startups Companies
  31. 31. Old School of Startups (before 2010) ...
  32. 32. All I Need to Do is Execute the Plan
  33. 33. All I Need to Do is Make the Forecast
  34. 34. What we know now (and have known all along)...
  35. 35. Business Plans are FICTION
  36. 36. "Everybody has a plan until they get punched in the mouth."
  37. 37. Five year forecast? MAGICAL THINKING
  38. 38. Crystal ball... 2007 2013
  39. 39. Previous 5-Year Plans
  40. 40. Business Model Business Plan>
  41. 41. five innovations what is a business model?
  42. 42. Business Model Generation segments value prop. revenue streams customersofferinfrastructure cost structure activities partners resources relationships channels financial innovation
  43. 43. the Canvas segments value prop. revenue streams customersofferinfrastructure cost structure activities partners resources relationships channels financial
  44. 44. still fiction... segments value prop. revenue streams customersofferinfrastructure cost structure activities partners resources relationships channels financial ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ?
  45. 45. ... and we want facts! segments value prop. revenue streams customersofferinfrastructure cost structure activities partners resources relationships channels financial ✔ ✔ ✔ ? ✔ ✔ ? ✔ ✔ ✔ ✔ ✔ ? ✔ ? ✔
  46. 46. How?
  47. 47. pick one... segments value prop. revenue streams customersofferinfrastructure cost structure activities partners resources relationships channels financial ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ?
  48. 48. design experiment ... segments value prop. revenue streams customersoffer relationships channels financial ? ? ? ? ? ? ? ? ? ? ? A controlled experiment generally compares the results obtained from an experimental sample against a control sample, which is practically identical to the experimental sample except for the one aspect whose effect is being tested (the independent variable).
  49. 49. run it in the world ... segments value prop. revenue streams customersoffer relationships channels financial ? ? ? ? ? ? ? ? ? ? ? A controlled experiment generally compares the results obtained from an
  50. 50. ... and iterate! segments value prop. revenue streams customersoffer relationships channels financial ✔ ? ? ? ? ? ? ? ? ? ? A controlled experiment generally compares the results obtained from an
  51. 51. five innovations the scientific method applies to business
  52. 52. ©2006 innovation
  53. 53. 62 the key idea There are NO FACTS in the building!
  54. 54. 63 the big secret Conduct 100+ Interviews
  55. 55. 64 A man who carries a cat by the tail learns something he can learn in no other way.
  56. 56. Why do Startups fail?
  57. 57. Startups don’t fail because they fail to make something...
  58. 58. Startups don’t fail because they fail to make something. Startups fail because they fail to make something someone wants to buy from them.
  59. 59. segments value prop. revenue streams customersofferinfrastructure cost structure activities partners resources relationships channels financial Business Model
  60. 60. segments value prop. revenue streams customersofferinfrastructure cost structure activities partners resources relationships channels financial Product / Market Fit
  61. 61. “If you build it, he will come...”
  62. 62. Tools for managing Engineering Risk Tools for managing Customer Risk ? Waterfall Development Porter’s Five Forces SWOT Analysis Project Management Baseline Risk Assessment Stress Testing Concentration Methodology Quantitative Risk Management ...
  63. 63. five innovations how to reduce customer risk
  64. 64. Customer Discovery innovation
  65. 65. Customer Discovery Startups Search Companies Execute
  66. 66. Customer Discovery Understand the Problem then Develop the Solution
  67. 67. This may sound familiar... Understand the Problem then Develop the Solution ... but it’s actually the inverse
  68. 68. Customers want your technology. MYTH
  69. 69. Customers don’t care about (your) technology. TRUTH Customers just want their problem solved.
  70. 70. Customer Discovery key idea Customer POV
  71. 71. Customer Discovery WHO CARES? WHY will they BUY?
  72. 72. segments value prop. revenue streams customersofferinfrastructure cost structure activities partners resources relationships channels financial Product / Market Fit
  73. 73. How do you know you have product / market fit?
  74. 74. METRICS
  75. 75. METRICS Vanity
  76. 76. METRICS Vanity
  77. 77. five innovations build to measure measure to learn learn to build
  78. 78. Lean Startup Methodology innovation
  79. 79. Agile Development
  80. 80. MVPMinimum Viable Product
  81. 81. LOW FIDELITY HIGH FIDELITY Minimum Viable Product MVP Built to LEARN Not to SELL
  82. 82. Moneyball! METRICS Actionable
  83. 83. the Pipeline $$$
  84. 84. METRICS AARRR
  85. 85. acquisition activation retention revenue referral
  86. 86. the equation that matters... segments value prop. REVENUE customersofferinfrastructure COST activities partners resources relationships channels financial <
  87. 87. ... is this one: CAC << LTV acquisition activation retention revenue referral CAC LTV
  88. 88. if CAC << LTV COST < REVENUE and then COMPANY!
  89. 89. five innovations define: “startup” business model generation the scientific method customer discovery lean startup methodology
  90. 90. Customer Discovery Business Model Generation Lean Startup Methodology Startup Engineering
  91. 91. venturelab.gatech.edu @venturelab / @keithmcgreggor keith@venturelab.gatech.edu 75 Fifth St NW, Suite 202, Atlanta GA 30308

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