First class's slides for my Lean Entrepreneurship course @ Carnegie Mellon University (94-840 Section A2)

1. Lean Entrepreneurship
Sean Ammirati
October 22, 2012
#CMULean © Sean Ammirati, 2012

2. About me...
• Research Fellow, CMU Software Industry
Center
• Director Business Development, Peak
Strategy (sold to Morgan Stanley)
• CEO & Co-Founder, mSpoke (sold to
LinkedIn)
• COO, ReadWriteWeb (sold to SAY Media)
#CMULean
• Partner, Birchmere Ventures © Sean Ammirati, 2012

3. Lean Entrepreneurship
• Technology Startup are not just small
versions of big technology companies
• Introducing innovation (especially in
technology based innovation) requires a
more agile approach
• Social & Cloud platforms are catalyzing
significant additional changes (for the better)
• Many principals are applicable to
“intrapreneurship” as well

4. Class Format
• Lecture emphasizing a specific best practice
• Interactive discussion on a topic of interest
in the national startup or technology media
• Student group led analysis of a historical
startup & patterns that can be learned
#CMULean © Sean Ammirati, 2012

5. Best Practices Covered
#CMULean © Sean Ammirati, 2012

6. Customer Discovery
• Testing problem & product concept quickly
using digital tools like CPC advertising and
landing pages
• Understanding the difference between
customer needs and product features
• Using Web Platforms, Services & Tools to
quickly build “Minimally Awesome
Products”
#CMULean © Sean Ammirati, 2012

7. Developing a Replicable
Sales & Marketing Plan
• Understanding difference between
innovators / early adopter customers those
‘across the chasm’
• Sales Process
• Tools & Techniques to automate continuous
measurement and scale
#CMULean © Sean Ammirati, 2012

8. Digital Business Models
• The business model canvas paradigm
• Financial Modeling
• Common High Growth Technology
Business Model Patterns
#CMULean © Sean Ammirati, 2012

9. Recruiting Team
Members
• Culture
• Generalist vs Specialist
• What do technologists really want?
#CMULean © Sean Ammirati, 2012

10. Agile & Continuous
Software Development
• SCRUM vs Continuous Deployment
• Leveraging Platforms
#CMULean © Sean Ammirati, 2012

11. Raising Capital for Your
Startup
• VC Fundamentals
• Emergence of Accelerators for High
Growth Tech Startups
#CMULean © Sean Ammirati, 2012

12. Logistics
#CMULean © Sean Ammirati, 2012

13. Class Preparation
• Each week, you will be required to spend
approximately an hour watching video lectures or
reading content to prepare for that week’s class
material.
• Each week, you should be prepared to discuss a
topic of interest in the national tech / startup
media.
• One week, you will be required to have (as part of a
group) conducted an analysis of a historical startup
#CMULean © Sean Ammirati, 2012

14. Class Evaluation
• Student Group Presentation (30%)
• Attendance & Participation (20%)
• Two Application Exercises
(25% each – 50% total)
#CMULean © Sean Ammirati, 2012

15. Student Group
Presentation (30%)
• Clarity of overall presentation
• Metrics & benchmarks identified
• Lessons learned identified
#CMULean © Sean Ammirati, 2012

16. Attendance &
Participation (20%)
• Contribution to the discussion by raising thoughtful
questions and analyzing relevant issues
• Builds on others’ ideas (listen!)
• Expands the class’ perspective and appropriately
challenging assumptions and perspectives
• For each weeks’ discussion on a topic of interest in
the national startup / technology media, suggests
interesting and relevant topics.
• Attends class regularly
#CMULean © Sean Ammirati, 2012

17. Application Exercises
(25% each - 50% total)
• Clarity of overall presentation
• Process and work conducted to create the
deliverable (please show the work
completed to land on the deliverable)
• Quality and thoughtfulness of the analysis
conducted
#CMULean © Sean Ammirati, 2012

18. Application Exercises
• Put into practice the best practices you are learning in the class.
• If you are working on or exploring launching a startup, you
should target the exercises on your startup. If not, you can
partner with a local startup or just do the exercises on a
fictitious startup.
• For your grade, I am more concerned with the process and work
you do. Therefore, the quality of the idea you are exploring
won’t impact it. However, I’d always encourage you to maximize
the value of your personal time by investing in ideas you actually
are interested in.
• Each exercise should be delivered as a SINGLE PDF FILE and
uploaded to blackboard.
#CMULean © Sean Ammirati, 2012

19. Exercise 1: Customer
Discovery & Development
• A set of hypothesis you set out to test
about your customer’s problems and
needs.
• The customer discovery experiments you
conducted to test these hypothesis
• Validated (or invalidated) learning’s about
your customer’s problems & needs
#CMULean © Sean Ammirati, 2012

20. Exercise 2: Technology
Development
• A specification for your Minimally
Awesome Product (or MVP) based on
Exercise 1
• A product backlog of the work required to
build your M.A.P.
#CMULean © Sean Ammirati, 2012

21. Laptop Policy
Use your laptop only
to participate &
take notes!
#CMULean © Sean Ammirati, 2012

22. Sample Quick
Presentation:
PayPal
#CMULean © Sean Ammirati, 2012

23. Confinity
Founding Team: 12/1998
#CMULean © Sean Ammirati, 2012

24. #CMULean © Sean Ammirati, 2012

25. http://www.fastcompany.com/1837839/reid-hoffman-paypals-pivoted-path-success
#CMULean © Sean Ammirati, 2012

26. X.com + Confinity
March 2000
#CMULean © Sean Ammirati, 2012

27. Early Metrics
8.8 M
$747 M
9,000,000 $800,000,000
6,750,000 $600,000,000
4,500,000 $400,000,000
824,000
2,250,000 $46 M $200,000,000
0 $0
Q1 2000 Q2 2000 Q3 2000 Q4 2000 Q1 2001 Q2 2001
Number of Accounts Total Payment Volumne
source: PayPal S1 -- http://www.secinfo.com/dRqWm.4G9Ag.htm
#CMULean © Sean Ammirati, 2012

28. Toll Bridge
Business Model
Charge a % off each
transaction (tax)
Key is how do you require
people to use your bridge?
#CMULean © Sean Ammirati, 2012

29. Barrier to Entry:
Fraud Detection
http://ecorner.stanford.edu/authorMaterialInfo.html?mid=1028
#CMULean © Sean Ammirati, 2012

30. #CMULean © Sean Ammirati, 2012

31. Lessons
• Pivot till you have a product market fit
worth scaling: Palm Pilot -> Email $
• Barriers to entry aren’t always patents:
Fraud Detection
• Never underestimate the value of a strong
team
#CMULean © Sean Ammirati, 2012

32. Thoughts as you do
yours ...
• Target: 45 - 60 Minutes
• Find & analyze data on early usage
• Pull out interesting lessons learned
• Doesn’t have to be all slides
#CMULean © Sean Ammirati, 2012

33. Creating Your
Groups
#CMULean © Sean Ammirati, 2012

34. Create Groups
1. Form your own groups
(3 - 4 people) x 7 weeks
diversity among group is great!
2. Pick your company
3. Pick your week
#CMULean © Sean Ammirati, 2012

35. Potential Companies
• Google • Amazon
• Facebook • Groupon
• OpenTable • Yelp
• LinkedIn • ... (feel free to
propose your
• eBay own)
• Yahoo
#CMULean © Sean Ammirati, 2012