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[PreMoney SF 2016] Mike Maples Jr > Beyond Lean Startups

Mike Maples Jr., Founding Partner, Floodgate > Beyond Lean Startups

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[PreMoney SF 2016] Mike Maples Jr > Beyond Lean Startups

  1. 1. Beyond Lean Startups Mike Maples, Jr @m2jr; www.floodgate.com; 6-21-16
  2. 2. Ten Years Ago… The Lean Startup Revolution.
  3. 3. 2 Books Captured the Zeitgeist
  4. 4. The Result: An Explosion of Entrepreneurship •  Influenced tens of thousands of founders •  “Minimum viable product,” “Customer development,” and “Product/Market Fit” became mainstream vernacular •  The number of startups exploded •  The ability of founders to iterate intelligently accelerated •  Capital innovation followed the founders (Micro-funds like Floodgate and FirstRound, Accelerators like YC and 500 Startups) •  Entrepreneurship became more Democratized
  5. 5. Fast-Forward to 2016 •  The downside of low barriers to entry is…low barriers to entry •  Too many startups •  Customers, potential employees, investors, and others struggle to make sense of the noise •  Racing to product/market fit still matters, but it is no longer enough.
  6. 6. Startups need to Play Bigger Company Design and Category Design…Not just Product Design.
  7. 7. The Value Stack Value creation Proprietary Power Product Power Company Power Category Power …avoids the need to compete …achieves product- market fit …prepares for rapid scaling …captures the value from changing spend
  8. 8. Proprietary Power Avoiding the need to compete Proprietary Power Product Power Company Power Category Power
  9. 9. Sources of Proprietary Power
  10. 10. Technology Advantage (usually harnessing Moore’s Law)
  11. 11. Network Effects (usually harnessing Metcalfe’s Law)
  12. 12. Fundamental Advantages are Fundamental •  Perfect competition is not perfect •  Mindless competition is pervasive in Tech Startups •  Can it be a monopoly if it works? •  Is there a structural competitive advantage, not just a first-mover advantage?
  13. 13. Product Power Achieving Product-Market Fit Proprietary Power Product Power Company Power Category Power
  14. 14. Delighting the customer requires a “WTF” Experience Lyft and Uber Tesla Autopilot
  15. 15. Extra Credit Can you make your WTF features flow from your key competitive advantages?
  16. 16. Company Power Preparing for rapid scaling Proprietary Power Product Power Company Power Category Power
  17. 17. Sources of Company Power •  Scalable Business Model –  Converts innovation to value •  Scalable Management Systems –  Avoids technical and management debt
  18. 18. Scalable Business Model •  Always possible when Proprietary Power and Product Power are present •  Increasing margins and pricing power are “proof” that the first two layers are strong
  19. 19. Culture Define it or just let it happen?
  20. 20. Basic Management Systems •  1:1s •  Team Meetings •  Board Meetings •  Forecasting Frameworks
  21. 21. Compensation Strategy •  Role of salary. •  Role of options. •  Role of bonuses. •  Particularly important in a competitive recruiting environment.
  22. 22. Hot Teams
  23. 23. Category Power Capturing the value from changing spend Proprietary Power Product Power Company Power Category Power
  24. 24. Category Kings… •  Don’t just make something to sell to people •  Introduce the world to a new category of product or service. •  Replace our current point of view with a new point of view. •  And ultimately, they change how people and businesses decide to spend their money.
  25. 25. Examples
  26. 26. Category Kings usually capture 70-80% of the profit pool.
  27. 27. A New Manifesto for Founders?
  28. 28. Funding your value stack
  29. 29. The Goal of Seed Rounds Value creation Proprietary Power Product Power Company Power Category Power …marry the first two layers …lay early groundwork
  30. 30. The Goal of “Execution” Rounds Value creation Proprietary Power Product Power Company Power Category Power …create the flywheel for blitz-scaling ...category design …invest to tighten fundamental advantages
  31. 31. The Goal of “Late Stage” Rounds Value creation Proprietary Power Product Power Company Power Category Power …relentless refinement ...capture the profit pool from emerging category
  32. 32. All of us need to up our game
  33. 33. THANKS!
  34. 34. Suggested Reading Proprietary Power Product Power Company Power Category Power Play Bigger, by Al Ramadan, Dave Peterson, Christopher Lochhead, Kevin Maney High Output Management, by Andy Grove Scaling Up Excellence, by David Sutton and Huggy Rao Business Model Generation, by Alexander Osterwalder The Wealth of Networks, by Yochai Benkler Zero to One, by Peter Thiel The Only Thing That Matters, Pmarca blog The First Mile, by Scott Anthony CS183 Blitz-scaling Notes, by Reid Hoffman, et al

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Mike Maples Jr., Founding Partner, Floodgate > Beyond Lean Startups

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