- Most startups fail within the first few years, with failure rates between 60-90% depending on the sector. However, successful entrepreneurs often do not understand why their businesses succeeded. - The traditional business model of developing a product and then raising money and selling it leads to many pitfalls like escalating commitment to failing ideas and focusing on features rather than customers. - A better approach is to continually test ideas with customers through experiments and iterate based on feedback to understand customer needs before developing the full product or service. This process-based model focuses on execution over searching for the right idea.

4. Improvisation

5. Most startups will fail
60-70% of new businesses fail within 4 years
60-70% venture funded startups will fail
In some sectors up to 90% of startups fail
Are we doing something wrong?

6. “Most successful entrepreneurs I’ve met
have no idea about the reasons for their
success. My success was a mystery to me
then, and only a little less so now.”
Bob Metcalfe, Inventor of Ethernet

7. Eric Ries: Achieving Grandiose Failure
Eric Ries: Learns His Lesson
http://ecorner.stanford.edu/authorMaterialInfo.html?mid=2290
http://ecorner.stanford.edu/authorMaterialInfo.html?mid=2291

8. Design experiments and test to validate your
hypotheses

9. Entrepreneur as Hero
Process Myth
Money Myth

10. For entrepreneurs who have risked their time,
reputation, and cash….
Passion can quickly become dogmatism
Determination can become commitment to a failing
course of action and
Vision can lead one down a dead-end road “

11. How to build a business 1.0
Reinforced in most universities by the business
plan class
Entrepreneur
has a idea
Discuss with /
raise money
from friends,
family and
fools
Find a
location,
develop the
product
Perfect the
product and
add features
for broad
appeal
Sell the
product

12. Identify
product
opportunity
Create
product
specs
Build alpha
product
Test
product,
build beta
product
Sell
product to
customers
The Product Development Model
Same thing, just on creating a product without
consulting the customer first!

13. Product Development Model Based on
Execution Not Search
Entrepreneur
has a idea
Discuss with /
raise money
from friends,
family and
fools
Find a
location,
develop the
product
Perfect the
product and
add features
for broad
appeal
Sell the
product
“Escalation of
Commitment”
Stage
“American Idol”
Stage
“Midnight
Genius” Stage
“Feature Lock-
in” Stage
Russian
Roulette
“Sales Pipeline
Problem” Stage

14. Entrepreneur
has a idea
Test pain and
then the
solution with
customers
Develop
market
strategy and
business
model with
customers
Perfect the
product with
customers
Sales
Customers

15. Entrepreneurs act on assumptions
When money arrives, it feels like a validation of those
assumptions
Should really focus on finding out customer wants
Money is too easy to spend
Increases distractions and reduces flexibility
Need to remain nimble and flexible, don’t let burn rate get
too high
Premature scaling
Increases communication friction and politics

16. Entrepreneur as Hero
Falling in love with their product and ignoring negative
feedback
Process Myth
Standard entrepreneurial process is almost an exact
copy of the product development process
Money Myth
Increased burn rate and need to stay creative, only
constraint is time!

18. To create a product/service that addresses the customer’s
pain, it helps to understand that pain
The long interview is a strategy to help you learn some
things you don’t know you don’t know while also
overcoming some common pitfalls of interviews:
Not first asking about the customer’s needs
Biasing the responses by letting your enthusiasm show through
Asking leading questions or questions that can be answered by
a simple yes or no

19. 1. A brief introduction and some biographical
questions to put the customer at ease
2. A few (2 or 3) “grand tour” (broad, open-ended)
questions to encourage the respondent to tell you
Everything that is relevant to them about the occasions in
which they might use your product/service
Everything that comes to their mind when thinking about
your product/service

20. 3. ‘Floating’ prompts to get the respondent to say
more about something they’ve just mentioned
Raising your eyebrows; repeating key words, asking
“What do you mean, “_____________?”
4. Planned prompts
Lists of what you think you know and don’t know,
preceded by the phrase “What about _______?” or
“What if ____________?”

21. Interview Guide: Introduction
(What is the correct spelling of your name?)
Where do you live?
Do you sometimes eat between meals?
Sex
Age
Others (work or student?, income, size of company,
etc.)

22. Interview Guide: Grand tour question #1
Would you please tell me what your typical [eating
habits] are like between mealtimes on a typical work
day?
Floating prompts picking up on what they said
Planned prompts zoning in on key issues of interest

23. Interview Guide: Grand tour question #2
Explain the concept of drinkable yogurt (or e.g., Global
Fast Pac) , then ask: What’s your reaction?
Floating prompts
Planned prompts

24. To get the maximum benefit, conduct 20 plus
interviews (per team) split by markets
Respondents should be strangers and from diverse
backgrounds
Face-to-face interviews are preferred over phone
interviews
During the interviews focus on listening (be agreeable and
friendly, not aggressive)
Open-ended questions!!!
The data collection must be “disciplined”: everyone on
team asks the same basic questions