LEAN
STARTUP
HristoNeychev
HristoNeychev
@HristoNeychev

I’M HRISTO NEYCHEV I bring
new ideas to life INTERESTS cloud, mobile, web EXPERIENCE 13 years, 4 industries, 3 startups

neychev
dance
studio

what is the most resilient
parasite? bacteria? virus?

IDEA

GROWS LIKE A VIRUS 1+1
= 1+1 1+1 = 2+2

“…and even the smallest seed
of an idea can grow. It can grow to define or destroy you!”

SUCCESSFUL
BUSINESS
BRIGHT
IDEA

SUCCESSFUL
BUSINESS
BRIGHT
IDEA

BRIGHT IDEA Time Resources Funding
People Etc… SUCCESSFUL BUSINESS

SUCCESSFUL BUSINESS Time Resources Funding
People Etc… BRIGHT IDEA

LEANSTARTUP

THE LEAN STARTUP by Eric
Ries LEAN MANUFACTURING (JIT) Just In time Delivery JAPAN Manufacturing Industry

Lean startup methodologies apply to
any individual, team, or company looking to introduce new products or services into the market.

LEAN slender agile quick fast
rapid swift nimble…

STARTUP “A human institution designed
to create a new product or service under conditions of extreme uncertainty” Eric Ries

CREATE

EXTREME
UNCERTAINTY

„If you don’t know what
you are doing… …better do it fast“

Put a process/methodology around it.
VALIDATED LEARNING!

Get ready to FAIL!

You rarely hit the bull's-eye,
but this never stopped you from playing!

INNOVATION
AT ESSILOR OF AMERICA

US HQ 50+ Manufacturing Labs
500+ Sales Reps 30,000+ 1.9 years repurchase cycle Eye Care Professionals (ECPs) 150,000,000+ People wearing eyeglasses

EYE
EXAM

BUY
EYEGLASSES

BUT, YOU HAVE TO WAIT!

THE IDEA Tablet device will
educate patients while they are waiting

• Educate patients • Help
make the right decision • Improve eye-care • Better eye health • Increase market share • Improve capture rate • Increase revenue per customer

Can this be done? …why
and how? ?

WHY AND HOW • Tablet
or TV? Why? • Education or advertising? Or both? How? • Before or after the eye exam? Why? • Self-service or someone will help? Who? Why? • Should we sell it or give it away? Why? How?

Business Model Canvas I prefer
the LEAN CANVAS

Problem (1) Solution (4) Unique
Value Proposition (3) Unfair Advantage (5) Customer Segment (2) Can’t be easily copied or bought Top 3 features Top 3 problems Key Metrics (8) Key activities you measure Single, clear, compelling message that states why you are different and worth buying Channels (9) Path to customers Cost Structure (7) Revenue (6) Customer Acquisition Costs Distributing Costs Hosting People, etc. Revenue Model Lifetime Value Revenue Gross Margin Target customers

Problem (1) Solution (4) Unique
Value Proposition (3) Unfair Advantage (5) Customer Segment (2) Tablet + videos Customers are unaware of the key benefits of premium lenses Opticians do a poor job explaining them Key Metrics (8) Learn all you need to know about your eyes and the lenses you need. Make the right choice. Take care of your eyes’ health. Capture rate Revenue per customer Share of ECP sales We sell the most premium lenses on the market Channels (9) Eyeglass wearers Path to customers Cost Structure (7) Revenue (6) Tablets, videos, software, distribution Increased purchases in ECP channel

TOOLS TO HELP YOU •
Research • Surveys • Interviews – ask for commitment • Focus groups • Test market • [Genchi Genbutsu] – “go and see for yourself” • EXPERIMENT

COMMITMENTS TIME – meetings, trials,
etc. REPUTATION – intro, testimonial, CASH case study, etc.

"go and see for yourself"
現地現物 [Genchi Genbutsu] “the real place” “the crime scene” 現場 [Gemba] A key principle of the Toyota Production System

“Design an EXPERIMENT that attempts
to answer the question!” Eric Ries Create series of FAST and CHEAP micro-experiments that lead you to VALIDATED LEARING!

VALIDATED LEARNING The unit of
progress for Lean Startups

PROGRESS IN MANUFACTURING = NUMBER
OF UNITS

PROGRESS IN STARTUPS = VALIDATED
LEARNING

THE TRADITIONAL APPROACH 1. Slow
2. Expensive 3. Gives you ONLY ONE attempt to succeed/fail (in a 20%/80% game)

RESULT: You build something that
nobody wants! • PIC

Build it and they will
come!

Traditional Sequential Approach Lean Startup
Approach

THE LEAN STARTUP APPROACH 1.
FAST and Cheap 2. MULTIPLE full iteration cycles 3. Gives you MULTIPLE opportunities to LEARN/VALIDATE your thinking 4. Gives you MULTIPLE attempts to SUCCEED/FAIL 5. Gives you MULTIPLE opportunities to PIVOT

Traditional Sequential Approach Lean Startup
Approach

Minimum Viable Product

MVP Crappy products nobody wants
MINIUM VIABLE Expensive products that require to much time and money

“Any additional work beyond what
was required to start learning is waste, no matter how important it might have seemed at the time.” The Dropbox MVP

“The first version of Gmail
was literally written in a day.” – Paul Buchheit (creator and lead developer of Gmail) “Entrepreneurship in a lean startup is really a series of MVP’s” – Eric Ries “If Apple can launch a smartphone without Find or Cutand-Paste, what can you cut out of your product requirements?” – Sramana Mitra

MVP

MVP #5

MVP #1 PowerPoint Deck +
Hristo Neychev

VALIDATED ASSUMPTIONS/HYPOTHESIS • Customers are
willing to spend time to learn more about eyeglass lenses • Explaining the benefits of high quality lenses changes customers buying decision (upsell)

MVP #2 Info in the
deck fits your prescription

MVP #3 Self-service deck (no
Hristo Neychev)

MVP #4 Simple video playing
from my laptop

MVP #5 Ugly tablet plays
5 videos based on your prescription

KEY LEARNING • Build multiple
MVPs • Don’t spend months waiting for a nice product and then change the company's direction • Adapt your plan incrementally, inch by inch, minute by minute • Genchi Genbutsu - "go and see for yourself"

WHAT DO I VALIDATE? Test
the founders hypothesis about: 1. Customer problem 2. Product concept 3. If the minimum feature set solve that problem What if I fail to validate the hypothesis?

Change in the strategy without
changing the vision

PIVOT “Structured course correction designed
to test a new fundamental hypothesis about the product, strategy, and engine of growth” Eric Ries The direction of your PIVOT depends on your vision!

PIVOT EXAMPLE 1 WAS: “The
Point” began as a platform for mobilizing groups of people towards action for various causes PIVOTED TO: only one group action - group buying

PIVOT EXAMPLE 2 WAS: blended
elements of Foursquare and Mafia Wars in a mobile app PIVOTED TO: remove everything except the photosharing feature, thus renamed to “Instagram”

PIVOT EXAMPLE 3 WAS: “application
that will allow individuals to "beam" sums of money between handheld devices such as mobile phones, Palm Pilots, and pagers” 07.27.99 PIVOTED TO: online payments

PIVOT EXAMPLE 4 WAS: Cloud-based
IDE for desktop development THEN: Cloud-based IDE for Mobile development THEN: Cloud services for hybrid mobile developers NOW: Cloud platform for Mobile development

Action Plan

Idea MVP3 First product PIVOT
or PERSEVERE Quick research MVP3 PIVOT or Business model canvas Hypothesis / Assumptions PERSEVERE MVP1 MVP2 Abandon this direction

ASSUMPTIONS 1. List all assumptions
2. Create MVP(s) to VALIDATE all assumptions 3. BUILD-MEASURE-LEARN 4. List all new assumption 5. Create MVP(s) to VALIDATE all new assumptions 6. BUILD-MEASURE-LEARN …rinse and repeat

YOUR BIGGEST FEAR? •No money?
•No time? •No good ideas? •No motivation? •No co-founder?

CREATING
THE
WRONG
THING!

CLOSING WORDS Build PRODUCT IDEAS
Learn Measure DATA • Move as fast as possible • Learn as much as possible • Don’t be afraid to PIVOT • Don’t be afraid to FAIL • VALIDATE everything

HAPPY VALIDATION! Thank you! Hristo
Neychev HristoNeychev HristoNeychev @HristoNeychev