Introduction to Lean Startups with Steve Guengrich

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Introduction to Lean Startups with Steve Guengrich

  1. 1. Introduction to Lean Startups Steve Guengerich May 22, 2014
  2. 2. You are here
  3. 3. How many know or would identify themselves as a Lean Startup
  4. 4. new product ideas to get 1 successful product58
  5. 5. change their original plans drastically66%
  6. 6. Not a better Plan A But a path to a plan that works.
  7. 7. Lean Startup is a rigorous process for iterating from a Plan A to a plan that works
  8. 8. Agenda 1. What is a Lean Startup? 2. What does a Lean Startup look like? 3. How can you use Lean to define and measure progress?
  9. 9. New Idea “Stages of Adoption” • Ignored • Misunderstood • Obvious – now and before
  10. 10. We are Lean because… • we got a great deal on our furniture…
  11. 11. We are Lean because… • we got a great deal on our furniture… • we surveyed all our customers and found that…
  12. 12. We are Lean because… • we got a great deal on our furniture… • we surveyed all our customers and found that… • we’ve implemented continuous deployment…
  13. 13. A Lean Startup is about speed Startups that succeed are those that manage to iterate enough times before running out of resources. - Eric Ries
  14. 14. A Lean Startup is about focus Focus on the right actions that are important to the startup, and ignore the rest.
  15. 15. Characteristics of a Lean Startup
  16. 16. Business Model vs. Business Plan
  17. 17. Business model hypothesis 1. What is the problem I’m solving? 2. Who is the customer? 3. How – business model
  18. 18. Business Model Canvas (lean edition) Problem Solution Unique Value Proposition Unfair Advantage Customer Segments Key Activity Channels Cost Structure Revenue Streams Top 3 problems Top 3 features Single, compelling clear message that states why you are different and worth buying Can’t be easily copied or bought Target customers Activity that drives retention/ revenue Path to customers Customer acquisition costs Distribution costs Hosting People, etc. Revenue model Life time value Revenue Gross margin
  19. 19. Business Model Canvas (nonprofit & lean edition) Problem Solution Unique Value Proposition Competitive Advantage Customer Segments Key Activity Channels Cost Structure Revenue/Outcome Streams Top 3 problems you are trying to solve Top 3 features of your solution Single, compelling clear message that states why you are different and worth buying or investing in Can’t be easily copied or bought Target customers, clients, and stakeholders served Activity(ies) that drives revenue / success Path(s) to reaching/serving customers Customer acquisition costs Distribution costs Hosting People, etc. 1. Financial outcomes • Revenue model • Lifetime value • Revenue • Gross margin 2. Non-financial outcomes • Social impact • Mission-related objectives • Behavior changes Key Resources & Internal Alignment • Degree of board and other critical path stakeholder buy-in • Physical resources needed • People resources needed • Intellectual resources needed
  20. 20. Validate Problem / Solution Fit Do I have a problem worth solving? Problem/solution fit Product/market fit Scale
  21. 21. Problem/Solution Fit - Lean Canvas P S UVP UA CS KA CH C$ R$ Top 3 problems Top 3 features Single, compelling clear message that states why you are different and worth buying Can’t be easily copied or bought Target customers Activity that drives retention/ revenue Path to customers Customer acquisition costs Distribution costs Hosting People, etc. Revenue model Life time value Revenue Gross margin
  22. 22. Achieve Product / Market Fit Have I built something people want? Problem/solution fit Product/market fit Scale
  23. 23. Product development gets in the way of learning Very little learning Requirements Development QA Release Some learning Most learning happens here
  24. 24. Involve customers throughout product dev Requirements Continuous Deployment Release Customer Validation Customer Discovery
  25. 25. Product/Market Fit - Lean Canvas P S UVP UA CS KA CH C$ R$ Top 3 problems Top 3 features Single, compelling clear message that states why you are different and worth buying Can’t be easily copied or bought Target customers Activity that drives revenue/ retention Path to customers Customer acquisition costs Distribution costs Hosting People, etc. Revenue model Life time value Revenue Gross margin
  26. 26. Scale - Lean Canvas P S UVP UA CS KA CH C$ R$ Top 3 problems Top 3 features Single, compelling clear message that states why you are different and worth buying Can’t be easily copied / bought Target customers Activity that drives revenue/ retention Path to customers Customer acquisition costs Distribution costs Hosting People, etc. Revenue model Life time value Revenue Gross margin
  27. 27. After Product / Market Fit Problem/solution fit Product/market fit Scale Validated learning Pivots Growth Optimizations
  28. 28. Start with what matters P S UVP UA CS KA CH C$ R$ Problem #1 Problem #2 Problem #3 Feature #1 Feature #2 Feature #3 Founders Marketers
  29. 29. But also tackle the riskiest part P S UVP UA CS KA CH C$ R$ Problem #1 Problem #2 Problem #3 Feature #1 Feature #2 Feature #3 Founders Marketers Something that can’t be copied or bought Personal authority Website Subscription model: $49 / mo.
  30. 30. Formulate falsifiable hypotheses Leap of Faith: Being known as an “expert” will drive early adopters Hypothesis: Blog post will drive > 100 early sign-ups
  31. 31. Build accessible dashboards Hypothesis Metrics Week 1 Week 2 Hypothesis Metrics Week 1 Week 2 Hypothesis Metrics Week 1 Week 2 CH CS P Personal authority will drive early adopters Early adopters will primarily be pre-product/market fit companies Problem fit Blog post will drive > 100 early sign-ups Number of teaser 72 20 page sign-ups Conduct 30-50 customer interviews within Number of customer 5 9 4 weeks interviews 80% of early adopters will be founders Percentage of 4/5 6/9 interviewees that fit this description 80% of early adopters will vote problem Number of must- 3/3 7/9 as must-have have votes from customer interviews
  32. 32. Make the results auditable
  33. 33. Run board meetings in a lessons learned format
  34. 34. Scale vs. product/market fit Problem/solution fit Product/market fit Scale Validated learning Pivots Growth Optimizations
  35. 35. After product/market fit, some level of success is almost always guaranteed.
  36. 36. True False False True Revenue No Yes No Usage Yes Beware the “false positives”
  37. 37. Pivots are about finding a plan that works Optimizations are about accelerating that plan
  38. 38. Pivots Experiments: Validate Goal: Course correction Optimization Experiments: Refine Goal: Efficiency
  39. 39. You stand to learn the most when the probability of the expected outcome is 50%; that is, when you don’t know what to expect.
  40. 40. Scale - Lean Canvas P S UVP UA CS KA CH C$ R$ Top 3 problems Top 3 features Single, compelling clear message that states why you are different and worth buying Can’t be easily copied / bought Target customers Activity that drives revenue/ retention Path to customers Customer acquisition costs Distribution costs Hosting People, etc. Revenue model Life time value Revenue Gross margin
  41. 41. While revenue is the first form of validation, retention is the ultimate form of validation
  42. 42. Every process works until you add people; key is balancing your hiring with equal number of Experimenters Specialists
  43. 43. Problem/solution fit Product/market fit Scale Your goal: Learning Your investor’s goal: Growth Your goal: Growth Your investor’s goal: Growth Ideal time to raise funding
  44. 44. Leverage your advisors for good advice but don’t follow it, apply it. Advice <> judgment or validation Advice = identifying and prioritizing risk
  45. 45. Thanks! Steve Guengerich @sguengerich 703-957-0797

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