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Sell First, Build Later
Lean Startup, Customer Development & Business Model
Istanbul Coders Meetup
19 September 20...
2 / 113
Who am I?
İsmail BERKAN:
• Startup advisor, mentor and entrepreneur
• Early stage startup specialist
• Management ...
3 / 113© Copyright 2013 İsmail Berkan 19 September 2013
4 / 113
1: Fundamentals
2: New Toolset for Startups
3: Ten Steps for Tech Startups
Agenda
© Copyright 2013 İsmail Berkan 1...
5 / 113
1: Fundamentals
© Copyright 2013 İsmail Berkan 19 September 2013
6 / 113
So You Want to be a Millionaire?
© Copyright 2013 İsmail Berkan
1: Fundamentals
19 September 2013
7 / 113© Copyright 2013 İsmail Berkan
After all, all
startups feel like
assembling a
plane on the air...
19 September 2013
8 / 113
Why Build a Startup?
• Change and improve the world
• Build an organization of lasting value
• Make customers’ liv...
9 / 113© Copyright 2013 İsmail Berkan
What is a Startup?
"A startup is a temporary organization in
search of a scalable, r...
10 / 113
STARTUP
=
EXPERIMENT
© Copyright 2013 İsmail Berkan
1: Fundamentals
What is a Startup?
19 September 2013
11 / 113
Why startups are not small
versions of a large company
© Copyright 2013 İsmail Berkan
1: Fundamentals
19 Septembe...
12 / 113© Copyright 2013 İsmail Berkan
Scalable
Startup
Large
Company
Transition
The Execution of
the Business Model
The S...
13 / 113
What's a Startup Idea?
Problem
(Input = Why)
Solution
(Output = What)
Startup idea Solution
© Copyright 2013 İsma...
14 / 11319 September 2013© Copyright 2013 İsmail Berkan
15 / 11319 September 2013© Copyright 2013 İsmail Berkan
Are You an Entrepreneur or a Wantrepreneur
Entrepreneur Wantrepren...
16 / 113
What’s Your Purpose?
"Purpose acts as a guiding light, it gives you the motivation to work through the tough time...
17 / 113
Passion
What do you
love to do?
Strengths
What are you
awesomely
good at?
Values
What is
important to
you?
Founde...
18 / 113
“Simply put: we don’t build
services to make money;
we make money to build
better services. And we
think this is ...
19 / 113
Steve Jobs explains the rules for success
Click the link below to watch the video (1m29s)
http://youtu.be/KuNQgln...
20 / 113© Copyright 2013 İsmail Berkan 19 September 2013
21 / 113
"9 out of 10 new products FAIL and
many of those failures are
PREVENTABLE."
Steve Blank
Reality
© Copyright 2013 ...
22 / 11319 September 2013© Copyright 2013 İsmail Berkan
90%
LOSERS
100%
WINNERS
Traditional Startup
(talent / guesses base...
23 / 113
80%
of the software
developed is
being wasted
IAG Consulting, 2008CHAOS Report Standish Group, 2002 & 2006 Source...
24 / 113
"More startups fail from
a lack of customers than from a failure of
product development."
Steve Blank
#1 Startup ...
25 / 113
The #1 Reason Why Products Fail
It is because we waste time, money, and
effort building the wrong product.
Source...
26 / 113
• New Product Uncertainty:
• Unknown Problem
• Unknown Solution
• Unknown Customer
• The Path to Disaster
• Busin...
27 / 113© Copyright 2013 İsmail Berkan
1: Fundamentals
19 September 2013
Steve Blank on Silicon Valley and Failure
Click t...
28 / 113© Copyright 2013 İsmail Berkan
Most Entrepreneurs Mis-Prioritizing Their Activities
Entrepreneurs are
doing good t...
29 / 113
Simple Complex
Source: Kathy Sierra
Featuritis versus The Happy User Peak
© Copyright 2013 İsmail Berkan
2: New T...
30 / 113
Techies:
Try it!
Skeptics:
No way!
Visionaries:
Get ahead!
Pragmatists:
Stick with the herd!
Conservatives:
Hold ...
31 / 113
The Five Why's Technique
It helps to determine a root cause of a problem.
This technique was developed as a syste...
32 / 113
Problem — A new release disabled a feature for customers.
1st Why? — Because a particular server failed.
2nd Why?...
33 / 113© Copyright 2013 İsmail Berkan
1: Fundamentals
19 September 2013
Eric Ries: Entrepreneurship Can Be Learned
Click ...
34 / 113
2: New Toolset for
Startups
© Copyright 2013 İsmail Berkan 19 September 2013
35 / 113© Copyright 2013 İsmail Berkan
History of Management Tools
1602 19081700 20121800
The Dutch East India
Company, 16...
36 / 113
Get out
of the
building!
Genchi Genbutsu (現地現物)
=
Go and See for Yourself
=
Go to the Source
=
Get out of the Bui...
37 / 113
Customer Development Model
Customer
Discovery
Customer
Validation
Company
Building
Customer
Creation
Pivot
Turn h...
38 / 113
Hypothesis
Test
Design
ExperimentInsight
The Customer Development Insight Cycle
© Copyright 2013 İsmail Berkan
2:...
39 / 113© Copyright 2013 İsmail Berkan
A Product is
Customer + Problem + Solution
Don't
Start
Here
Start
Here
2: New Tools...
40 / 113© Copyright 2013 İsmail Berkan
Hypotheses and Assumptions
2: New Toolset for Startups
converting guesses into fact...
41 / 113
Victory is
measured in
learning.
© Copyright 2013 İsmail Berkan
2: New Toolset for Startups
19 September 2013
Sou...
42 / 113© Copyright 2013 İsmail Berkan
2: New Toolset for Startups
19 September 2013
The Customer Development Process
by S...
43 / 113
Build.
Measure.
Learn.
© Copyright 2013 İsmail Berkan
2: New Toolset for Startups
19 September 2013
44 / 113© Copyright 2013 İsmail Berkan
2: New Toolset for Startups
19 September 2013
45 / 113
+
incremental
releases
make products
customers want
+
reduce waste
Lean Startup
© Copyright 2013 İsmail Berkan
2:...
46 / 113© Copyright 2013 İsmail Berkan
2: New Toolset for Startups
19 September 2013
The Lean Startup in 150 Seconds
by Jo...
47 / 113
STOP
WASTING
PEOPLE’S
TIME & MONEY
© Copyright 2013 İsmail Berkan
2: New Toolset for Startups
19 September 2013
S...
48 / 113
What are the Lean Startup Principles?
• Nail it then scale it
• Rapid hypothesis testing about market, pricing,
c...
49 / 113
The Startup Build-Measure-Learn Loop
LEARN BUILD
MEASURE
IDEAS
PRODUCT
Minimize TOTAL time through the loop
DATA
...
50 / 113
There’s much more…
IDEAS
PRODUCTDATA
BUILDLEARN
MEASURE
Code Faster
Unit Tests
Usability Tests
Continuous Integra...
51 / 113
What is an Minimum Viable Product
(MVP) ?
"The minimum amount of effort you
have to do to complete exactly one
tu...
52 / 113© Copyright 2013 İsmail Berkan
Don’t be misled…
MVP a functioning product
MVP Experiment
(Think: Minimum Viable Ex...
53 / 113© Copyright 2013 İsmail Berkan
The Minimum Viable Product (MVP)
Source: http://LeanSteps.co
2: New Toolset for Sta...
54 / 11319 September 2013© Copyright 2013 İsmail Berkan
PRODUCT
Minimum Viable Product and Pareto Principle
MAIN PROBLEMS
...
55 / 113
Running Effective Experiments
Source: Ash Maurya (Running Lean)
© Copyright 2013 İsmail Berkan
2: New Toolset for...
56 / 113
Maximize for Speed, Learning and Focus
Source: Ash Maurya (Running Lean)
© Copyright 2013 İsmail Berkan
2: New To...
57 / 113© Copyright 2013 İsmail Berkan
Traditional Product Development
Unit of Progress: Advance to Next Stage
Waterfall R...
58 / 113© Copyright 2013 İsmail Berkan
Product Development at Lean Startup
Unit of Progress: Validated Learning About Cust...
59 / 113
Reduce INVENTORY, RISK, and WASTE
© Copyright 2013 İsmail Berkan
2: New Toolset for Startups
19 September 2013
60 / 113© Copyright 2013 İsmail Berkan
Transition
Scalable Startup
Company
Source: Eric Ries
19 September 2013
2: New Tool...
61 / 11319 September 2013© Copyright 2013 İsmail Berkan
Piano Stairs
by TheFunTheory.com
Click the link below to watch the...
62 / 113
One-page Business
Model
versus
50-page Business
Plan
© Copyright 2013 İsmail Berkan
2: New Toolset for Startups
1...
63 / 113
So, we need a language in
order to talk about your
startup.
© Copyright 2013 İsmail Berkan
2: New Toolset for Sta...
64 / 113
"No business plan survives first contact with customers."
Steve Blank
"Burn your business plan before it burns yo...
65 / 113© Copyright 2013 İsmail Berkan 19 September 2013
Capture your vision on a single page business model
66 / 113© Copyright 2013 İsmail Berkan 19 September 2013
67 / 113© Copyright 2013 İsmail Berkan
Business Model Environment Strategies
2: New Toolset for Startups
19 September 2013
68 / 113
A step-by-step
blueprint that
puts ideas into
action
© Copyright 2013 İsmail Berkan
2: New Toolset for Startups
1...
69 / 113
PRODUCT MARKET
© Copyright 2013 İsmail Berkan 19 September 2013
70 / 113
The Different Worldviews of a Startup
© Copyright 2013 İsmail Berkan
2: New Toolset for Startups
19 September 2013
71 / 113
Entrepreneurs
Source: Ash Maurya
© Copyright 2013 İsmail Berkan
2: New Toolset for Startups
19 September 2013
72 / 113
Customers
Source: Ash Maurya
© Copyright 2013 İsmail Berkan
2: New Toolset for Startups
19 September 2013
73 / 113
Investors
Source: Ash Maurya
© Copyright 2013 İsmail Berkan
2: New Toolset for Startups
19 September 2013
74 / 113
Advisors
Source: Ash Maurya
© Copyright 2013 İsmail Berkan
2: New Toolset for Startups
19 September 2013
75 / 113
3: Ten Steps for
Tech Startups
© Copyright 2013 İsmail Berkan 19 September 2013
76 / 113
Founder/
Idea Fit
Customer/
Problem Fit
Problem/
Solution Fit
Product/
Market Fit
Bus. Model /
Scale Fit
Brainsto...
77 / 113© Copyright 2013 İsmail Berkan
The Lean Startup Hill
Source: http://LeanSteps.co
3: Ten Steps for Tech Startups
19...
78 / 113© Copyright 2013 İsmail Berkan
Step 2: Brainstorm and Evaluate Ideas
19 September 2013
79 / 113
Step 3: Validate Founder/Idea Fit
• Check if you and team fit with "purpose/idea"
• Be passionate about the idea ...
80 / 113
Step 4: Solve a Painful Problem
Vitamin
Pain Killer
Addictive Drug
Are we solving a BIG customer problem?
Magnitu...
81 / 113© Copyright 2013 İsmail Berkan
Pain Pays
"Any big problem is a big opportunity… No one
will pay you to solve a non...
82 / 113
What is the problem?
© Copyright 2013 İsmail Berkan
3: Ten Steps for Tech Startups
19 September 2013
83 / 113© Copyright 2013 İsmail Berkan
Understand the Problem and Customer
• Who has the problem?
• What is the top proble...
84 / 113
Focus on the problems
not the solutions.
Learn early, learn often, and
learn fast!
© Copyright 2013 İsmail Berkan...
85 / 113© Copyright 2013 İsmail Berkan
3: Ten Steps for Tech Startups
19 September 2013
Finding the Problem is the Hard Pa...
86 / 113
Step 5: Build a Killer Startup Team
Startups with multiple founders have a greater
chance of success than single-...
87 / 113
The Startup Team: Must Have Skills
© Copyright 2013 İsmail Berkan
3: Ten Steps for Tech Startups
Most people are ...
88 / 113
Is your team aligned?
© Copyright 2013 İsmail Berkan
3: Ten Steps for Tech Startups
19 September 2013
Source: And...
89 / 113
Step 6: Create an One-Page Lean Canvas
FILL OUT ALL 9 BOXES OF THE CANVAS IN ORDER 1 THRO 9
© Copyright 2013 İsma...
90 / 113
Step 7: Get Out of the Building (GOOB)
© Copyright 2013 İsmail Berkan
3: Ten Steps for Tech Startups
1. Talk to p...
91 / 113© Copyright 2013 İsmail Berkan
Some Real
MVP Examples
19 September 2013
92 / 113
Fake Door MVP
© Copyright 2013 İsmail Berkan 19 September 2013
93 / 113© Copyright 2013 İsmail Berkan
3: Ten Steps for Tech Startups
19 September 2013
"How $40 Saved Us 9 Months and $2M...
94 / 113
Coming Soon Video Explainer MVP
Initial MVP
• Screen flow movie of mockups
• Landing Page – sign up if you are in...
95 / 113© Copyright 2013 İsmail Berkan
3: Ten Steps for Tech Startups
19 September 2013
96 / 113
Take the photo Email the photo
Concierge and Flinstoning MVP
© Copyright 2013 İsmail Berkan
3: Ten Steps for Tech...
97 / 113
Crowdfunding MVP
© Copyright 2013 İsmail Berkan
3: Ten Steps for Tech Startups
19 September 2013
98 / 113
Collect Email Adresses & Survey MVP
© Copyright 2013 İsmail Berkan
3: Ten Steps for Tech Startups
19 September 20...
99 / 113© Copyright 2013 İsmail Berkan
3: Ten Steps for Tech Startups
19 September 2013
100 / 113
Currency ($) Pitch MVP
© Copyright 2013 İsmail Berkan
3: Ten Steps for Tech Startups
19 September 2013
101 / 113© Copyright 2013 İsmail Berkan
3: Ten Steps for Tech Startups
19 September 2013
How to test & validate a startup ...
102 / 113
Step 8: Pivot or not Pivot
Don’t Let This Happen To You:
• Thinking and accepting pivot as a failure
• Pivoting ...
103 / 113
"I'm not leaving you. I'm pivoting to another man."
© Copyright 2013 İsmail Berkan
3: Ten Steps for Tech Startup...
104 / 113
Fall in love with your customers,
market and business model not with
your product/service.
Step 9: Build the Rig...
105 / 113
Discover
Your
Business
Model
Problem
Solution
Customer
Segments
Channels
Revenue
Streams
Cost
Structure
Key Metr...
106 / 113
Step 10: Get Funding
Only ask for funding when you have a:
• Successful customer/problem/solution fit
• Validate...
107 / 113
Source: Steve Blank
© Copyright 2013 İsmail Berkan
3: Ten Steps for Tech Startups
How to Get a VC Meeting
19 Sep...
108 / 113
Source: Y Combinator
© Copyright 2013 İsmail Berkan 19 September 2013
109 / 113© Copyright 2013 İsmail Berkan
“Successful startups are the ones who
have enough money left over to try their
sec...
110 / 113© Copyright 2013 İsmail Berkan
Summary
• Be Honest with Yourself & Discover Truth
• Know Your Purpose & Aim to th...
111 / 11319 September 2013© Copyright 2013 İsmail Berkan
• Stay Lean & Agile
• Work on the Business Models not the Busines...
112 / 113© Copyright 2013 İsmail Berkan 19 September 2013
113 / 113
İsmail BERKAN
Email
ismail@ismailberkan.com
Twitter
https://twitter.com/ismailberkan
Linkedin
http://tr.linkedin...
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Sell First, Build Later with the Lean Startup: Fundamentals, Tools, Methods and Ten-Steps

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"Sell First, Build Later" presentation slides cover four major concepts such as the Lean Startup, Customer Development, Agile Development and Business Modelling. Briefly, explains the fundamentals, tool sets and ten steps how to build a tech startup. Slides are from my talk at the largest meetup group for coders in Turkey, 'Istanbul Coders', (Istanbul, September 2013).

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Sell First, Build Later with the Lean Startup: Fundamentals, Tools, Methods and Ten-Steps

  1. 1. 1 / 113 Sell First, Build Later Lean Startup, Customer Development & Business Model Istanbul Coders Meetup 19 September 2013 © Copyright 2013 İsmail Berkan
  2. 2. 2 / 113 Who am I? İsmail BERKAN: • Startup advisor, mentor and entrepreneur • Early stage startup specialist • Management consultant • International and diverse industry experience • Total of 18+ years experience: • 13 years of corporate IT • 3+ years of management consultancy • 2+ years of startups • Computer Science + MBA © Copyright 2013 İsmail Berkan 19 September 2013
  3. 3. 3 / 113© Copyright 2013 İsmail Berkan 19 September 2013
  4. 4. 4 / 113 1: Fundamentals 2: New Toolset for Startups 3: Ten Steps for Tech Startups Agenda © Copyright 2013 İsmail Berkan 19 September 2013
  5. 5. 5 / 113 1: Fundamentals © Copyright 2013 İsmail Berkan 19 September 2013
  6. 6. 6 / 113 So You Want to be a Millionaire? © Copyright 2013 İsmail Berkan 1: Fundamentals 19 September 2013
  7. 7. 7 / 113© Copyright 2013 İsmail Berkan After all, all startups feel like assembling a plane on the air... 19 September 2013
  8. 8. 8 / 113 Why Build a Startup? • Change and improve the world • Build an organization of lasting value • Make customers’ lives better © Copyright 2013 İsmail Berkan 1: Fundamentals 19 September 2013
  9. 9. 9 / 113© Copyright 2013 İsmail Berkan What is a Startup? "A startup is a temporary organization in search of a scalable, repeatable, profitable business model." 2010, Steve Blank "A startup is a human institution designed to create a new product or service under conditions of extreme uncertainty." 2010, Eric Ries 1: Fundamentals 19 September 2013
  10. 10. 10 / 113 STARTUP = EXPERIMENT © Copyright 2013 İsmail Berkan 1: Fundamentals What is a Startup? 19 September 2013
  11. 11. 11 / 113 Why startups are not small versions of a large company © Copyright 2013 İsmail Berkan 1: Fundamentals 19 September 2013
  12. 12. 12 / 113© Copyright 2013 İsmail Berkan Scalable Startup Large Company Transition The Execution of the Business Model The Search for the Business Model Startups versus Companies Startups Search Companies Execute 1: Fundamentals Source: Steve Blank (The Startup Owner's Manual) 19 September 2013
  13. 13. 13 / 113 What's a Startup Idea? Problem (Input = Why) Solution (Output = What) Startup idea Solution © Copyright 2013 İsmail Berkan 1: Fundamentals 19 September 2013 Think (Process = How)
  14. 14. 14 / 11319 September 2013© Copyright 2013 İsmail Berkan
  15. 15. 15 / 11319 September 2013© Copyright 2013 İsmail Berkan Are You an Entrepreneur or a Wantrepreneur Entrepreneur Wantrepreneur Committed Only Involved Self-Reliant Dependent Self Starter Procrastinator Risk Taker Risk Averse Highly Optimistic Pessimistic Lives life with reckless abandon Stays safe and alive Loves being busy Loves feeling busy Loves result-based strategies Loves couch-potato strategies Sees failure as opportunity Sees failure as end of the world 1: Fundamentals
  16. 16. 16 / 113 What’s Your Purpose? "Purpose acts as a guiding light, it gives you the motivation to work through the tough times. Importantly it helps you say “No” to stuff."—Tom Holme, IDEO © Copyright 2013 İsmail Berkan 19 September 2013
  17. 17. 17 / 113 Passion What do you love to do? Strengths What are you awesomely good at? Values What is important to you? Founder(s) True Purpose (Destiny) Business Idea Do you have a big "why" for doing this? What problems do you want to solve? What people will pay you to do? Are you willing to commit your next 5 to 10 years on this idea? Founder / Idea Fit © Copyright 2013 İsmail Berkan 1: Fundamentals “Don’t start a company unless it’s an obsession and something you love.” Mark Cuban 19 September 2013 Happy Spot
  18. 18. 18 / 113 “Simply put: we don’t build services to make money; we make money to build better services. And we think this is a good way to build something.” Mark Zuckerberg letter to shareholders Facebook’s Purpose: give people the power to share and make the world more open and connected. © Copyright 2013 İsmail Berkan 19 September 2013
  19. 19. 19 / 113 Steve Jobs explains the rules for success Click the link below to watch the video (1m29s) http://youtu.be/KuNQgln6TL0 © Copyright 2013 İsmail Berkan 1: Fundamentals 19 September 2013 WATCH THE VIDEO CLICK TO
  20. 20. 20 / 113© Copyright 2013 İsmail Berkan 19 September 2013
  21. 21. 21 / 113 "9 out of 10 new products FAIL and many of those failures are PREVENTABLE." Steve Blank Reality © Copyright 2013 İsmail Berkan 1: Fundamentals 19 September 2013
  22. 22. 22 / 11319 September 2013© Copyright 2013 İsmail Berkan 90% LOSERS 100% WINNERS Traditional Startup (talent / guesses based) Lean Startup (science / facts based) You Normal People Average people Me Me You Average people Normal People Bill Gates Gifted/ Talented people Steve Jobs Marck Zuckerberg Lucky people genius 10% WINNERS 1: Fundamentals Source: http://LeanSteps.co
  23. 23. 23 / 113 80% of the software developed is being wasted IAG Consulting, 2008CHAOS Report Standish Group, 2002 & 2006 Source: http://LeanSteps.co © Copyright 2013 İsmail Berkan 1: Fundamentals 19 September 2013
  24. 24. 24 / 113 "More startups fail from a lack of customers than from a failure of product development." Steve Blank #1 Startup Risk = Customers © Copyright 2013 İsmail Berkan 1: Fundamentals Customer Risk + Market Risk + Product Risk + … 19 September 2013
  25. 25. 25 / 113 The #1 Reason Why Products Fail It is because we waste time, money, and effort building the wrong product. Source: Ash Maurya © Copyright 2013 İsmail Berkan 1: Fundamentals 19 September 2013
  26. 26. 26 / 113 • New Product Uncertainty: • Unknown Problem • Unknown Solution • Unknown Customer • The Path to Disaster • Business model built on untested assumptions • Market research serves to support your assumptions rather than validate them • Scale based on the business plan • Lack of customers and markets • Change business at scale (slow and expensive) • Run out of money • Poor execution due to lack of right skills • Flawed business model • External threats • and many more… • A Problem Not Worth Solving • Building the Wrong Solution • Can't Get Customers to Pay • Can't Get Customers Cheaply Enough More… Why They Fail © Copyright 2013 İsmail Berkan 1: Fundamentals 19 September 2013
  27. 27. 27 / 113© Copyright 2013 İsmail Berkan 1: Fundamentals 19 September 2013 Steve Blank on Silicon Valley and Failure Click the link below to watch the video (1m22s) http://www.flickr.com/photos/osterwalder/6787544663/ WATCH THE VIDEO CLICK TO
  28. 28. 28 / 113© Copyright 2013 İsmail Berkan Most Entrepreneurs Mis-Prioritizing Their Activities Entrepreneurs are doing good things, but not doing them in the right order. More than 80% of the time entrepreneurs are ignoring customer demand in the right product mix until after they have started to scale their business. Harvard Business Review, Beating the Odds When You Launch a New Venture by Clark G. Gilbert and Matthew J. Eyring 19 September 2013
  29. 29. 29 / 113 Simple Complex Source: Kathy Sierra Featuritis versus The Happy User Peak © Copyright 2013 İsmail Berkan 2: New Toolset for Startups 19 September 2013
  30. 30. 30 / 113 Techies: Try it! Skeptics: No way! Visionaries: Get ahead! Pragmatists: Stick with the herd! Conservatives: Hold on! Early Markets Mainstream Markets Late Market Relative%ofCustomers © Copyright 2013 İsmail Berkan 1: Fundamentals The Early Stage "Black Hole" 19 September 2013
  31. 31. 31 / 113 The Five Why's Technique It helps to determine a root cause of a problem. This technique was developed as a systematic problem-solving tool by Taiichi Ohno, the father of the Toyota Production System. © Copyright 2013 İsmail Berkan 1: Fundamentals 19 September 2013
  32. 32. 32 / 113 Problem — A new release disabled a feature for customers. 1st Why? — Because a particular server failed. 2nd Why? — Because an obscure subsystem was used in the wrong way. 3rd Why? — The engineer who used it didn’t know how to use it properly. 4th Why? — Because he was never trained. 5th Why? — Because his manager doesn’t believe in training new engineers because he and his team are “too busy.” (a root cause) Solution — Management will dedicate time and budget in training new engineers. What began as a purely technical fault is revealed quickly to be a very human managerial issue. Five Why Example Source: Eric Ries (The Lean Startup) © Copyright 2013 İsmail Berkan 1: Fundamentals 19 September 2013
  33. 33. 33 / 113© Copyright 2013 İsmail Berkan 1: Fundamentals 19 September 2013 Eric Ries: Entrepreneurship Can Be Learned Click the link below to watch the video (1m16s) http://youtu.be/gJOz6a1JvPs WATCH THE VIDEO CLICK TO
  34. 34. 34 / 113 2: New Toolset for Startups © Copyright 2013 İsmail Berkan 19 September 2013
  35. 35. 35 / 113© Copyright 2013 İsmail Berkan History of Management Tools 1602 19081700 20121800 The Dutch East India Company, 1602- 1798. First «modern company» issued first stock certificates. First MBA program was designed in 1908 for big businesses by Harvard. 300 years start, build and grow without formally trained executives. Formal management tools are more than 100 years old. 2010 The Lean Startup – "Creating Value" (2001-2010) The Dot.com Bubble – "Making Money" (1995-2000) 2000 Source: Adapted from Steve Blank (The Startup Owner's Manual) 2: New Toolset for Startups 19 September 2013
  36. 36. 36 / 113 Get out of the building! Genchi Genbutsu (現地現物) = Go and See for Yourself = Go to the Source = Get out of the Building (GOOB) & Talk to People © Copyright 2013 İsmail Berkan 2: New Toolset for Startups 19 September 2013
  37. 37. 37 / 113 Customer Development Model Customer Discovery Customer Validation Company Building Customer Creation Pivot Turn hypotheses into facts Identify scalable and repeatable sales model Iteration Execute © Copyright 2013 İsmail Berkan 2: New Toolset for Startups The Search for a Business The Growth for a Business Product/Market Fit 19 September 2013
  38. 38. 38 / 113 Hypothesis Test Design ExperimentInsight The Customer Development Insight Cycle © Copyright 2013 İsmail Berkan 2: New Toolset for Startups 19 September 2013
  39. 39. 39 / 113© Copyright 2013 İsmail Berkan A Product is Customer + Problem + Solution Don't Start Here Start Here 2: New Toolset for Startups 19 September 2013
  40. 40. 40 / 113© Copyright 2013 İsmail Berkan Hypotheses and Assumptions 2: New Toolset for Startups converting guesses into facts 19 September 2013
  41. 41. 41 / 113 Victory is measured in learning. © Copyright 2013 İsmail Berkan 2: New Toolset for Startups 19 September 2013 Source: Luxr.co
  42. 42. 42 / 113© Copyright 2013 İsmail Berkan 2: New Toolset for Startups 19 September 2013 The Customer Development Process by Steve Blank Click the link below to watch the video (3m34s) http://youtu.be/NXR_O_Hwuws WATCH THE VIDEO CLICK TO
  43. 43. 43 / 113 Build. Measure. Learn. © Copyright 2013 İsmail Berkan 2: New Toolset for Startups 19 September 2013
  44. 44. 44 / 113© Copyright 2013 İsmail Berkan 2: New Toolset for Startups 19 September 2013
  45. 45. 45 / 113 + incremental releases make products customers want + reduce waste Lean Startup © Copyright 2013 İsmail Berkan 2: New Toolset for Startups 19 September 2013
  46. 46. 46 / 113© Copyright 2013 İsmail Berkan 2: New Toolset for Startups 19 September 2013 The Lean Startup in 150 Seconds by Joone Studios Click the link below to watch the video (2m30s) http://youtu.be/WAdikBfKeD8 WATCH THE VIDEO CLICK TO
  47. 47. 47 / 113 STOP WASTING PEOPLE’S TIME & MONEY © Copyright 2013 İsmail Berkan 2: New Toolset for Startups 19 September 2013 Source: Luxr.co
  48. 48. 48 / 113 What are the Lean Startup Principles? • Nail it then scale it • Rapid hypothesis testing about market, pricing, customers (customers & markets unknown) • MVP (minimum viable product) • Low burn by design (no scaling until revenue) • Metrics, iteration, agile development • Learn fast (fail fast), pivot or persevere © Copyright 2013 İsmail Berkan 2: New Toolset for Startups 19 September 2013
  49. 49. 49 / 113 The Startup Build-Measure-Learn Loop LEARN BUILD MEASURE IDEAS PRODUCT Minimize TOTAL time through the loop DATA IDEAS • Experiments • Validated learning © Copyright 2013 İsmail Berkan 2: New Toolset for Startups (The Startup OODA Loop) 19 September 2013
  50. 50. 50 / 113 There’s much more… IDEAS PRODUCTDATA BUILDLEARN MEASURE Code Faster Unit Tests Usability Tests Continuous Integration Incremental Deployment Free & Open-Source Components Cloud Computing Cluster Immune System Just-in-time Scalability Refactoring Developer Sandbox Minimum Viable Product Measure Faster Split Tests Clear Product Owner Continuous Deployment Usability Tests Real-time Monitoring Customer Liaison Learn Faster Split Tests Customer Interviews Customer Development Five Whys Root Cause Analysis Customer Advisory Board Falsifiable Hypotheses Product Owner Accountability Customer Archetypes Cross-functional Teams Semi-autonomous Teams Smoke Tests Funnel Analysis Cohort Analysis Net Promoter Score Search Engine Marketing Real-Time Alerting Predictive Monitoring© Copyright 2013 İsmail Berkan 2: New Toolset for Startups 19 September 2013
  51. 51. 51 / 113 What is an Minimum Viable Product (MVP) ? "The minimum amount of effort you have to do to complete exactly one turn of Build-Measure-Learn feedback loop." Eric Ries © Copyright 2013 İsmail Berkan 2: New Toolset for Startups 19 September 2013
  52. 52. 52 / 113© Copyright 2013 İsmail Berkan Don’t be misled… MVP a functioning product MVP Experiment (Think: Minimum Viable Experiment) 2: New Toolset for Startups 19 September 2013
  53. 53. 53 / 113© Copyright 2013 İsmail Berkan The Minimum Viable Product (MVP) Source: http://LeanSteps.co 2: New Toolset for Startups 19 September 2013
  54. 54. 54 / 11319 September 2013© Copyright 2013 İsmail Berkan PRODUCT Minimum Viable Product and Pareto Principle MAIN PROBLEMS (80%)20% MAIN CAUSES SMALL PROBLEMS (20%) MVP "For many events, roughly 80% of the effects come from 20% of the causes." (Pareto Principle) 2: New Toolset for Startups
  55. 55. 55 / 113 Running Effective Experiments Source: Ash Maurya (Running Lean) © Copyright 2013 İsmail Berkan 2: New Toolset for Startups 19 September 2013
  56. 56. 56 / 113 Maximize for Speed, Learning and Focus Source: Ash Maurya (Running Lean) © Copyright 2013 İsmail Berkan 2: New Toolset for Startups 19 September 2013
  57. 57. 57 / 113© Copyright 2013 İsmail Berkan Traditional Product Development Unit of Progress: Advance to Next Stage Waterfall Requirements Specification Design Implementation Verification Maintenance Problem: known Solution: known 19 September 2013 2: New Toolset for Startups Source: Eric Ries
  58. 58. 58 / 113© Copyright 2013 İsmail Berkan Product Development at Lean Startup Unit of Progress: Validated Learning About Customers ($$$) Problem: unknown Solution: unknown Customer Development Hypotheses, Experiments, Insights Data, Feedback, Insights Agile Development (XP) 19 September 2013 2: New Toolset for Startups Source: Eric Ries
  59. 59. 59 / 113 Reduce INVENTORY, RISK, and WASTE © Copyright 2013 İsmail Berkan 2: New Toolset for Startups 19 September 2013
  60. 60. 60 / 113© Copyright 2013 İsmail Berkan Transition Scalable Startup Company Source: Eric Ries 19 September 2013 2: New Toolset for Startups
  61. 61. 61 / 11319 September 2013© Copyright 2013 İsmail Berkan Piano Stairs by TheFunTheory.com Click the link below to watch the video (1m48s) http://youtu.be/2lXh2n0aPyw WATCH THE VIDEO CLICK TO 2: New Toolset for Startups
  62. 62. 62 / 113 One-page Business Model versus 50-page Business Plan © Copyright 2013 İsmail Berkan 2: New Toolset for Startups 19 September 2013
  63. 63. 63 / 113 So, we need a language in order to talk about your startup. © Copyright 2013 İsmail Berkan 2: New Toolset for Startups 19 September 2013
  64. 64. 64 / 113 "No business plan survives first contact with customers." Steve Blank "Burn your business plan before it burns you." Alexander Osterwalder Business Model versus Business Plan 20 minutes A single diagram of your business Several weeks or months A document investors make you write that they don't read © Copyright 2013 İsmail Berkan 2: New Toolset for Startups 19 September 2013
  65. 65. 65 / 113© Copyright 2013 İsmail Berkan 19 September 2013 Capture your vision on a single page business model
  66. 66. 66 / 113© Copyright 2013 İsmail Berkan 19 September 2013
  67. 67. 67 / 113© Copyright 2013 İsmail Berkan Business Model Environment Strategies 2: New Toolset for Startups 19 September 2013
  68. 68. 68 / 113 A step-by-step blueprint that puts ideas into action © Copyright 2013 İsmail Berkan 2: New Toolset for Startups 19 September 2013 Running Lean is systematic process for iterating from Plan A to a plan that works, before running out of resources. —Ash Maurya
  69. 69. 69 / 113 PRODUCT MARKET © Copyright 2013 İsmail Berkan 19 September 2013
  70. 70. 70 / 113 The Different Worldviews of a Startup © Copyright 2013 İsmail Berkan 2: New Toolset for Startups 19 September 2013
  71. 71. 71 / 113 Entrepreneurs Source: Ash Maurya © Copyright 2013 İsmail Berkan 2: New Toolset for Startups 19 September 2013
  72. 72. 72 / 113 Customers Source: Ash Maurya © Copyright 2013 İsmail Berkan 2: New Toolset for Startups 19 September 2013
  73. 73. 73 / 113 Investors Source: Ash Maurya © Copyright 2013 İsmail Berkan 2: New Toolset for Startups 19 September 2013
  74. 74. 74 / 113 Advisors Source: Ash Maurya © Copyright 2013 İsmail Berkan 2: New Toolset for Startups 19 September 2013
  75. 75. 75 / 113 3: Ten Steps for Tech Startups © Copyright 2013 İsmail Berkan 19 September 2013
  76. 76. 76 / 113 Founder/ Idea Fit Customer/ Problem Fit Problem/ Solution Fit Product/ Market Fit Bus. Model / Scale Fit Brainstorming Idea Evaluation Purpose Founder(s) Founding Team Lean Canvas Eco-System Primary Users Primary Payers Target Problem Customer Interview Value Proposition Low -fidelity MVP Value Proposition 1-Page Sketching Risky Hypotheses Lean Experiments Early Adopters Blog Features Hi-fidelity MVP Development Team Mature MVP Key Metrics Satisfaction Brand Business Model Revenue Referrals Bootstrap Fund Team Product Dev. Social Media Promotion Profit START INTERVIEW EXPERIMENT SCALEBUILD FOUNDER / MARKET FIT Step 1: Understand the Startup Milestones Source: Adapted from http://LeanSteps.co© Copyright 2013 İsmail Berkan 19 September 2013
  77. 77. 77 / 113© Copyright 2013 İsmail Berkan The Lean Startup Hill Source: http://LeanSteps.co 3: Ten Steps for Tech Startups 19 September 2013
  78. 78. 78 / 113© Copyright 2013 İsmail Berkan Step 2: Brainstorm and Evaluate Ideas 19 September 2013
  79. 79. 79 / 113 Step 3: Validate Founder/Idea Fit • Check if you and team fit with "purpose/idea" • Be passionate about the idea (love what you do) • Have the right skills set to do the job • Other:  Have the right people on your team who shares the same vision  Don't try to do it all by yourself  Dedicate 100% of your/team time to a startup  No parallel jobs or projects – one startup at a time  Say no, if you’re not 100% excited  Get out of your comfort zone  Understand market and users before building anything  Learn quickly from customers to build your product  Get rid of any ego that may damage your startup  Adopt and use the agile and lean tools © Copyright 2013 İsmail Berkan 3: Ten Steps for Tech Startups 19 September 2013
  80. 80. 80 / 113 Step 4: Solve a Painful Problem Vitamin Pain Killer Addictive Drug Are we solving a BIG customer problem? Magnitude of a pain/need Rateofcustomerdelight © Copyright 2013 İsmail Berkan 3: Ten Steps for Tech Startups 19 September 2013
  81. 81. 81 / 113© Copyright 2013 İsmail Berkan Pain Pays "Any big problem is a big opportunity… No one will pay you to solve a non-problem." —Vinod Khosla (Kleiner Perkins) Shark Bite VS. Mosquito Bite 3: Ten Steps for Tech Startups 19 September 2013
  82. 82. 82 / 113 What is the problem? © Copyright 2013 İsmail Berkan 3: Ten Steps for Tech Startups 19 September 2013
  83. 83. 83 / 113© Copyright 2013 İsmail Berkan Understand the Problem and Customer • Who has the problem? • What is the top problem/pain? • How is it solved today? "Customers don’t care about your solution. They care about their problems." Dave McClure, 500 Startups "Customers don't want software; they want their problems solved." Mary Poppendieck 3: Ten Steps for Tech Startups 19 September 2013
  84. 84. 84 / 113 Focus on the problems not the solutions. Learn early, learn often, and learn fast! © Copyright 2013 İsmail Berkan 3: Ten Steps for Tech Startups 19 September 2013
  85. 85. 85 / 113© Copyright 2013 İsmail Berkan 3: Ten Steps for Tech Startups 19 September 2013 Finding the Problem is the Hard Part by Kevin Systrom, CEO of Instagram Click the link below to watch the video (3m28s) http://youtu.be/XETaA1b6ep4 WATCH THE VIDEO CLICK TO
  86. 86. 86 / 113 Step 5: Build a Killer Startup Team Startups with multiple founders have a greater chance of success than single-founder startups. © Copyright 2013 İsmail Berkan 3: Ten Steps for Tech Startups "Great things in business are never done by one person, they’re done by a team of people." Steve Jobs 19 September 2013
  87. 87. 87 / 113 The Startup Team: Must Have Skills © Copyright 2013 İsmail Berkan 3: Ten Steps for Tech Startups Most people are good at one or maybe two of these, but it’s extremely rare to find someone who can wear all the hats. The ideal team size is two or three people. Vision (Search for the business model + Customer Dev.) Sales & Marketing (Position & Sell it) Product (Frame it/define it) Technology (Build it) 19 September 2013
  88. 88. 88 / 113 Is your team aligned? © Copyright 2013 İsmail Berkan 3: Ten Steps for Tech Startups 19 September 2013 Source: Andreas Klinger
  89. 89. 89 / 113 Step 6: Create an One-Page Lean Canvas FILL OUT ALL 9 BOXES OF THE CANVAS IN ORDER 1 THRO 9 © Copyright 2013 İsmail Berkan 3: Ten Steps for Tech Startups 19 September 2013
  90. 90. 90 / 113 Step 7: Get Out of the Building (GOOB) © Copyright 2013 İsmail Berkan 3: Ten Steps for Tech Startups 1. Talk to potential customers 2. List your assumptions 3. Test the riskiest ones 4. Design experiments 5. Evaluate results 6. Change plans based on evidence 7. Launch small proof-of-concept products 8. Get a few paying customers 9. Make them really happy 10.Repeat, as needed. 19 September 2013 Source: Adapted from Luxr.co
  91. 91. 91 / 113© Copyright 2013 İsmail Berkan Some Real MVP Examples 19 September 2013
  92. 92. 92 / 113 Fake Door MVP © Copyright 2013 İsmail Berkan 19 September 2013
  93. 93. 93 / 113© Copyright 2013 İsmail Berkan 3: Ten Steps for Tech Startups 19 September 2013 "How $40 Saved Us 9 Months and $2MM" by Paul Howe, CEO of Need Feed Click the link below to watch the video (5m21s) https://vimeo.com/24749599 WATCH THE VIDEO CLICK TO
  94. 94. 94 / 113 Coming Soon Video Explainer MVP Initial MVP • Screen flow movie of mockups • Landing Page – sign up if you are interested • Posted on Hacker News and Digg Result: 90,000 Signups in Three Days © Copyright 2013 İsmail Berkan 3: Ten Steps for Tech Startups 19 September 2013
  95. 95. 95 / 113© Copyright 2013 İsmail Berkan 3: Ten Steps for Tech Startups 19 September 2013
  96. 96. 96 / 113 Take the photo Email the photo Concierge and Flinstoning MVP © Copyright 2013 İsmail Berkan 3: Ten Steps for Tech Startups 19 September 2013
  97. 97. 97 / 113 Crowdfunding MVP © Copyright 2013 İsmail Berkan 3: Ten Steps for Tech Startups 19 September 2013
  98. 98. 98 / 113 Collect Email Adresses & Survey MVP © Copyright 2013 İsmail Berkan 3: Ten Steps for Tech Startups 19 September 2013
  99. 99. 99 / 113© Copyright 2013 İsmail Berkan 3: Ten Steps for Tech Startups 19 September 2013
  100. 100. 100 / 113 Currency ($) Pitch MVP © Copyright 2013 İsmail Berkan 3: Ten Steps for Tech Startups 19 September 2013
  101. 101. 101 / 113© Copyright 2013 İsmail Berkan 3: Ten Steps for Tech Startups 19 September 2013 How to test & validate a startup in 10 weeks Danbits.com Case Study Click the link below to watch the video (7m04s) http://vimeo.com/64520024 WATCH THE VIDEO CLICK TO
  102. 102. 102 / 113 Step 8: Pivot or not Pivot Don’t Let This Happen To You: • Thinking and accepting pivot as a failure • Pivoting away from your goals or purpose • Unwilling to pivot • Pivot too often and too soon • Panic at the pivot "A change in STRATEGY without a change in VISION." Eric Ries 70% of every startup would possibly pivot from the initial idea. © Copyright 2013 İsmail Berkan 3: Ten Steps for Tech Startups 19 September 2013
  103. 103. 103 / 113 "I'm not leaving you. I'm pivoting to another man." © Copyright 2013 İsmail Berkan 3: Ten Steps for Tech Startups 19 September 2013
  104. 104. 104 / 113 Fall in love with your customers, market and business model not with your product/service. Step 9: Build the Right Product © Copyright 2013 İsmail Berkan 3: Ten Steps for Tech Startups “You’ve got to start with the customer experience and work back toward the technology – not the other way around.” Steve Jobs 19 September 2013
  105. 105. 105 / 113 Discover Your Business Model Problem Solution Customer Segments Channels Revenue Streams Cost Structure Key Metrics Unfair Advantage Unique Value Proposition © Copyright 2013 İsmail Berkan 3: Ten Steps for Tech Startups 19 September 2013
  106. 106. 106 / 113 Step 10: Get Funding Only ask for funding when you have a: • Successful customer/problem/solution fit • Validated product with market • Pivot successfully at least one time • Significant traction • Right team with complementary skills • Delightful solution to a painful problem • Scalable and growing market • Repeatable sales and revenue model • Clear and profitable business model • Competitive advantage and it's better than competitors • Marketing plan on how do you get customers • Serial entrepreneur experience with successful exit What do you need from investors: • How much are you raising and how will you spend the money? © Copyright 2013 İsmail Berkan 3: Ten Steps for Tech Startups 19 September 2013
  107. 107. 107 / 113 Source: Steve Blank © Copyright 2013 İsmail Berkan 3: Ten Steps for Tech Startups How to Get a VC Meeting 19 September 2013
  108. 108. 108 / 113 Source: Y Combinator © Copyright 2013 İsmail Berkan 19 September 2013
  109. 109. 109 / 113© Copyright 2013 İsmail Berkan “Successful startups are the ones who have enough money left over to try their second idea.” —Clayton Christensen, Author and Harvard Professor Change or Fail Fast 19 September 2013
  110. 110. 110 / 113© Copyright 2013 İsmail Berkan Summary • Be Honest with Yourself & Discover Truth • Know Your Purpose & Aim to the Happy Spot • Get out of Your Comfort Zone • Be Willing to Search & Discover Your Business Model • Think Big, Start Small & Act Fast • Build a Great Team with Complementary Skills • Be Prepared for the Experiments • Find a Big Customer Pain or Need • Always Get out of the Building (GOOB) • Validate All Unknowns & Assumptions • Maximize Experiments for Focus, Speed & Learning • Focus on the Problems & Customers, Not the Solutions • Nail It, Then Scale It 19 September 2013
  111. 111. 111 / 11319 September 2013© Copyright 2013 İsmail Berkan • Stay Lean & Agile • Work on the Business Models not the Business Plans • Code Faster, Measure Faster, Learn Faster & Succeed Faster • Learn Early, Learn Often & Learn Fast • Change (Iterate & Pivot) or Fail Fast & Fail Well • Learn & Be Ready for the Pivot • Don’t be Shy to Feel the Pain • Scale Fast and Smart • Waste No Time, Money or Resources • Approach to the Right Investor at the Right Time • Keep It Simple • Sell First, Build Later • Make Something People Passionately Want Summary (Cont'd.)
  112. 112. 112 / 113© Copyright 2013 İsmail Berkan 19 September 2013
  113. 113. 113 / 113 İsmail BERKAN Email ismail@ismailberkan.com Twitter https://twitter.com/ismailberkan Linkedin http://tr.linkedin.com/in/ismailberkan © Copyright 2013 İsmail Berkan 19 September 2013

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