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Intro to Lean Startup

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1. What is a startup?
2. What is a lean startup?
3. How do lean startups operate?
4. What do lean startups believe?

Presented to the Asia Pacific Leadership Program at the East West Center, Octobe4, 2014.

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Intro to Lean Startup

  1. 1. Intro to Lean Startup Isaac Souweine Head of Product @ Frank & Oak Presented at the Oct., 2014
  2. 2. I. What is a startup?
  3. 3. What is a startup? “A startup is an organization formed to search for a repeatable and scalable business model.” - Steve Blank Source: http://steveblank.com/2010/01/25/whats-a-startup-first-principles/
  4. 4. Let’s unpack that definition A startup is an organization formed to search for a repeatable and scalable business model. -Steve Blank Source: http://steveblank.com/2010/01/25/whats-a-startup-first-principles/
  5. 5. So what is not a startup? ● A small business is not a startup ● A large company is not a startup ● Non-profits and govts are not startups
  6. 6. So what is not a startup? ● A small business is not a startup ● A large company is not a startup ● Non profits and govts are not startups ● But all of these organizations can learn from startups!
  7. 7. Why should you care about startups? ● You might want to start one! ● You might want to work for one ● You might need to engage with them ● You can definitely learn from them
  8. 8. What can you learn from startups? ● How to deal with uncertainty ● How to work with limited resources ● How to create something genuinely new
  9. 9. II. What is a lean startup?
  10. 10. What is a lean startup? "Lean Startup" is a system for developing a business or product in the most efficient way possible to reduce the risk of failure.” Source: http://leanstartup.pbworks.com/w/page/65946049/Intro%20to%20Lean%20Startup
  11. 11. Let’s unpack that definition ● Startups are extremely risky ● Lean startup is not about removing risk, it is about managing risk ● Lean startups manage risk by linking “investment” (quantum of risk) to validation (risk reduction)
  12. 12. Where does lean startup come from?
  13. 13. Where does it really come from? ● Lean manufacturing (Toyota) ● Agile development (Many folks) ● Innovation theory (C. Christensen) ● Customer development theory (S. Blank)
  14. 14. What is lean startup responding to? PETS.COM NASDAQ 2000 - 2002
  15. 15. How is lean startup different? ● Engage with customers immediately ● Launch fast and iterate ● Set clear milestones for “investment” ● Change direction as needed ● Treat every aspect of the startup as a hypothesis that needs to be proven
  16. 16. III. How do lean startups operate?
  17. 17. Lean Canvas
  18. 18. Lean Canvas Every cell in the canvas is a hypothesis that is waiting to be proven.
  19. 19. Build - Measure - Learn Source: http://www.400minutes.com/build-measure-learn-spiral/ ● Build something ● Measure results ● Learn something ● Rinse and repeat
  20. 20. Customer Development ● Formal technique for engaging with customers prior to product development ● Generally starts with interviews (problem or solution) cf Steve Blank ● Can also include various online tests and experiments before building a product
  21. 21. Customer Development
  22. 22. Customer Development
  23. 23. Customer Development Source: http://blog.bufferapp.com/idea-to-paying-customers-in-7-weeks-how-we-did-it
  24. 24. Customer Development
  25. 25. Problem/Solution Fit ● The output of a successful customer development cycle ● Confirmation of: ○ a well defined customer segment ○ a real problem that the customer has ○ a plausible solution to that problem
  26. 26. Problem/Solution Fit
  27. 27. Problem/Solution Fit Source: http://blog.bufferapp.com/idea-to-paying-customers-in-7-weeks-how-we-did-it
  28. 28. Minimum Viable Product “The smallest possible version of your product that delivers customer value.” -Ash Maurya
  29. 29. Minimum Viable Product
  30. 30. Minimum Viable Product
  31. 31. Minimum Viable Product
  32. 32. Minimum Viable Product Source: https://www.udemy.com/lean-startup-sxsw-2012-videos-and-presentations/#/lecture/74035
  33. 33. Pivoting ● Orderly response to “failure” ● Product pivots - zoom in, out ● Customer pivots - zoom in, out, switch ● Other pivots - channel, platform etc. ● The smaller/faster the pivot the better ● The bigger the pivot, the more painful
  34. 34. Pivoting
  35. 35. Pivoting
  36. 36. Pivoting Zoom In Pivot
  37. 37. Pivoting Problem Pivot
  38. 38. Product/Market Fit ● The only thing that matters ● Roughly corresponds to confirmation of a scalable business model ● Does not correspond to profitability ● Lots of argument about how to define it ● Will trigger funding for scale/efficiency
  39. 39. Product/Market Fit
  40. 40. Product/Market Fit
  41. 41. A/B Testing ● Long time marketing technique embraced by lean startups ● More about incremental improvement ● Becomes extremely relevant after product/market fit
  42. 42. A/B Testing
  43. 43. A/B Testing
  44. 44. IV. What do lean startups believe?
  45. 45. Lean Startup beat “fat” startups “Fat” Startups Lean Startups Pre launch Stealth mode Landing page Product Fully featured MVP Initial Investment Large Small Risk Super high Moderate Note - that said, sometimes fat is the way to go
  46. 46. Startups are not like big companies, so they should not act like them Big Company Startup Customer Knows its customer Not sure about its customer Product Mature product Immature product Innovation Incremental Disruptive Learning speed Slow Fast
  47. 47. Startups are learning organizations ● A startup is a series of hypothesis ● The goal of the startup is to move from hypothesis to fact ● The customer is the only source of facts ● The measure of an early stage startup is the speed at which it produces facts
  48. 48. isouweine [at] gmail @sonofsarah

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