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Outlier Ventures - How We Create Startup Traction

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This outlines our 'venture building' process for startups over the first 6 months of its life to establish Product / Market Fit.

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Outlier Ventures - How We Create Startup Traction

  1. 1. MPV The Traction Book Building sustainable businesses
  2. 2. Traction is when.. • We have tested our understanding of the customer problem / need • We have tested the customer agrees we have the solution to their problem / need • We have tested our understanding of who the customer is & why they care • We have tested that we have a problem/solution fit for each customer segment • We have tested our hypotheses about our business model • We have tested that some of our ideal customers will buy our solution • We have tested a repeatable & scalable positioning & customer acquisition process • We have achieved product/market fit • We are now ready to scale up sales & marketing
  3. 3. 90% of startups fail but not always straight away
  4. 4. That means most startups are the living dead aka ‘Zombies’. In some cases wasting millions. So raising money isn’t an indicator of success
  5. 5. Most start-ups fail because: a. Don’t establish ‘Product-Market Fit’. This means their assumptions were false and never challenged or challenged too late. b. Run out of cash. This is because they haven’t built a compelling and ongoing narrative for investors with demonstrable traction. c. Wrong Team. Having the right people working in the right team is the hardest part to get right. You will see these people more than your friends & family under immense pressures so pick wisely.
  6. 6. 2 1 Technical Support Capital Advisory Research Growth We provide pre- seed & seed capital to help you get to ‘product market fit’ We provide proven incubation & acceleration platforms to help you quickly get to ‘product market fit’ We have in-house blockchain CTO’s, front & back end developers We have an insights team that provide analyst support throughout your project Our investor group provide support and access to their networks to gain advice & feedback We are your.. Other Co-founder
  7. 7. Our Approach to De-Risking 1.Lean Startup 2.Agile Engineering 3.Founder Dating 4.Atomised Investing } To reach Product Market Fit
  8. 8. Product/market fit means being in the right market with the right product at the right time.
  9. 9. Customer Discovery Customer Creation Possible Pivot SEARCH EXECUTION 1. Lean Business: Optimal valuation creation with minimal waste We first find a customer & understand their needs before we build a line of code or form any company. Only once this iterative process is complete do we try and scale a company. Company Building Customer Validation
  10. 10. 2. Agile Engineering: Insight led iterative development We focus on small but regular releases, constantly tested and informed by direct feedback from users
  11. 11. 3. Founder Dating Hoping for the best preparing for the worst • One of the most important keys to startup success is team chemistry • Sadly some start-ups get tied up in complex legal structures only to find out they aren’t compatible. • This then becomes very difficult for either party to extricate themselves from • As your ‘other co-founder’ we look to ‘date’ one another first within loose but secure contractual agreements that protect the IP but has an easy get out clause for both sides • Firstly we want to establish there is an opportunity and secondly we’re both going to enjoy working together realising it • Once both of these boxes are ticked we form a joint venture together
  12. 12. 4. Atomised Investing: Investing early & against progress • VCs have learnt the hard way that investing smaller amounts earlier de-risks the process for all parties • Many are now beginning to act on this knowledge or leave this phase investing entirely until after product-market fit has been established • We have chosen to invest at a pre-seed stage with both capital and value throughout to the full the seed cycle • We spread our investments across a series of small ‘sprints’ of work, usually on a quarterly basis, each with a clear and well defined stage gate
  13. 13. Customer Development Product Development Business Creation Atomised Financing Product / Market Fit Problem / Solution Fit We seek to understand the customers problem they will pay to be fixed and our ability to solve it. We seek to test the solution to the problem is the right one. We finance well defined stages with clear exit gates where we choose to progress, pivot or ditch. We form a company and begin to build a team to deliver against the strategy. Founder Dating We experiment with you and test the working relationship making it easy for both parties to exit cleanly. Bringing it all together Company Formation
  14. 14. Customer Discovery Translating the founder’s vision for the company into hypotheses about each component of the business model and creating a set of experiments to test each hypothesis.
  15. 15. Customer Discovery is done when... • We have tested our understanding of the customer problem (or need) • We have tested our understanding of the customer’s agreement that we have the solution to their problem (or need) • We have tested our understanding of who the customer is & why they care • We have tested that we have a problem/solution fit for each well-understood customer segment • We have tested our hypotheses about our business model and it holds • Otherwise, we diitch or pivot and iterate
  16. 16. Test. Learn. Repeat. Founders must be comfortable with failure when it leads to learning & iteration
  17. 17. 1. State Hypothesis 2. Test Problem 3. Test Solution 4. Verify or Pivot Draw Business Model Canvas with your various assumptions • Get out of the building • Build wireframe / prototype a ‘Low Fidelity MVP’ • Test understand of problem / need • Build ‘High Fidelity App’ • Get customer agreement you have solution PRODUCT MARKET FIT • Do people agree you are solving a high value problem or need • Do you understand the business model enough to test
  18. 18. MVP • A Low-Fidelity MVP is the simplest minimum viable product. It’s purpose is to gather feedback about the validity of the customer problem. (e.g. a landing-page with a sign-up to get more information). • A High-Fidelity MVP is a modest minimum viable product. It’s purpose is to gather feedback about the validity of the customer solution. (e.g. a website with the core features implemented)
  19. 19. Not like this Like this
  20. 20. • Build minimum features to gain feedback • Demo quickly • Rapidly & iteratively get customer feedback • The more feedback the more features
  21. 21. Next Steps Building out a roadmap for action
  22. 22. Putting the flag in the ground What is the wrong you are trying to fix? This is not a mission statement, Nor is it about profit or product The thing that motivates you And will motivate your customers And your staff
  23. 23. Creating A Business Model Canvas
  24. 24. Customer Discovery Customer Validation Possible Pivot - Define business model - Test problem - Test solution - Refine business model - Realise Prototype - Start MVP 1.0 - Re-test problem - Re-test solution - Refine business model - Iterate MVP - Test acquisition process - Test sell (1st customers) - Refine acquisition process - Iterate MVP - Test sell (more customers) - Refine acquisition process - Iterate MVP Sprint 1 Sprint 2 Sprint 3 Sprint 4 Problem / Solution Fit Product / Market Fit 2 – 3 Months 2 – 4 Months Planning
  25. 25. Actions 1. Agree who does what against Customer Discovery & Validation sprints 2. Timeline sprints, based on availability & seasonality, for next 2 x quarters 3. Confirm IP split & put in place a Collaboration Agreement 4. Setup sharing environments in Slack, Basecamp & Aha! 5. Formally commit all IP to sharing environments 6. Schedule kick-off meeting & weekly calls

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