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Lean Startup presentation at Kellogg Entrepreneurship Conference

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I gave a Lean Startup presentation at Kellogg Entrepreneurship Conference on Wed May 25, 2011. It's an intro presentation so if you know lean well already, it's all review.

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Lean Startup presentation at Kellogg Entrepreneurship Conference

  1. 1. Lean StartupsThe Manufacturing of Innovation
  2. 2. Who am I?john@blueleaf.com - @johnprendergast - About.Me/JohnPrendergast
  3. 3. Founder of Blueleaf.com Who am I?john@blueleaf.com - @johnprendergast - About.Me/JohnPrendergast
  4. 4. Founder of Blueleaf.com Board Member oneforty Who am I?john@blueleaf.com - @johnprendergast - About.Me/JohnPrendergast
  5. 5. Founder of Blueleaf.com Mentor at Techstars Board Member oneforty Who am I?john@blueleaf.com - @johnprendergast - About.Me/JohnPrendergast
  6. 6. Founder of Blueleaf.com Mentor at Techstars Board Member oneforty Who am I? One of the first Boston Chicken Franchiseesjohn@blueleaf.com - @johnprendergast - About.Me/JohnPrendergast
  7. 7. Founder of Blueleaf.com Mentor at Techstars Board Member oneforty Who am I? One of the first Boston Chicken FranchiseesProduct Management at a series of startups john@blueleaf.com - @johnprendergast - About.Me/JohnPrendergast
  8. 8. Founder of Blueleaf.com Mentor at Techstars Board Member oneforty Who am I? One of the first Boston Chicken FranchiseesProduct Management at a series of startups Investment Banker for Tech Cos john@blueleaf.com - @johnprendergast - About.Me/JohnPrendergast
  9. 9. Lean Startups
  10. 10. Name has caused confusion
  11. 11. Toyota Production System Lean Manufacturing
  12. 12. Minimize waste ... http-//www.flickr.com/photos/editor/172690560/sizes/l/in/photostream/.jpg
  13. 13. Not cheap or bootstrapped
  14. 14. Startups?
  15. 15. It’s where innovation happens
  16. 16. What is a startup?
  17. 17. What is a startup?• A startup is a human institution designed to deliver a new product or service under conditions of extreme uncertainty• Nothing to do with size of the company, sector of the economy or industry
  18. 18. Said Differently ...
  19. 19. Innovation
  20. 20. Innovation Manufacturing
  21. 21. Innovation ManufacturingRepeatable process for creating market accepted innovation
  22. 22. Innovation ManufacturingApply lean manufacturing principles and the scientific method to the process of innovation
  23. 23. Lean StartupsApply lean manufacturing principles and the scientific method to the process of innovation
  24. 24. CAUTION_http-//www.flickr.com/photos/32315759@N00/452776240/sizes/z/in/photostream/
  25. 25. Methodology Can’tReplace Judgement
  26. 26. Or Replace Vision
  27. 27. Why bother with this?
  28. 28. Source: Eric Ries
  29. 29. Most Innovations Fail Source: Eric Ries
  30. 30. It doesn’t need to be that way . . .
  31. 31. Why Do Startups Fail?
  32. 32. Lack of Customers
  33. 33. Question?
  34. 34. Does it make sense that we haveproduct development process ... Source: Steve Blank
  35. 35. ... but a not a Customer Development Process?
  36. 36. Entrepreneurial Superpowers
  37. 37. Vision / Delusional CapacityEntrepreneurial Superpowers
  38. 38. Vision / Delusional Capacity Bias for ActionEntrepreneurial Superpowers
  39. 39. Steve Blank Hypotheses• Entrepreneurs and Investors are generally executing on guesses• Startups aren’t small versions of large organizations• They are about learning/discovery, not execution• Need to surface hypotheses/assumptions and test against facts• However, the Facts Live Outside of the Building
  40. 40. Led to CustomerDevelopment Model Source: Steve Blank
  41. 41. Customer Development is at the Heart of Lean Startups
  42. 42. Surface Hypotheses & Test
  43. 43. Facts Live Outside of the Building
  44. 44. Separate Vision from Delusion
  45. 45. Customer Development
  46. 46. Eric Ries Extended Model• Steve realized the Problem was unknown,• Eric’s Insights • Given that the Solution is also unknown • Agile development needed to match Customer development speed
  47. 47. Built To Learn IDEAS LEARN BUILD DATA CODE MEASURE
  48. 48. John Boyd’s Insight IDEAS LEARN BUILD DATA CODE MEASURE
  49. 49. John Boyd’s InsightOODA Loop IDEAS LEARN BUILD DATA CODE MEASURE
  50. 50. John Boyd’s Insight OODA Loop IDEAS• Observe, Orient, Decide, Act LEARN BUILD DATA CODE MEASURE
  51. 51. John Boyd’s Insight OODA Loop IDEAS• Observe, Orient, Decide, Act LEARN BUILD• Depends on accurate external data DATA CODE MEASURE
  52. 52. John Boyd’s Insight OODA Loop IDEAS• Observe, Orient, Decide, Act LEARN BUILD• Depends on accurate external data DATA CODE MEASURE• Speed through the loop beats quality of iteration
  53. 53. Changes Context of Progress
  54. 54. Not About Working Big Plan
  55. 55. Progress =Validated Learning About Customers
  56. 56. Or we can accelerate into a brick wall
  57. 57. Changes scope ofdevelopment efforts
  58. 58. Changes scope of development efforts• Huge feature lists don’t make sense
  59. 59. Changes scope of development efforts• Huge feature lists don’t make sense
  60. 60. Changes scope of development efforts• Huge feature lists don’t make sense• Actual working product may not make sense
  61. 61. Changes scope of development efforts• Huge feature lists don’t make sense• Actual working product may not make sense
  62. 62. Changes scope of development efforts• Huge feature lists don’t make sense• Actual working product may not make sense• Create the smallest amount of “product” necessary to learn
  63. 63. Minimum Viable Product
  64. 64. Product / Market Fit“Do whatever is required to get to product/market fit. Including: changing out people, rewriting your product, moving into a different market, telling customers no when you don’t want to, telling customers yes when you don’t want to, raising that fourth round of highly dilutive venture capital —whatever is required.” — Marc Andreessen http://blog.pmarca.com/2007/06/the-pmarca-gu-2.html
  65. 65. Great Startups Adjust To Facts
  66. 66. The Pivot http://startuplessonslearned.blogspot.com/2009/06/pivot-dont-jump-to-new-vision.html
  67. 67. The Pivot• What do successful startups have in common? • They started out as digital cash for PDAs, but evolved into online payments for eBay. • They started building BASIC interpreters, but evolved into the worlds largest operating systems monopoly. • They were shocked to discover their online games company was actually a photo-sharing site. http://startuplessonslearned.blogspot.com/2009/06/pivot-dont-jump-to-new-vision.html
  68. 68. The Pivot• What do successful startups have in common? • They started out as digital cash for PDAs, but evolved into online payments for eBay. • They started building BASIC interpreters, but evolved into the worlds largest operating systems monopoly. • They were shocked to discover their online games company was actually a photo-sharing site. http://startuplessonslearned.blogspot.com/2009/06/pivot-dont-jump-to-new-vision.html
  69. 69. The Pivot• What do successful startups have in common? • They started out as digital cash for PDAs, but evolved into online payments for eBay. • They started building BASIC interpreters, but evolved into the worlds largest operating systems monopoly. • They were shocked to discover their online games company was actually a photo-sharing site.• Pivot: change directions but stay grounded in what we’ve learned. http://startuplessonslearned.blogspot.com/2009/06/pivot-dont-jump-to-new-vision.html
  70. 70. The Pivot PIVOTCARTOON_http-//www.newyorker.com/humor/issuecartoons/2010/04/26/cartoons_20100419#slide=2
  71. 71. On Pivots @dbinetti
  72. 72. On Pivots @dbinetti
  73. 73. On Pivots• Pivots are restatements of your business model; not synonymous with product change @dbinetti
  74. 74. On Pivots• Pivots are restatements of your business model; not synonymous with product change @dbinetti
  75. 75. On Pivots• Pivots are restatements of your business model; not synonymous with product change• Pivots are a consequence of learning about your business, not just your product @dbinetti
  76. 76. On Pivots• Pivots are restatements of your business model; not synonymous with product change• Pivots are a consequence of learning about your business, not just your product @dbinetti
  77. 77. On Pivots• Pivots are restatements of your business model; not synonymous with product change• Pivots are a consequence of learning about your business, not just your product• Pivots are vision-driven, not testing driven @dbinetti
  78. 78. Speed Wins ...
  79. 79. What about management process?
  80. 80. Leading & Managing Lean
  81. 81. Leading & Managing Lean• People don’t rally around experiments - “It’s the vision stupid”
  82. 82. Leading & Managing Lean• People don’t rally around experiments - “It’s the vision stupid”
  83. 83. Leading & Managing Lean• People don’t rally around experiments - “It’s the vision stupid”• Everything starts with vision then rigorously test against actual results
  84. 84. Leading & Managing Lean• People don’t rally around experiments - “It’s the vision stupid”• Everything starts with vision then rigorously test against actual results
  85. 85. Leading & Managing Lean• People don’t rally around experiments - “It’s the vision stupid”• Everything starts with vision then rigorously test against actual results• Optimize Total Time through the loop
  86. 86. Leading & Managing Lean• People don’t rally around experiments - “It’s the vision stupid”• Everything starts with vision then rigorously test against actual results• Optimize Total Time through the loop
  87. 87. Leading & Managing Lean• People don’t rally around experiments - “It’s the vision stupid”• Everything starts with vision then rigorously test against actual results• Optimize Total Time through the loop• Traditional management tools are not built for extreme uncertainty
  88. 88. Leading & Managing Lean• People don’t rally around experiments - “It’s the vision stupid”• Everything starts with vision then rigorously test against actual results• Optimize Total Time through the loop• Traditional management tools are not built for extreme uncertainty
  89. 89. Leading & Managing Lean• People don’t rally around experiments - “It’s the vision stupid”• Everything starts with vision then rigorously test against actual results• Optimize Total Time through the loop• Traditional management tools are not built for extreme uncertainty• Iteration speed is governed by speed of learning not “building”
  90. 90. Start with Vision and adjust
  91. 91. Unit Economics & Biz model NOT projections
  92. 92. Openness NOT command and control
  93. 93. Learning Can Be Scary
  94. 94. Innovation accounting
  95. 95. Innovation accounting• Establish the Baseline • Build the minimum viable product • Measure how customers behave right now
  96. 96. Innovation accounting• Establish the Baseline • Build the minimum viable product • Measure how customers behave right now
  97. 97. Innovation accounting• Establish the Baseline • Build the minimum viable product • Measure how customers behave right now• Tune the Engine • Experiment to move metrics from baseline to ideal
  98. 98. Innovation accounting• Establish the Baseline • Build the minimum viable product • Measure how customers behave right now• Tune the Engine • Experiment to move metrics from baseline to ideal
  99. 99. Innovation accounting• Establish the Baseline • Build the minimum viable product • Measure how customers behave right now• Tune the Engine • Experiment to move metrics from baseline to ideal• Pivot or persevere • When experiments reach diminishing returns some distance from goal
  100. 100. In Action - Stanford Lean Launchpad
  101. 101. Tactical fun with MVPs
  102. 102. Minimum Viable Product• Minimum set of features needed to learn from earlyvangelists - visionary early customers • Avoid building products that nobody wants • Max learning per $• Probably much more minimum than you think
  103. 103. Minimum Viable Product• Visionary customers can “fill in the gaps” on missing features, if the product solves a real problem• Allows us to achieve a big vision in small increments without going in circles• Requires a commitment to iteration• MVP is only for BIG VISION products; unnecessary for minimal products
  104. 104. Minimum Viable Product
  105. 105. Minimum Viable Product• Smoke testing with landing pages, adwords
  106. 106. Minimum Viable Product• Smoke testing with landing pages, adwords• SEM on $5 per day
  107. 107. Minimum Viable Product• Smoke testing with landing pages, adwords• SEM on $5 per day• In-product split testing
  108. 108. Minimum Viable Product• Smoke testing with landing pages, adwords• SEM on $5 per day• In-product split testing• Paper prototypes
  109. 109. Minimum Viable Product• Smoke testing with landing pages, adwords• SEM on $5 per day• In-product split testing• Paper prototypes• Keynote products
  110. 110. Minimum Viable Product• Smoke testing with landing pages, adwords• SEM on $5 per day• In-product split testing• Paper prototypes• Keynote products• Concierge tests
  111. 111. Minimum Viable Product• Smoke testing with landing pages, adwords• SEM on $5 per day• In-product split testing• Paper prototypes• Keynote products• Concierge tests• Cohort and Engagement
  112. 112. MVP Fears
  113. 113. MVP Fears• False negative: “customers would have liked the full product but the MVP sucks, so we abandoned the vision
  114. 114. MVP Fears• False negative: “customers would have liked the full product but the MVP sucks, so we abandoned the vision
  115. 115. MVP Fears• False negative: “customers would have liked the full product but the MVP sucks, so we abandoned the vision• Visionary complex “Customers don’t know what they want”
  116. 116. MVP Fears• False negative: “customers would have liked the full product but the MVP sucks, so we abandoned the vision• Visionary complex “Customers don’t know what they want”
  117. 117. MVP Fears• False negative: “customers would have liked the full product but the MVP sucks, so we abandoned the vision• Visionary complex “Customers don’t know what they want”• Too busy to learn: “it would be faster to just built it right, all this measuring distracts from delighting customers”
  118. 118. Lean Startup Principles
  119. 119. Lean Startup Principles• Innovation & Entrepreneurship is management
  120. 120. Lean Startup Principles• Innovation & Entrepreneurship is management
  121. 121. Lean Startup Principles• Innovation & Entrepreneurship is management• Validated Learning
  122. 122. Lean Startup Principles• Innovation & Entrepreneurship is management• Validated Learning
  123. 123. Lean Startup Principles• Innovation & Entrepreneurship is management• Validated Learning• Build - Measure - Learn
  124. 124. Lean Startup Principles• Innovation & Entrepreneurship is management• Validated Learning• Build - Measure - Learn
  125. 125. Lean Startup Principles• Innovation & Entrepreneurship is management• Validated Learning• Build - Measure - Learn• Speed through the loop beat quality
  126. 126. Lean Startup Principles• Innovation & Entrepreneurship is management• Validated Learning• Build - Measure - Learn• Speed through the loop beat quality
  127. 127. Lean Startup Principles• Innovation & Entrepreneurship is management• Validated Learning• Build - Measure - Learn• Speed through the loop beat quality• Innovation Accounting
  128. 128. People and Resources Textjohn@blueleaf.com - @johnprendergast - About.Me/JohnPrendergast
  129. 129. People and Resources• Steve Blank - www.steveblank.com, includes the Standford Lean Launchpad Text john@blueleaf.com - @johnprendergast - About.Me/JohnPrendergast
  130. 130. People and Resources• Steve Blank - www.steveblank.com, includes the Standford Lean Launchpad - Book: 4 Steps to the Epiphany Text john@blueleaf.com - @johnprendergast - About.Me/JohnPrendergast
  131. 131. People and Resources• Steve Blank - www.steveblank.com, includes the Standford Lean Launchpad - Book: 4 Steps to the Epiphany• Eric Ries - www.startuplessonslearned.com Text john@blueleaf.com - @johnprendergast - About.Me/JohnPrendergast
  132. 132. People and Resources• Steve Blank - www.steveblank.com, includes the Standford Lean Launchpad - Book: 4 Steps to the Epiphany• Eric Ries - www.startuplessonslearned.com - Book: The Lean Startup Text john@blueleaf.com - @johnprendergast - About.Me/JohnPrendergast
  133. 133. People and Resources• Steve Blank - www.steveblank.com, includes the Standford Lean Launchpad - Book: 4 Steps to the Epiphany• Eric Ries - www.startuplessonslearned.com - Book: The Lean Startup Text• Patrick Vlaskovits & Brant Cooper - Vlaskovits.com, market-by-numbers.com john@blueleaf.com - @johnprendergast - About.Me/JohnPrendergast
  134. 134. People and Resources• Steve Blank - www.steveblank.com, includes the Standford Lean Launchpad - Book: 4 Steps to the Epiphany• Eric Ries - www.startuplessonslearned.com - Book: The Lean Startup Text• Patrick Vlaskovits & Brant Cooper - Vlaskovits.com, market-by-numbers.com - The Entrepreneurs Guide to Customer Development john@blueleaf.com - @johnprendergast - About.Me/JohnPrendergast
  135. 135. People and Resources• Steve Blank - www.steveblank.com, includes the Standford Lean Launchpad - Book: 4 Steps to the Epiphany• Eric Ries - www.startuplessonslearned.com - Book: The Lean Startup Text• Patrick Vlaskovits & Brant Cooper - Vlaskovits.com, market-by-numbers.com - The Entrepreneurs Guide to Customer Development• Meetup.com, local Lean Startup Circle Meetups - ~20,000 members globally john@blueleaf.com - @johnprendergast - About.Me/JohnPrendergast
  136. 136. People and Resources• Steve Blank - www.steveblank.com, includes the Standford Lean Launchpad - Book: 4 Steps to the Epiphany• Eric Ries - www.startuplessonslearned.com - Book: The Lean Startup Text• Patrick Vlaskovits & Brant Cooper - Vlaskovits.com, market-by-numbers.com - The Entrepreneurs Guide to Customer Development• Meetup.com, local Lean Startup Circle Meetups - ~20,000 members globally http://lean-startup.meetup.com/ john@blueleaf.com - @johnprendergast - About.Me/JohnPrendergast
  137. 137. People and Resources• Steve Blank - www.steveblank.com, includes the Standford Lean Launchpad - Book: 4 Steps to the Epiphany• Eric Ries - www.startuplessonslearned.com - Book: The Lean Startup Text• Patrick Vlaskovits & Brant Cooper - Vlaskovits.com, market-by-numbers.com - The Entrepreneurs Guide to Customer Development• Meetup.com, local Lean Startup Circle Meetups - ~20,000 members globally http://lean-startup.meetup.com/• Lean Startup Circle online - ~4,000 members with active discussions john@blueleaf.com - @johnprendergast - About.Me/JohnPrendergast
  138. 138. People and Resources• Steve Blank - www.steveblank.com, includes the Standford Lean Launchpad - Book: 4 Steps to the Epiphany• Eric Ries - www.startuplessonslearned.com - Book: The Lean Startup Text• Patrick Vlaskovits & Brant Cooper - Vlaskovits.com, market-by-numbers.com - The Entrepreneurs Guide to Customer Development• Meetup.com, local Lean Startup Circle Meetups - ~20,000 members globally http://lean-startup.meetup.com/• Lean Startup Circle online - ~4,000 members with active discussions https://groups.google.com/group/lean-startup-circle john@blueleaf.com - @johnprendergast - About.Me/JohnPrendergast

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