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Lean Startup Essentials - STARTup Live Hagenberg

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Lean Startup Essentials - STARTup Live Hagenberg

  1. 1. Lean Startup Essentials Lean Startup Essentials Lukas Fittl lukas@fittl.com STARTup Live Hagenberg 14th May 2011
  2. 2. Lean Startup Essentials Agenda Today’s focus: The early stage • 10 - 20min blocks, quick Q&A after each • 1: Why? & The Canvas • 2: Customer Discovery • 3: Case Study
  3. 3. Lean Startup Essentials #1 Part 1: Why? & Lean Canvas
  4. 4. Lean Startup Essentials #1: Introduction About Me • 2nd time entrepreneur • 2007-2010: Soup.io • The Efficient Cloud “Heroku for Europe” to “PaaS technology for hosting providers” (Seedcamp 2011 company) • Collaborated with Ash Maurya on the Lean Canvas
  5. 5. Lean Startup Essentials #1: Introduction Whats the Lean Startup? • A methodology on how to create order in the (unavoidable) chaos of a startup. • Iterative approach to learning & building (as in: agile vs. waterfall) • Summarization of entrepreneurial learnings.
  6. 6. Lean Startup Essentials #1: Introduction Where this all comes from • Steve Blank - Customer Development • Alex Osterwalder - Business Model Canvas • Eric Ries - The Lean Startup • Ash Maurya - Lean Canvas
  7. 7. Lean Startup Essentials #1: Lean Startup Most startups fail from a lack of (paying) customers.
  8. 8. Lean Startup Essentials #1: Lean Startup Startups are not just a small version of a big company.
  9. 9. Lean Startup Essentials #1: Lean Startup Startup: Temporary organization used to search for a repeatable and scalable business model. As defined by Steve Blank.
  10. 10. Lean Startup Essentials #1: Lean Startup Your initial goal: Improve likely success rate of your venture, and reduce risk of failure. Enable yourself to actually make the jump into a full-time entrepreneur.
  11. 11. Lean Startup Essentials #1: Lean Startup Your Process: Likely entirely chaotic. No one implements the lean startup as a strict process. Similar to agile adoption (e.g. Kan-ban) you need to make a slow transition into more structured thinking.
  12. 12. Lean Startup Essentials #1: The BM Canvas So, we need a language in order to talk about your startup.
  13. 13. Lean Startup Essentials #1: The BM Canvas Product is only one of the critical aspects that make your company work.
  14. 14. Lean Startup Essentials #1: The BM Canvas The Business Model Canvas
  15. 15. Lean Startup Essentials #1: The BM Canvas Alex Osterwalder - Business Model Generation
  16. 16. Lean Startup Essentials #1: The BM Canvas Day Month Year No. Who are our Key Partners? What Key Activities do our Value Propositions require? What value do we deliver to the customer? What type of relationship does each of our Customer For whom are we creating value? Who are our key suppliers? Our Distribution Channels? Which one of our customer’s problems are we helping to solve? Segments expect us to establish and maintain with them? Who are our most important customers? Which Key Resources are we acquiring from partners? Customer Relationships? What bundles of products and services are we offering to each Customer Segment? Which ones have we established? Which Key Activities do partners perform? Revenue streams? Which customer needs are we satisfying? How are they integrated with the rest of our business model? How costly are they? What Key Resources do our Value Propositions require? Through which Channels do our Customer Segments Our Distribution Channels? Customer Relationships? want to be reached? Revenue Streams? How are we reaching them now? How are our Channels integrated? Which ones work best? Which ones are most cost-efficient? How are we integrating them with customer routines? What are the most important costs inherent in our business model? For what value are our customers really willing to pay? Which Key Resources are most expensive? For what do they currently pay? Which Key Activities are most expensive? How are they currently paying? How would they prefer to pay? How much does each Revenue Stream contribute to overall revenues? This work is licensed under the Creative Commons Attribution-Share Alike 3.0 Unported License. To view a copy of this license, visit http://creativecommons.org/licenses/by-sa/3.0/ or send a letter to Creative Commons, 171 Second Street, Suite 300, San Francisco, California, 94105, USA.
  17. 17. Lean Startup Essentials #1: The BM Canvas Key Partners Key Activities Value Customer Customer Proposition Relationships Segments Key Channels Resources Cost Structure Revenue Streams
  18. 18. Lean Startup Essentials #1: The BM Canvas Customer Segments • Narrowly chosen group of Key Partners Key Activities Value Customer Customer Proposition Relationships Segments people that buy/use your Key Channels Resources product Cost Structure Revenue Streams • Marketplace biz models = 2 cust segmens (or more) • Matching Value Proposition, Channels, Revenue Streams and Customer Relationships
  19. 19. Lean Startup Essentials #1: The BM Canvas Channels • How does the customer learn Key Partners Key Activities Value Customer Customer Proposition Relationships Segments about your product? Key Channels Resources Cost Structure Revenue Streams • B2B and B2C vastly different! • SEM, SEO, Friend Invites, Social Media, Direct Sales, Tradeshows, PR, Content Marketing, etc.
  20. 20. Lean Startup Essentials #1: The BM Canvas Value Proposition • What’s the problem you’re Key Partners Key Activities Value Customer Customer Proposition Relationships Segments solving for the customer? Key Channels Resources Cost Structure Revenue Streams • These might be things they’ve already started building in house, because there is an active need
  21. 21. Lean Startup Essentials #1: The BM Canvas Revenue Streams • How much is the problem Key Partners Key Activities Value Customer Customer Proposition Relationships Segments worth to the customer? Key Channels Resources Cost Structure Revenue Streams • Not how much it costs you to implement the value proposition • Avoid Free and Freemium! (marketing tactic, not rev model)
  22. 22. Lean Startup Essentials #1: The BM Canvas Customer Relationships • How do you want to interact Key Partners Key Activities Value Customer Customer Proposition Relationships Segments with your customers? Key Channels Resources Cost Structure Revenue Streams • Automated self-service vs. many in-person meetings • Determines the scalability of your business model
  23. 23. Lean Startup Essentials #1: The BM Canvas Key Activities • What are the people in your Key Partners Key Activities Value Customer Customer Proposition Relationships Segments company doing day by day? Key Channels Resources Cost Structure Revenue Streams • Create the product: Software Development, DevOps, etc. • Market the product • Integrate the product, run webinars, create whitepapers, ...
  24. 24. Lean Startup Essentials #1: The BM Canvas Key Resources • Which physical assets do you Key Partners Key Activities Value Customer Customer Proposition Relationships Segments need for your company to work? Key Channels Resources (set of test hardware, etc.) Cost Structure Revenue Streams • Which other assets? (online platform, patents, etc.) • Include/exclude HR, doesn’t really matter (duplicate info)
  25. 25. Lean Startup Essentials #1: The BM Canvas Cost Structure • What are your HR costs? Key Partners Key Activities Value Customer Customer Proposition Relationships Segments (rough estimate) Key Channels Resources Cost Structure Revenue Streams • Marketing channel costs • Infrastructure costs • It’s about Unit Economics, not your made-up 5 year plan
  26. 26. Lean Startup Essentials #1: The BM Canvas Key Partners • Channel Partners Key Partners Key Activities Value Customer Customer Proposition Relationships Segments Key Channels • Strategic Partners/Alliances Resources Cost Structure Revenue Streams • Suppliers • Especially Important for direct sales biz models
  27. 27. Lean Startup Essentials #1: The BM Canvas Example: Tupalo Key Partners Key Activities Value Customer Customer Proposition Relationships Segments Herold / Software Dev European #1 Finding #1: Community #1 9-to-5 folks Directories SEO information, looking for lunch quality & location #2: Clear B2B options, etc. of a business Product #1 Long-tail Key #2 Promoting a Channels mainstream Resources business, providing correct #1 Long-tail SEO #2 Business Data about information to owners customers #2 Direct Sales (restaurants, etc.) businesses Cost Structure Revenue Streams HR (15 people) #1 Free Infrastructure (4 servers) #2 Hundreds/Thousands of EUR (recurring) Business Data
  28. 28. Lean Startup Essentials #1: The BM Canvas Example: Freckle Key Partners Key Activities Value Customer Customer Proposition Relationships Segments Software Dev Tracking time Tribe-like Freelancers Marketing/ precisely without interaction Copywriting effort Agencies Easily invoice Key clients with good Channels Resources report on performed work - Word of mouth - Cross-sales Existing - Freebies audience: - Existing Mailinglists, audience Twitter, etc. Cost Structure Revenue Streams HR (2 people) 12-50 USD / month (dep. on company size) Hosting (1 server)
  29. 29. Lean Startup Essentials #1: The BM Canvas Example: Garmz Key Partners Key Activities Value Customer Customer Proposition Relationships Segments Marketing Marketing Partners! #1 Mass- #1 Structured #1 Fashion Biz Dev producing a work together designers Fashion schools fashion garment Software Dev #2 Online Shop #2 Trend-chasing #1 Build up your hipsters Key fashion brand Channels Resources Fashion blogs #2 Buy trendy Partnerships Production clothes #1 Fashion schools Factory #1 Fashion events #2 Word of mouth / strong brand Cost Structure Revenue Streams Production! (super expensive) #2 100 EUR / piece Prototyping Payout to designer
  30. 30. Lean Startup Essentials #1: The BM Canvas Live Example Someone from the audience: Pitch us your business 4 other people: What’s the customer segment? What are the channels? What’s the value proposition? What’s the revenue model?
  31. 31. Lean Startup Essentials #1 Q&A
  32. 32. Lean Startup Essentials #2: Customer Discovery Part 2: Customer Discovery
  33. 33. You probably already had a product idea
  34. 34. Lean Startup Essentials #2: Customer Discovery And an implict assumption about your market
  35. 35. And now you’ve mapped out a rough biz model
  36. 36. Lean Startup Essentials #2: Customer Discovery Now it’s time to focus on qualitative feedback from the market
  37. 37. Lean Startup Essentials #2: Customer Discovery Listen to what customers have to say - don’t execute a fabricated value proposition
  38. 38. Lean Startup Essentials #2: Customer Discovery Customer Discovery Methods
  39. 39. Lean Startup Essentials #2: Customer Discovery Customer Interviews 30 min in-person with your prototypical customer People like talking about their field - explore their worldview.
  40. 40. Lean Startup Essentials #2: Customer Discovery How to conduct an interview 1. Set context & tell your story 2. Tell your problem hypothesis 3. Listen to their worldview 4. Ask for follow up / references
  41. 41. Lean Startup Essentials #2: Customer Discovery Online Market Tests: Google Adwords Fake Landing Page with “Signup to be notified when we launch” “Can we call you to ask a couple of Qs?”
  42. 42. Lean Startup Essentials #2: Customer Discovery User Groups & Conferences: Hand out cards with invite codes - landing page with “join our soon-to- launch beta programme” SolidRails European VPS cloud. Fully-integrated Rails hosting. Your private beta access code: OEWO8C
  43. 43. Lean Startup Essentials #2: Customer Discovery Amy Hoy’s Sales Safari: Lurk in online forums of your customer segment, learn how they talk about products & benefits
  44. 44. Lean Startup Essentials #2 Q&A
  45. 45. Lean Startup Essentials #3: Case Study Part 3: Case Study
  46. 46. Recap: What’s PaaS? • The role model: Heroku • Fully-integrated hosting for Rails/Java/Django/etc. • Many US clones popping up • VMware’s Cloud Foundry - OSS PaaS
  47. 47. Rewind to Summer 2010 The idea back then: Heroku for Europe
  48. 48. Efficiency!
  49. 49. Market Testing • Invite codes at conferences & user meetups • Google Adwords testing, e.g. RailsHosting.in • Interviews with hosting providers • Open ears to what the end-users want, and what the industry currently sells (“cloud hosting”)
  50. 50. Pivot • Marketing channels hard to build up • Hosting is a local market • Product & engineering-driven company much easier with B2B model
  51. 51. Pivot: License technology to hosting companies
  52. 52. Positioning PaaS ? Cloud Foundry OpenStack IaaS OnApp Eucalyptus Mass-Market “Cloud” Providers Hosting Providers Agencies SMBs Devs Startups Enterprises
  53. 53. Positioning PaaS Efficient Cloud Cloud Foundry OpenStack IaaS OnApp Eucalyptus Mass-Market “Cloud” Providers Hosting Providers Agencies SMBs Devs Startups Enterprises
  54. 54. Lean Startup Essentials #1: The BM Canvas Example: Efficient Cloud Key Partners Key Activities Value Customer Customer Proposition Relationships Segments System Software Dev Integrators Offer Platform- Self-service #1 Mass-market Sales as-a-Service Linux distribution hosting providers hosting products (less than 50 ppl) for Rails, Java, .. #1 Mass-market Key Have high Channels hosting providers Resources margins for (50+ ppl) mass-market Direct Sales, customers Tradeshows, #1 Enterprises Efficiency Conferences Trade Secret #2 Developers Open-Source Cost Structure Revenue Streams HR (5 people) Initial Iicense fee + monthly fee for updates Test Infrastructure (6 servers) Var. 1: Per end-user, tiered by retail price Var. 2: Per server / CPU cores OSS “community edition” - Free
  55. 55. Lean Startup Essentials Literature Literature
  56. 56. Lean Startup Essentials Literature Steve Blank - The Four Steps to the Epiphany steveblank.com
  57. 57. Lean Startup Essentials Literature Alex Osterwalder - Business Model Generation businessmodelgeneration.com
  58. 58. Lean Startup Essentials Literature Eric Ries - The Lean Startup lean.st
  59. 59. Lean Startup Essentials Literature Ash Maurya - Running Lean book.runningleanhq.com
  60. 60. Lean Startup Essentials Literature Neil Davidson - Don’t Just Roll the Dice
  61. 61. Lean Startup Essentials Thanks! Lukas Fittl lukas@fittl.com

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