[Lean 101] Bootstrapping & Getting Out of the Building

200. Bootstrap & Act
Get out of the building
Nikos Palavitsinis, Agro-Know

Lean AKademy, Mar-Apr, 2014
Definition
Adjective
(of a person or project) using one's own resources
rather than external help.

201. Revisit our Lean Canvas
• Let’s take a look at your new versions of your
Lean Canvases
• Which were the parts of the LC that you
changed during the past week? Why did you
do so?

202. Loose ends have to end!
• It’s all about hypotheses right?
• What if you have the problems wrong?
• What if you have the prices too low?

203. Three Stages of a Startup
• Do I have a problem worth solving?
• Have I built something that people want?
• How can I scale this up?

204. What’s an
Experiment?
a scientific procedure
undertaken to make
a discovery,
test a hypothesis, or
demonstrate a known fact.

Validated Learning Loop

Steps
• Understand the Problem: Conduct customer
interviews or use other customer observational
techniques to understand whether you have a problem
worth solving.
– Who has the problem, what is the top problem, and how is
it solved today?
• Define the Solution: Take a stab at defining the
solution, build a demo that helps the customer
visualize the solution, and then test it with customers.
– Will the solution work? Who is the early adopter? Does
the pricing model work?

Steps
• Validate Qualitatively: Build your MVP and then
soft-launch it to your early adopters. Do they
realize the unique value proposition (UVP)?
– How will you find enough early adopters to support
learning? Are you getting paid?
• Verify Quantitatively: Launch your refined
product to a larger audience. Have you built
something people want?
– How will you reach customers at scale? Do you have a
viable business?

Risk
A state of uncertainty where some of
the possibilities involve a loss,
catastrophe, or other undesirable
outcome

Product Risk
• Getting the product right
– First make sure you have a problem worth solving,
– Then define the smallest possible solution (MVP),
– Build and validate your MVP at small scale
(demonstrate UVP),
– Then verify it at large scale

Customer Risk
• Building a path to customers
– First identify who has the pain,
– Then narrow this down to early adopters who
really want your product now,
– It’s OK to start with outbound channels,
– But gradually build/develop scalable inbound
channels—the earlier the better.

Market Risk
• Building a viable business
– Identify competition through existing alternatives
and pick a price for your solution,
– Test pricing first by measuring what customers say
(verbal commitments),
– Then test pricing by what customers do,
– Optimize your cost structure to make the business
model work.

Ranking of Business Models
• You may find yourselves with more than one
canvases filled out
– This may happen in case of different problems for
different customer segments
• But how do you decide on the one to act
upon?

Weights
• Customer pain level (Problem): Prioritize customer
segments that you believe will need your product the
most.
• Ease of reach (Channels): If you have an easier path
to one segment of customers over others, take that
into consideration.
• Price/gross margin (Revenue Streams/Cost
Structure): Pick a customer segment that allows you
to maximize on your margins.

Weights
• Market size (Customer Segments): Pick a customer
segment that represents a big enough market given
the goals for your business.
• Technical feasibility (Solution): Visit your Solution
box to ensure that your planned solution not only is
feasible, but also represents the minimum feature
set to put in front of customers

206. Seek External Advice
• Get out of the building
• Find “advisors”
– Prototypical customer
– Potential investor
– Other entrepreneur
• Ask specific questions, 20% setup – 80% talk,
talk to visionary people, don’t take their input
as validation or judgement

207. Running Effective Experiments

What to do?
• Measure one thing: Stay focused on the key learning
or key metric you need to achieve, which will vary by
the type and stage of your product,
• Do the smallest thing possible to learn: Challenge
yourself to find the simplest thing you can do to test a
hypothesis,
• Formulate a Falsifiable Hypothesis: Don’t accumulate
just enough evidence to convince yourself that your
hypothesis is correct,
• Validate Qualitatively, Verify Quantitatively: Your
initial goal is to get a strong signal that typically doesn’t
require a large sample size,

What to do?
• Correlate Results back to Specific Actions:
Inform your product development in really
specific actions from your side,
• Create Accessible Dashboards: Share your
experiments and their results, openly with
your team,
• Communicate Learning Early & Often:
Periodically communicate the lessons learned
from your last batch of experiments.

208. Interviews
a meeting of people face to face, esp.
for consultation

No surveys – No focus groups!

Why?
• Surveys assume you know the right questions,
• Surveys assume you know the right answers,
• You can’t see the customer during a survey,
• Focus groups are just plain wrong,
• Maybe you can use surveys to validate what
you learn from your initial interviews

Tips
• Build a frame around learning, not pitching. In a learning
frame, the roles are reversed: you set the context, but then you
let the customer do most of the talking,
• Don’t ask customers what they want. Measure what they do.
It’s fairly common to find customers lying in interviews, out of
politeness or they really don’t know or don’t care enough,
• Stick to a script. You need to bind the conversation around
specific learning goals. Otherwise, you can blow off a lot of time
and end up with an overwhelming amount of unactionable
information,
• Cast a wider net initially. Not all of your prospects will (or
should) be early adopters,

Tips
• Prefer face-to-face meetings. Pick up body language, connect
and communicate. Create a sense of closeness,
• Start with people you know. Get comfortable with your
script, rehearse it.
• Take someone along with you. Might help with
documentation and following the script in case something is
overlooked,
• Pick a neutral location. Create a casual atmosphere, not make
it business-like from day 1. Let them choose the place if they
want to,

Tips
• Ask for sufficient time. Let them know how much time
you will need and stick to this. Don’t ask them 30
minutes and keep them occupied for three times the
time,
• Don’t pay or provide other incentives. You want to
attract customers, truly, you don’t want to pay their kind
words,
• Avoid recording the interviews. Don’t make your
interviewees think about what they are about to say 2-3
times before they say it,
• Document results immediately after the interview. Get
five minutes alone with silence and document all the
results on paper.

These do NOT apply
• Customers don’t know what they want,
• Talking to 20 people isn’t statistically
significant,
• I only rely on quantitative metrics,
• I am my own customer, I don’t need to talk to
anyone,
• My friends think it’s a great idea,

These do NOT apply
• Why spend weeks talking to customers when I
can build something over the weekend?
• No need to test the problem, it’s obvious,
• I can’t test the problem, it’s not obvious,
• People will steal my idea

Be prepared
Before venturing into the unknown,
you need a thing or two…

209. Prepare your Interview Form & Script
• An interview script
– To follow by the letter
• An interview form
– To help you document everything
• A data collection/analysis instrument
– To make sense of it

You need to know
• Product risk: What are you solving?
– How do customers rank the top three problems?
• Market risk: Who is the competition?
– How do customers solve these problems today?
• Customer risk: Who has the pain?
– Is this a viable customer segment?

Example
• Idea: Build a tool/service/process that would
help Project Managers prepare proposals for
EU-funding
• We got three problems
• A list of possible interviewees
• Booked the appointments

Story
• Recently we found ourselves in the middle of yet
another proposal preparation to secure funding
for this amazing idea we had for one project.
Following all the typical methods and tools to
prepare the proposal, with a highly skilled team
supporting it, we did submit it and we were more
than positive related to its results. Getting the
results back, we found out that the proposal was
not accepted, reaching a really low score. What
was worse, looking at the remarks made, they did
make a lot of sense and we were really surprised
how we did not address them at the first place.

Story
• There and then, instead of blaming it on our tiredness,
the magnitude of the proposals submitted for the same
call, the politics or the weather, we decided to analyze
the causes of our failure and try to trace them back to
specific things that could have been improved. Looking
at that, we find ourselves with a bunch of problems
that were related either to the process or specific
people that we would like to share with you and ask for
your honest feedback on whether or not these
problems look familiar for you and if you have faced
them in the past. It’s really useful for us to learn about
the problems you have to contribute as well as the
ways you use to tackle them.

210. Making sense of it all
• Review results weekly
• Home in on early adopters
• Refine the problems
• Understand alternatives
• Essence lies in the detail (words)
• Find ways to reach your early adopters

211. Collect Data & Report Findings
• Identify the demographics of early adopters
– Build an archetype
• Have a must-problem
– A burning issue that has to be resolved!
• Have accurate alternatives
– What do customers use today?

Initial Problems
• There’s a slow and problematic Proposal/Bid
Development
• When preparing a proposal we are not matching
brainstorming & discussion outcomes into
tangible proposal/bid contributions
• Having difficulty in analyzing existing funding
opportunities & identifying project ideas
• Identifying appropriate project roles and partners
to match them is a difficult and troublesome task
that needs addressing

Final Problems
• Problems with excessive communication
overhead with partners and unnecessary
interactions that get in the way of real work
• Problem of slow collection of partner input for
the various stages of a proposal
• Problem of low engagement of the majority of
the partners in the proposal preparation

Phase III 1st Priority
(weight: 3)
2nd Priority
(weight: 2)
3rd Priority
(weight: 1)
Not a
problem
(weight: 0)
TOTAL AVG
Problem a 2 3 1 2 13 1.63
Problem b 5 2 0 1 19 2.38
Problem c 4 2 0 2 16 2
Phase III Must Solve
(weight: 2)
Nice to Solve
(weight: 1)
Not needed
(weight: 0)
TOTAL AVG
Problem a 2 2 4 6 0.75
Problem b 5 2 1 12 1.5
Problem c 3 3 2 9 1.13

Problem Alternative
Excessive
Communication
Overhead
[new] Careful selection of partners
[new] Sending out instructions through e-mail
[new] Asking only really basic information
[new] Organize working meetings
[new] Skyping to cover all issues in the minimum time possible
[new] One person deals with communication
Slow Collection of
Input
[new] Strict deadlines
[new] Reminders through e-mail
[new] Phone
[new] Look at old proposals to find input needed
[new] Google
[new] Careful selection of partners
[new] Write on our own
[new] Dropbox
Limited Engagement
in Proposal
[new] We fill in the gaps by writing their parts on our own
[new] Setting clear rules from day 1
[new] We engage a core of partners, no more
[new] Communication through e-mail, Skype, phone

212. Takeaways & Assignments
• Three stages of a start up
• Experiment basics
• Risks
• Interview basics

212. Takeaways & Assignments
• Have three must-have problems
• Prepare the interview script and form
• Prepare a list with early adopters that can be
reached for interview

Bonus
• https://www.udacity.com/course/ep245

Questions?

[Lean 101] Bootstrapping & Getting Out of the Building

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