An introduction on how to build a startup using lean techniques. The talk was hosted by SLASSCOM and sponsored by Virtusa, Regus Sri Lanka and Pick Me.

1. RAOMAL PERERA
raomal@LeanDisruptor.com | @raomal @LeanDisruptor | www.facebook.com/LeanDisruptor
How to Build a Startup – Introduction
#LEANSTARTUP #SLASSCOM

2.  Serial Entrepreneur
 ISOCOR (NASDAQ: icor) & Network365/Valista (Intel)
 Adjunct Professor of Entrepreneurial Studies
 INSEAD, IE Business School, UCD, UCC
 Innovation, Lean Startup, Leadership, Business Planning &
Fund Raising
 Consultant
 Clients include MSD, Alltech, Darley Flying Start,
MoneyMate, HP, ResMed …
 Accolades
 Finalist Ernst & Young Entrepreneur of the Year
 Tech Pioneer World Economic Forum
 ISA Award for Outstanding Software Achievement
 Blog: www.LeanDisruptor.com
RAOMAL PERERA
2

3. FOLLOW ME
Twitter: @raomal
www.facebook.com/LeanDisruptor
www.LeanDisruptor.com
www.linkedin.com/in/raomal
Email: raomal@LeanDisruptor.com
3

4. 1991
2000+
1996
1999
NASDAQ: ICOR
~$100m
Offer $237m
Closing:
$450m+
I exit to setup N365
4

5. 1999
2013
2003
I exited Valista
Acquire
d by
Merged with
2008
2009
B round €15m
Acquired iPin
2000
Mobile
commerce
Mobile
payments Offers to
acquire
Valista
2007
5

6. Synopsis
• Diaspora Matters
• The importance of identifying the problem first
before defining the solution.
• Getting an introduction to the Lean Startup
methodology used by Startups.
• Understand the basic components of a Business
model and explore the process of business model
innovation and experimentation in the context of
Customer Development.
• Focus on understanding the ‘job to be done’
• Get into the shoes of your customer so that you
can understand their needs. 6

7. DIASPORA Matters
• Kingsley Aikins – Diaspora
Matters
Tap into the huge potential that is in
the Sri Lankan diaspora.
7

8. You have the awesome solution
“Your Solution Is Not My Problem”
Source: Dave McClure
…. to a problem that does not exist.
8

9. Books
9

10. • Find the Gap; How to find opportunities that
others don’t see. - Amy Wilkinson
• Network (Effectual Entrepreneurship) –
Saras Sarasvathy
• Join the Dots – Steve Jobs
Action
10

11. Lean Startup Dublin Meetup – launched Jan 2012
– now have over 1,000 members.
Workshops run by Ash Maurya, John Mullins,
Brant Cooper, Mary Cronin & Raomal Perera
Talks on Lean Startup, Social Media, Agile, Fund
Raising, How to build a Startup, Lego Serious
Play, Lean in Corporates, Crowd Funding,
Cartier Women’s Initiative Award (CWIA).
LeanCamp
Lean Startup Dublin Meetup http://www.meetup.com/Lean-Startup-Dublin/
11

12. Lean Launchpad programme – (elements)
12

13. Playing Lean – The Board Game
13

14. How breakthrough ideas emerge from small
discoveries
Creative thinkers practice a set of simple but
ingenious experimental methods
• failing quickly to learn fast
• tapping into the genius of play
• engaging in highly immersed
observation
Free their minds, opening them up to making
unexpected connections and perceiving
invaluable insights.
14

15. Discovery
Behaviors
Cognitive
Process
AssociatingNetworking
Creative
Idea
Questioning
Observing
Experimenting
THE INNOVATOR’S DNA MODEL - FIVE “DISCOVERY
SKILLS” SEPARATE TRUE INNOVATORS FROM THE
REST OF US
15

16. Design thinking on innovation stimulation
Three core elements—observation, experimentation and
prototyping:
• You have to start with observation because it's the only way
to illuminate the subtle nuances about how people actually
get things done, or don't get things done, and it's these
deep insights that lead to powerful new ideas.
• Intellectual experimentation is equally critical because
there's no way to generate real breakthroughs unless
people are willing to explore a lot of options in a divergent
way.
• Finally, rapid and inexpensive prototyping is the most
efficient way to move an idea from concept to reality.
- Tim Brown, CEO of IDEO
16

17. Most successful
entrepreneurs don’t begin
with brilliant ideas – they
discover them
17

18. 18

19. Problem/
Solution Fit
Product/
Market Fit
Scale
The 3 steps
19

20. Understanding
the Problem
Define
Solution
Validate
Qualitatively
Verify
Quantitatively
20

21. Key Question: Do I have a problem worth solving?
 Who has the problem?
 What is the top problem?
 How is it solved today?
 Where do they have the problem or in what context do
they have a problem? (milkshake example)
 When do they have the problem?
 Why is it a problem? (root cause analysis. Why is the
single best word for creating value in a start-up and an
established business) - It is not possible to know what
the top problem is without knowing where, when and
why they have a problem. Also the questions may not be
answered in sequence e.g. will we find the problem and
the person with the problem at the same time?
Identify the Problem
21

22. Take a stab at defining the solution
Build a demo (MVP)
Test it with assumed customers
Will the solution work? (can the proposed
solution create customer value that exceeds the
cost to produce and deliver the solution to the
customer)
Who it the early adopter?
Does the pricing model work?
Define the Solution
22

23.  Build an MVP
 Soft launch to early adopters
 Do they realise the unique value proposition
 How will you find enough early adopters to support
learning?
 Are you getting paid?
 Analysis: There needs to be a bit of intuitive thinking
around the MVP. We need to ask and then guess how we
can create the most unique customer value in the
shortest amount of time with the least resources. With a
bit of thinking and an equal amount of action we have a
chance of appropriating real value in the short term
VALIDATE THE QUALITATIVELY
Validate Qualitatively
23

24. 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?
Analysis: A refined product needs to test both
qualitatively and quantitatively in order to find out
why the refined product creates customers’ value and
how large is the market potential?
Can this business produce (organically or through
investment) enough cash in the short term in order
that customers value - cost to produce = profit
Validate Quantitavely
24

25. “Product/market fit means
being in a good market with
a product that can satisfy
that market”
- Marc Andreessen
25

26. Key Question: Have I built something people
want?
*Achieving this is the first significant
milestone of a start up
Product-Market Fit
26

27. Key Question: How do I accelerate growth?
Scale / Business Model Fit
27

28. Problem/Solution
Fit
Product Market
Fit
Scale
Focus: Validated
Learning
Experiments: Pivots
Focus: Growth
Experiments:
Optimisations
28

29. BUILD
PRODUCT
MEASURE
DATA
LEARN
IDEAS
Pivot:
Change in
direction
of a
startup
while
staying
grounded
in
learning –
Eric Ries
Experiment:
A cycle
around the
validated
learning
loop.
29

30. Traction is a measure of your product’s
engagement with its market. Investors care about
traction over everything else.- Nivi and Nival, Venture hacks
Problem/Solution
Fit
Product/Market
Fit
Scale
Ideal
time to
raise
money
30

31. Lean Canvas
Cost Structure
Customer Acquisition costs
Distribution costs
Hosting
People, etc.
Revenue Streams
Revenue Model
Life Time Value
Revenue
Gross Margin
Problem
Top 3 problems
Solution
Top 3 features
Key Metrics
Key activities you
measure
Unique Value
Proposition
Single, clear,
compelling message
that states why you are
different and worth
paying attention
Unfair Advantage
Can’t be easily copied
or bought
Channels
Path to customers
Customer
Segments
Target customers
PRODUCT MARKET
31

32. “Studies comparing successful and
unsuccessful innovation have found that the
primary discriminator was the degree to
which the user needs were fully
understood.”
– David Garvin, Harvard Business School
32

33. Often (first-time) entrepreneurs feel
that step 1 involves writing a
business plan/building a slide deck
and getting funded!
33

34. What is a business model?
A business model describes the rationale
of how an organisation Creates, Delivers
and Captures value
34

35. Use of BMC in Established Companies
IMPROVE ----------------------------------INVENT
Know Problem/Know Solution -Unknown Problem/Unknown
Solution
------EXECUTE -------------------------SEARCH------------
35

36. Pivot
SEARCH EXECUTE
Customer Development
36

37. 37
Finding the Problem is the Hard Part
– Kevin Systrom & Mike Krieger (Instagram
Co_Founders)
Instagram Co-Founder Kevin Systrom believes building
solutions for most problems is the easy part; the hard part is
finding the right problem to solve. Here he opens up about
how he and fellow Co-Founder Mike Krieger identified the
problems they wanted to solve around sharing photos through
mobile devices. He also reminds entrepreneurs to embrace
simple solutions, as they can often delight users and
customers.

38. ABC
ANN
APPROACHED
THE BANK 121314
38

39. You may have jumped to the
“ABC” or “12 13 14” or “financial
institution”
Conclusions
Without EVEN KNOWING or
CONSIDERING alternatives!
39

40. I force you to use your
rational brain only?
40

41. What is 17x24?
41

42. Our subjective judgements are
biased: we are far too willing to
believe research findings based
on inadequate evidence and
prone to collect too few
observations in our own
research
42

43. 43

44. Has become the biggest bookseller in
the world even though it doesn’t own a
single brick-and-mortar store.
Is the largest music retailer even though
it doesn’t sell CDs.
Is the world’s largest coffeehouse chain
to sell standardised coffee products at
premium prices.
Reinvented video rental despite not
owning a single physical shop
44

45. 45
“It is not the strongest of the
species that survive, nor the
most intelligent, but the one
most responsive to change.”
- Charles Darwin

46. Business Model Canvas explained
46
https://www.youtube.com/watch?v=QoAOzMTLP5s

47. 47

48. Nespresso’s Business Model
What is Nespresso’s Business Model? What
made them so successful?
4848

49. Hypotheses or guesses
• The canvas is a set of Hypotheses. i.e.
Guesses.
• It helps us to organize our thinking! It is
not about functional organisation but
about the business.
• The real question is How do we change
those guesses into FACTS?
49

50. Customer development process
Post it to the Wall
- Create the canvas
- Make it Visible
- Use Yellow Post-It
notes with your
guesses
Get Out of the Building and Test your hypotheses.
There are NO FACTS here. Talk to Customers,
Partners, Vendors. Design experiments, run tests, get
data
50

51. #1 Target
customer
segment
#2
Customer
segment
also
overseas
market new
set of
customers
• Who are your
most
important
customers?
• What are
their
archetype?
• What jobs do
they want
you to get
done for
them?
Customer Segments
51

52. Customer Persona/Archetypes
Profile
• Position/Title
• Age/Sex
• Role
• Discretionary budget
• Motivations
• Role models
52
•Who are you?
•How do you buy?
•What matters to you?
•Who influences you?

53. Customer Archetypes
Meet Paul, Sheetal and Barbara
Paul-RegularExerciser
• 20 – 45
• Aim to maintain and
track active lifestyle
• Looking for
inspiration on diet &
exercise regimes
• Gets a buzz from
exercising
Sheetal-SpiritualHealth
•
• 30 – 55
• Already follows a
healthy lifestyle
• Interested in
alternative
medicines/
treatments
• Believes eating well
is as important as
exercise
Barbara-On-OffDieter
•
• 30 +
• Yo-yo dieter, has
tried many of the fad
diets but never stuck
to one
• Needs tips and
motivation to keep
up a healthy lifestyle
• Irregular or
infrequent exerciser
53

54. 54

56. https://www.youtube.com/watch?v=Vmb
SpTJXozk
Clayton Christensen
56

57. “If you understand the job, how to
improve the product becomes just
obvious”
Clay Christensen
57

58. The Environment https://strategyzer.com/projects/aca
demy/business-model-environment
58

59. Review
–Diaspora Matters
–First Identify the problem and then define the
solution. Not the other way around.
–Find the Gap
–If you understand the job, how to improve the
product becomes obvious
–The BMC is a shared language for business
modelling. Use the template to change your
guesses to FACTS.
–Never underestimate the power of
networking 59

60. “There are no
shortcuts to any
place worth going”
– Beverly Sills

61. Strategy and Business Models – DIT PM Module 1
raomal@LeanDisruptor.com | @raomal @LeanDisruptor | www.facebook.com/LeanDisruptor
RAOMAL PERERA
THANK YOU!

62. 62
APPENDIX

63. Relevant Blogs
Alex Osterwalder -
www.alexosterwalder.com
Business Model Generation
 www.businessmodelgeneration.com
Steve Blank – www.steveblank.com
Ash Maurya – www.leanstack.com
Eric Ries - www.startuplessonslearned.com
John Mullins – www.getting-to-plan-b.com
Raomal Perera – www.LeanDisruptor.com

64. Additional Resources
64
Books:
What Customers Want – Using Outcome-
Driven Innovation to Create Breakthrough
Products and Services – Ulwick
Lean Analytics – Croll & Yoskowitz

65. Additional Resources
65
BMC Online Tools:
Strategyzer
https://canvanizer.com/ (free tool)
BMC tool for educators:
Launchpad Central offers end-to-end solutions to
validate business hypotheses, testing for value and
accelerating time to market.

66. Additional Resources
66
Stattys Notes; http://www.stattys.com/
- A new generation of adhesive notes with a unique "Write
and Slide" function.
Mapping the business model design space

67. Additional Resources
67
Video creation tool: Videoscribe
Business Modelling card decks:
www.amazon.com

68. Business Model Canvas explained
68
https://www.youtube.com/watch?v=QoAOzMTLP5s

69. 69

70. “No one cares how much you know, until
they know how much you care”
– Theodore Roosevelt
EMPATHY MAPS
70

71. 71
71

72. “People buy products and services to get jobs
done. As people complete these jobs, they
have certain measurable outcomes that they
are attempting to achieve. It links a company's
value creation activities to customer-defined
metrics.” - Ulwick
OUTCOME-DRIVEN
INNOVATION
72

73. Key Value Proposition Questions
• Problem Statement: What is the problem?
• Ecosystem: For whom is this relevant?
• Competition: What do customers do
today?
• Technology / Market Insight: Why is the
problem so hard to solve?
• Market Size: How big is this problem?
• Product: How do you do it? 73

74. • Problem Statement: Net security without a CTO
• Ecosystem: Small banks under FDIC pressure
• Competition: Expensive, Custom or DIY
• Technology / Market Insight: Small Companies
without Big Resources…Fines getting bigger
• Market Size: 9000 little banks, 5000 + more
• Product: perimeterusa.net
Example
74

75. © 2004 Valista Ltd. confidential information.75

76. Through what
mechanism
will your service
(product) be
delivered to your
client?
How will we GET,
KEEP and GROW
Customers? How will I
get the Value
to my
Customers?
How best to
communicat
e to each
customer
segment
Channels & Customer Relationships
76

77. Two Critical Channel Questions
How do you want to sell your product?1
is subtle, but more important than the first:
How does your customer want to buy your
product?
2
77

78. Physical Channels
© 2012 Steve Blank
78

79. Web Channels
© 2012 Steve Blank
79

80. Customer Relationships
Physical & Web Mobile Are Different
© 2012 Steve Blank
80

81. © 2012 Steve Blank
81

82. © 2012 Steve Blank 82

83. © 2012 Steve Blank 83

84. © 2012 Steve Blank 84

85. © 2012 Steve Blank 85

86. MVP
A Minimum Viable Product (MVP) is
“that product which has just those
features and no more that allows you
to ship a product that early adopters
see and, at least some of whom
resonate with, pay you money for, and
start to give you feedback on”
86

87. MVP #1 Explainer video
Explainer video is a short video that explains
what your product does and why people should
buy it.
A simple, 90 seconds animation is sufficient.
e.g. Dropbox
How to make an explainer video
87

88. MVP #2 A Landing Place
A landing page is a web page where
visitors “land” after clicking a link from
an ad, e-mail or another type of a
campaign.
88

89. MVP #2 A Landing Page
• Craft your Landing Page
• Set up a Google AdWord campaign and drive traffic
to your new landing page. Even here you can let the
AdWord engine rotate different messages and test
what works best on your prospects
• Set up Google Analytics. The most important thing to
measure is conversions – percent of visitors that sign
up (or perform another desired action)
• Set up a chat to make it easy for the visitors to raise
questions
• Set up a service like Qualaroo to survey your visitors
89

90. MVP #3 Wizard of Oz
A “Wizard of Oz” MVP is when you put up a
front that looks like a real working product, but
you manually carry out product functions. It’s
also known as “Flinstoning”.
Zappos shoes is the biggest online shoe
retailer, with annual sales exceeding $1 billion.
In his Lean Startup book, Eric Ries describes
how the founder started with a Wizard of Oz
product.
90

91. MVP #4 The Concierge MVP
Instead of providing a product, you start
with a manual service. But not just any
service! The service should consist of
exactly the same steps people would go
through with your product.
91

92. MVP #5 Piecemeal MVP
This strategy is a blend between the “Wizard
of Oz” and “Concierge” approaches. Again,
you emulate the steps people would go
through using your product – as you envision
it.
92

93. MVP #5 Crowd Funding
Sell it before you build it.
The basic idea is simple: launch a crowd
funding campaign on platforms such as
Kickstarter or IndieGoGo. Not only will you
validate if customers want to buy your product,
but you will also raise money.
93

94. Strategy and Business Models – DIT PM Module 1
raomal@LeanDisruptor.com | @raomal @LeanDisruptor | www.facebook.com/LeanDisruptor
RAOMAL PERERA
THANK YOU!