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How to Build a Startup
This document provides an overview of how to build a startup. It discusses identifying problems and opportunities, defining solutions, validating ideas with customers, and pivoting based on feedback. Key frameworks mentioned include the Lean Startup methodology, customer development process, minimum viable product, and business model canvas. The document emphasizes the importance of getting outside the building to test hypotheses with customers rather than making assumptions internally. It also notes common startup metrics and the need for fast decision making and validation through customer experiments.
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How to Build a Startup
- 1. RAOMAL PERERA raomal@LeanDisruptor.com |@raomal @LeanDisruptor | www.facebook.com/LeanDisruptor How to Build a Startup #LEANSTARTUP
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- 7. Find the Gap Howto find opportunities that others don’t see. - Amy Wilkinson 7
- 8. Lean StartupDublin Meetup launched Jan 2012 – now over 1,200 members Workshops run by Ash Maurya, John Mullins, Brant Cooper & 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/ 8
- 9. Lean Startupfor Enterprise Meetup inaugural meeting Feb 17, 2016 opened by Alex Osterwalder on Value Proposition Design. This is a group for enterprises wanting to learn about the latest concepts and frameworks in business to help them grow. Some of the topics we will discuss are: Lean Startup, Business Model Innovation, Design Thinking, Growth Hacking, Innovation Accounting, Lean Analytics, Purpose Driven Organisation and Social Media. NEW: Lean Startup for Enterprise Meetup http://www.meetup.com/Lean-Startup-for-Enterprise/ 9
- 10. Lean Launchpad Programme 10 EntrepreneursCreate Jobs – Can We Help Them Increase Their Chance Of Success?
- 11. Lean Launchpad programme– (elements) 11
- 12. Playing Lean –The Board Game 12
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- 17. How breakthrough ideasemerge 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. 17
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- 19. Often (first-time) entrepreneursfeel that step 1 involves writing a business plan/building a slide deck and getting funded! 19
- 20. What is aStartup? A TEMPORARY organisation DESIGNED to SEARCH ……. For REPEATABLE and SCALABLE Business Models Startups are NOT just SMALLER versions of a LARGE Company 20
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- 22. You have theawesome solution “Your Solution Is Not My Problem” Source: Dave McClure …. to a problem that does not exist. 22
- 23. The Problem /Need Statement 23
- 24. 24 Finding the Problemis 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.
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- 26. Problem/ Solution Fit Product/ Market Fit Scale The3 Steps 26 26
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- 28. Key Question: DoI 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 28
- 29. Take a stabat 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 29
- 30. Build an MVP Softlaunch 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 30
- 31. Launch your refinedproduct 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 31
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- 33. MVP A Minimum ViableProduct (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” 33
- 34. MVP #1 Explainervideo 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 34
- 35. MVP #2 ALanding 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. 35
- 36. MVP #2 ALanding 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 36
- 37. MVP #3 Wizardof 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. 37
- 38. MVP #4 TheConcierge 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. 38
- 39. MVP #5 PiecemealMVP 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. 39
- 40. MVP #5 CrowdFunding 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. 40
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- 44. Problem/Solution Fit Product Market Fit Scale Focus: Validated Learning Experiments:Pivots Focus: Growth Experiments: Optimisations 44
- 45. Traction is ameasure 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 45
- 46. “Studies comparing successfuland unsuccessful innovation have found that the primary discriminator was the degree to which the user needs were fully understood.” – David Garvin, Harvard Business School 46
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- 49. You may havejumped to the “ABC” or “12 13 14” or “financial institution” Conclusions Without EVEN KNOWING or CONSIDERING alternatives! 49
- 50. I force youto use your rational brain only? 50
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- 52. Our subjective judgementsare 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 52
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- 54. 54 Knowledge is havingthe right answer. Intelligence is asking the right questions The Art of Customer Interviewing
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- 56. What is abusiness model? A business model describes the rationale of how an organisation Creates, Delivers and Captures value 56
- 57. Why we needa shared language for business models? 57 https://strategyzer.com/academy/cours e/business-models-that-work-and- value-propositions-that-sell/1/1 Note: You may need to license the online learning tool on Strategyzer to view this clip from Osterwalder
- 58. Use of BMCin Established Companies IMPROVE ----------------------------------INVENT Know Problem/Know Solution -Unknown Problem/Unknown Solution ------EXECUTE -------------------------SEARCH------------ 58
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- 61. 61 “It is notthe strongest of the species that survive, nor the most intelligent, but the one most responsive to change.” - Charles Darwin
- 62. Getting from BusinessIdea to Business Model 62
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- 64. Nespresso’s Business Model Whatis Nespresso’s Business Model? What made them so successful? 6464
- 65. Strategy for Startups •Planning before the Plan • Use the Osterwalder Canvas to do two things: – Organise our thinking – Get out of the Building to turn the hypothesis into facts • SEARCH for the Business Model First and then Write it Up (Business Plan) 65
- 66. Customer Development Process Postit 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 66
- 67. Customer vs. ProductDevelopment • More startups fail from a lack of customers than from a failure of Product Development. • We have all the processes to manage the Engineering Risk • No processes to manage the Customer Risk. 67
- 68. Customer Development Manifesto 1.There are No Facts Inside Your Building, So Get Outside. 2. Pair Customer Development with Agile Development 3. Failure is an Integral Part of the Search 4. Make Continuous Iterations and Pivots 5. No Business Plan Survives First Contact with Customers. So Use a Business Model Canvas 68
- 69. Customer Development Manifesto 6.Design Experiments and Test to Validate Your Hypotheses. 7. Agree on Market Type. It Changes Everything 8. Startup Metrics Differ from Those in Existing Companies 9. Fast Decision-Making, Cycle Time, Speed and Tempo 10.It is All About Passion 69
- 70. Customer Development Manifesto 11.StartupJob Titles Are Very Different from a Large Company’s. 12. Preserve All Cash Until Needed. Then Spend 13.Communicate and Share Learning 14.Customer Development Success Begins With Buy-In 70
- 71. Hypotheses or Guesses Thecanvas 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? 71
- 72. 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 72
- 73. Strategy and BusinessModels – DIT PM Module 1 73 VALUE PROPOSITION CANVAS
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- 76. Clayton Christensen 76 Jobs tobe Done “If you understand the job, how to improve the product becomes just obvious”
- 77. “People buy productsand 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 77
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- 86. Case Study: Owlet OwletInfant Health Tracker Takes The Wearable Revolution Into The Crib 86 Note: You may need to license the online learning tool on Strategyzer to view this clip from Osterwalder
- 87. Review –First Identify theproblem 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 87
- 88. “There are no shortcutsto any place worth going” – Beverly Sills
- 89. Strategy and BusinessModels – DIT PM Module 1 raomal@LeanDisruptor.com | @raomal @LeanDisruptor | www.facebook.com/LeanDisruptor RAOMAL PERERA THANK YOU!
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- 91. 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
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- 93. Additional Resources 93 Books: What CustomersWant – Using Outcome- Driven Innovation to Create Breakthrough Products and Services – Ulwick Lean Analytics – Croll & Yoskowitz
- 94. Additional Resources 94 BMC OnlineTools: 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.
- 95. Additional Resources 95 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
- 96. Additional Resources 96 Video creationtool: Videoscribe Business Modelling card decks: www.amazon.com
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- 99. “No one careshow much you know, until they know how much you care” – Theodore Roosevelt EMPATHY MAPS 99
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- 101. “People buy productsand 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 101
- 102. Key Value PropositionQuestions • 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? 102
- 103. • 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 103
- 104. © 2004 ValistaLtd. confidential information.104
- 105. Through what mechanism will yourservice (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 105
- 106. Two Critical ChannelQuestions 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? 2 106
- 107. Physical Channels © 2012Steve Blank 107
- 108. Web Channels © 2012Steve Blank 108
- 109. Customer Relationships Physical &Web Mobile Are Different © 2012 Steve Blank 109
- 110. © 2012 SteveBlank 110
- 111. © 2012 SteveBlank 111
- 112. © 2012 SteveBlank 112
- 113. © 2012 SteveBlank 113
- 114. © 2012 SteveBlank 114
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- 116. Fund Raising forEntrepreneurs 116
- 117. Building Emotional Capitalfor Leadership 117
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- 119. How to Builda Startup 119
- 120. Strategy and BusinessModels – DIT PM Module 1 raomal@LeanDisruptor.com | @raomal @LeanDisruptor | www.facebook.com/LeanDisruptor RAOMAL PERERA THANK YOU!