The document outlines a workshop focused on three key exercises critical for startup success: defining purpose, understanding customers, and prioritizing experiments. It emphasizes the importance of a startup's purpose as a guiding light that motivates decision-making, the necessity of truly empathizing with customers, and the scientific method for validating business hypotheses. The workshop encourages participants to engage in real-world observation and experimentation rather than relying solely on traditional metrics of progress.

1. HELLO
MY NAME IS
@thulme
Hello
Workshop - IDEO & Techstars
Iain, Jenny, Matt, Tom & Stina
London! July 2013

2. 1) Purpose
2) Putting people first
3) Hypotheses &
Experiments
In the next 90 minutes we’ll work through 3 important exercises that are
key for any startup - exploring Purpose, Customers and Priorities...

3. 1) Purpose
We’ll start with Purpose: not all great startups are born with it but those that
scale well have invariably discovered it. Think of Purpose as your ultimate
ambition.

4. When I began investing startups often measured progress by the size of their
business plan. But this is probably inversely correlated with success?

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+ 1 1 1 0 1 1 1 1 0 0 1 1 0 0 1 add crossed out digits fi
---------------- 0 1 1 1 0 + 1 0 0 0 1 0 0 0 0 0 0
= 1 1 0 0 1 1 1 0 0 1 1 1 0 ---------- add remain
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0 * * * * * * 1 1 1 1 1 0 1 ---------- add remai
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1 0 1 0 1 1 1 1 0 1 1 1 1 0 1 1 1 0 0 1 1 1 0 0 1
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+ 1 0 1 1 ← Corresponds to a 1 1 0 1 1 1 1 (A) *
0 + 1 0 1 0 + 1 0 1 1 ----1 1 0 0 1 1 0 1 0 1 1
+ 0 0 0 + 0 0 0 1 --1 1 0 0 1 1 0 1 0 1 1
0 + 1 0 1 1 1 0 1 1 (A) * 1 1 0 0 1 1 0 1 0 1
1 ------- = 1 1 0 1 = 1 1 1 0 0 1 1 0 1 0 1 1 0 0 1 1 1
-------- – 1 1 0 1 + 1 1 0 0 1 1 0 1 0 1 1 0 0 1 1
= 1 1 0 1 + 1 1 0 1 1 1 1 0 0 1 1 0 1 0 1 1 0
+ 1 0 1 0 1 1 0 0 1 1 1 0 0 1 1 0 1 0
The same applies to number of lines of code - it’s not a measure of progress,
in fact all developers agree that elegant code tends to be more concise...

6. WE'RE DOıNG
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Have a look at the splash page above and ask: does number of signups infer
progress? Nope - people don’t even know what they’re signing up for.

7. More recently, a false measure of progress I often see is number of pivots -
the real question is are you pivoting toward your goals or away from them?

8. PIVOTS ≠ PROGRESS
Pivoting just because it gets hard is not progress. This applies to startups and
I think increasingly politics - Egypt being a case in point this week.

9. After all, all startups feel like roller coasters...

10. Ignorant
Optimism
Informed
Pessimism
Informed
Optimism
One of my first investors drew me this - he said I was ‘ignorantly optimistic’ at
the time and if I was taking his money it was a social contract to persevere
through the tough times - until I was informed & optimistic...

11. Seems like
a bad idea
Is a
good idea
I’ve always loved this image Peter Thiel drew - the best ideas have to seem
tough in some way, after all...

12. “...if it was easy
everyone
would be doing it”
(my Dad said this to me - I try to always remember it)

13. Seems like
a bad idea
Is a
good idea
Matters
I’d just add one more circle - any great startup has to also matter - this is
where Purpose comes in.

14. What's your purpose?
Purpose acts as a guiding light, it gives you the motivation to work through
the tough times we saw before. Importantly it helps you say “No” to stuff.

15. Facebook’s Purpose: give people the power to share and make the
world more open and connected
Look at Facebook: a clear Purpose enabled them to say “No” to aggressive
advertising for years - they knew it would have compromised their Purpose.

16. Facebook’s Purpose: give people the power to share and make the
world more open and connected.
“Simply put: we don’t build
services to make money;
we make money to build
better services. And we
think this is a good way to
build something.”
Mark Zuckerberg letter to shareholders

17. HotOrNot.com
(‘Facemash’ when MZ founded it didn’t have this grand Purpose - it was more
like ‘Hot or Not’ but he was smart enough to develop ambition over time)

18. Basecamp purpose: promote and enhance collaboration between a
team
Via Speckyboy.com
Your Purpose helps you make design decisions - for example Basecamp
lightened their navigation bar because they wanted users to focus on
collaboration rather than their site.

19. OpenIDEO Purpose: Design better, together for social good
With OpenIDEO we have stayed true to the initial Purpose thus far - I hope
that we view every design decision primarily through this lens.

20. you don’t scale
By Smath
Why does Purpose matter? Because, you don’t scale. Many Founders begin
because they’re ‘scratching their own itch,’ as you grow this has to be
important to others too...

21. By ketsugi
It’s increasingly clear that monetary incentives (beyond optimising mundane
tasks) are a pretty blunt instrument - once you’re lucky enough to have a
decent income it’s not the thing that drives performance...

22. By Ewan McIntosh...and they’ll always be someone (like this joker) able to offer more cash :)
By Ewan McIntosh

23. By Ewan McIntosh
...instead great startups motivate employees (and increasingly customers).
A Purpose for good is the engine inside your business.
By Wa-J

24. ...but you are what you measure
By goldbergBy Ewan McIntosh
All this is key, but you’d be right to point out struggling businesses often have
great Purposes too. The challenge is they usually optimise for something else.
Image by goldberg

25. Business Insider Purpose: aggregating, reporting, and analysing the
top news stories across the web and delivering them to you at rapid-
fire pace
By goldbergBy Ewan McIntosh
For example, why do sites embed slideshows? Is it to deliver news faster?
Nope - they’re doing it to increase ad impressions. That’s what they’re
measuring, in this case it’s absolutely not in line with BI’s Purpose...

26. Instagram Purpose "lower the bar for producing and sharing
awesome images"
By goldbergBy Ewan McIntosh
Contrast this with Kevin Systrom’s approach at Instagram. He optimised
speed & simplicity in creating great images - choosing to make images low
res & square. They even reduced number of features in some updates :)

27. Amazon Purpose: be earth's most customer centric company
By goldbergBy Ewan McIntosh
Amazon measures load times - they found in some cases an increase of
100ms led to a 1% decrease in sales of that item. Speed is in line with their
Purpose. Pingdom can be your design partner :)

28. 46,000
users or...
OpenIDEO Purpose: Design better, together for social good
By goldbergBy Ewan McIntosh
With OpenIDEO’s Purpose in mind, what should we be measuring? Number
of users? Number of countries represented? Nope, they might be leading
indicators but we should be measuring Impact.

29. OpenIDEO Purpose: Design better, together for social good
So that’s what we’ve begun to measure. We started by defining it and now we
share Impact and celebrate each story. Note: we’re still figuring this out :)

30. Exercise 1
So let’s dive into our first exercise - in the next 15 minutes work through the
questions in this document. Home in on a Purpose that would help you hire
your 100th employee, then print it on your project wall...

31. 2) Putting people first
Next up - customers. You might want to check out my talk at the G8 on this.
Note: I’ll try not to use the term Users as that makes them sound like addicts

32. This is a desire path, it’s the route that we actually take, rather than the paths
that were designed in (across Highbury Fields in N London in this case)
How do you think the urban planners react to this?

33. I bet many say we’re lazy or stupid for ignoring the paths. The answer to this
question is key - do you empathise with citizens/customers or dislike them? I
think disliking customers is a leading indicator of failure in any startup.

34. How can you dislike customers when they share exactly the same basic
needs as you, we’re all human. Let’s look at 3 ways to build your empathy for
customers, particularly for those not scratching their own itches...

35. 1. Live like the
customer
First up, actually live like your customer...

36. This is what it feels like to be a patient in your average hospital. Until you
live like a patient you don’t see this stuff.

37. Our colleague Kristian admitted himself as a patient, he saw the dull ceilings
all day and heard medics speaking in acronyms. This became an experience
he could design against. Do you live like the customer?

38. 2. Observe them in the real
world
Next up, observe reality...

39. Focus groups are not reality - not because people lie but because people
struggle to articulate their real thoughts and behaviours.

40. Instead, observe real life. I admire AG Lafley of P&G because he did this in
many of his markets when traveling, eg ladies washing clothes in India -
clearly they wouldn’t lug around 5l bottles of detergent that P&G sells in UK.

41. People are incredibly creative - in a focus group would this lady tell you that
she had her own hack for hands-free use of her mobile? She may not even
remember when she’s out of context.

42. Or in a focus group this old lady might tell you she manages to take her tablets
every day without problem. But if you watch her behaviours you notice she
was uses a meat slicer to open the container. (this is for real)

43. You should observe how people really use your digital products too. For
example, periodically check what search queries people make on the
homepage (amazingly this is rare in my experience).

44. Here’s a word cloud of the search queries from OpenIDEO - you can see that
there’s a desire path toward ‘education’ that we’re missing. We don’t quite
know what John represents - we may need to ask...

45. Also try heat mapping tools like Crazy Egg - that truly reveals desire paths.
You can see clearly in the image above that there are desire paths to
Challenges and How It Works on OpenIDEO, you also see redundancy.

46. 3. Today’s extremes
are tomorrow’s
average Joes
Next up - learn from extremes...

47. Statisticians & marketeers love bell curves, and most businesses focus on
the middle ‘it’s where the money is’. The problem with that is often the
middle is moving - the extremes today may become the norm tomorrow.

48. We therefore often look to extremes for inspiration. For example, when
observing someone fearful of credit this is what some IDEO researchers were
confronted with. A credit card in a block of ice. You can design from this...

49. Similarly look at extremes in digital products. For example, the rise of ‘white-
walling’ (people erase their FB profile at the end of each day). This would
show us many people increasingly want ephemeral services eg Snapchat...

50. Sometimes these extreme behaviours can be inspiration for your core
product. For example this is the first tweet sent suggesting hashtags - now a
cornerstone of Twitter. Startups thrive at the edges of existing markets.

51. By the way, Highbury Fields wasn’t originally designed badly it’s just Arsenal
Football Club moved its ground so on game days thousands of people now
take this route. The council’s job is to react to this change of use...

52. Here’s my favourite desire path in N London -
This is my favourite desire path because someone has adapted to it - instead
of cordoning off the grass they laid gravel. We all need to have the humility
to see and then adapt - the only truth is how people really use your product.

53. Exercise 2
Our second exercise is around understanding your customers - can you name
ten right off the bat. Everyone in your team should be able to name at least
one. Do you really understand and empathise with them?

54. 3) Hypotheses & Experiments
Finally, let’s talk through how to prioritise in any startup...

55. A BA BA B
Your startup is a simply a series of unanswered questions. If you don’t think
you have any unanswered questions then you really are in the s**t.

56. The fantastic Startup Genome Project taught us that the most common
reason for any startup to fail is ‘premature scaling’ - this is essentially scaling
before you’ve tested critical assumptions.

57. The best entrepreneurs prioritise like
scientists, they select their experiments...
There’s art to building startups but thanks to Steve Blank and others it’s
increasingly a science - your job is to choose and run the right experiments.

58. Hypothesis based
Important
Feasible
Great experiments are:
We can learn much from the Scientific Method in this respect...

59. ?
Efficient Answer:
ACCURATE
Make it as real as
possible, preferably do it
in the real world
LOW COST
Hijack existing
technologies/ networks
where possible
You need to test your Hypotheses efficiently...

60. I guess that’s why huge business plans bring me out in hives - it is hardly ever
the best way of testing hypotheses. It shows questionable judgment.

61. GHETTO
TESTING
Instead it’s usually more efficient to get out in the real world to test your
hypotheses - as Steve Blank says “the answer is outside the building,” eg Zynga
tests ideas for new games by advertising them before writing a line of code.

62. WE'RE DOıNG
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That approach, called Ghetto Testing is not the same as these ambiguous
splash pages by the way. These don’t validate any hypotheses, except
perhaps ‘we can build a website splashpage’ :)

63. This approach, of Launching to Learn / validate hypotheses is increasingly
important. For example, Wonga began issuing loans to assess if it could use
data to assess default risk - this was way more efficient than locking actuaries
in a room to endlessly talk about it...

64. For those of you building physical products you can use this approach too.
For example, Tim Ferriss tested different book covers by placing them on the
New Release table in the Palo Alto Borders to se how people reacted to each.

65. That’s the beauty of Kickstarter et al - enabling you to validate a market prior
to production. It worked well for our former colleague Scott Wilson when his
Tic-Toc watch raised just under $1m, he’s built a great company since.

66. EXPERIMENT:
will IDEO’s brand
have convening
power?
When launching OpenIDEO we wanted to test the hypothesis: IDEO has the
convening power to attract diverse people to the discussion

67. To find out we
launched ‘BIG
CONVERSATIONS’
on Facebook first.
So we launched a Facebook page to test just that- we found very quickly that
people would come and contribute. Hypothesis validated.

68. It gave us the confidence to launch OpenIDEO - please contribute if you have
a spare minute, or simply browse it for inspiration...

69. Exercise 3
Our final exercise today is to begin outlining our hypotheses and prioritise
them - the good news is that you have access to mentors, digital tools and
hopefully customers to validate efficiently. Your success will be a function of
the number of learning cycles you fit in your runway...

70. 1) What’s your Purpose and how will you measure it?
Is your team aligned around it? Will you review it
weekly?
2) Who’s your customer today? What are their real
needs? Which extremes today will be the norm
tomorrow?
3) What are your hypotheses, what order will you
efficiently test them and how?
We’ve covered some critical stuff, I’ll structure the next session around your
needs at that time but it’s likely to include pitching & business models...

71. HELLO
MY NAME IS
@thulme
Thanks