1. The document introduces the concept of Lean Startups, which is an iterative process for developing and testing business model hypotheses to achieve product/market fit and scale. 2. A Lean Startup focuses on validating problem/solution fit and product/market fit through frequent experiments and customer feedback before worrying about scale. 3. Key aspects of a Lean Startup include developing falsifiable hypotheses, building dashboards to measure key metrics, conducting regular "lessons learned" style meetings, and using pivots to course correct rather than long-term planning.

1. Introduction to Lean Startups
Steve Guengerich
May 22, 2014

3. You are here

4. How many know or would identify
themselves as a Lean Startup

5. new product ideas to get 1 successful
product58

6. change their original plans
drastically66%

8. Not a better Plan A
But a path to a plan that works.

9. Lean Startup is a rigorous process for iterating
from a Plan A to a plan that works

10. Agenda
1. What is a Lean Startup?
2. What does a Lean Startup look like?
3. How can you use Lean to define and measure
progress?

11. New Idea “Stages of Adoption”
• Ignored
• Misunderstood
• Obvious – now and before

12. We are Lean because…
• we got a great deal on our furniture…

13. We are Lean because…
• we got a great deal on our furniture…
• we surveyed all our customers and found
that…

14. We are Lean because…
• we got a great deal on our furniture…
• we surveyed all our customers and found
that…
• we’ve implemented continuous deployment…

15. A Lean Startup is about speed
Startups that succeed are those that manage to
iterate enough times before running out of
resources.
- Eric Ries

16. A Lean Startup is about focus
Focus on the right actions that are important to
the startup, and ignore the rest.

17. Characteristics of a Lean Startup

18. Business Model vs. Business Plan

19. Business model hypothesis
1. What is the problem I’m solving?
2. Who is the customer?
3. How – business model

20. Business Model Canvas (lean edition)
Problem Solution Unique
Value
Proposition
Unfair
Advantage
Customer
Segments
Key
Activity
Channels
Cost Structure Revenue Streams
Top 3 problems Top 3 features
Single, compelling
clear message
that states why
you are different
and worth buying
Can’t be easily
copied or bought
Target customers
Activity that
drives retention/
revenue
Path to
customers
Customer acquisition costs
Distribution costs
Hosting
People, etc.
Revenue model
Life time value
Revenue
Gross margin

21. Business Model Canvas (nonprofit & lean edition)
Problem Solution Unique
Value
Proposition
Competitive
Advantage
Customer
Segments
Key
Activity
Channels
Cost Structure Revenue/Outcome Streams
Top 3 problems
you are trying to
solve
Top 3 features of
your solution
Single, compelling
clear message
that states why
you are different
and worth buying
or investing in
Can’t be easily
copied or bought
Target
customers,
clients, and
stakeholders
served
Activity(ies) that
drives revenue /
success
Path(s) to
reaching/serving
customers
Customer acquisition costs
Distribution costs
Hosting
People, etc.
1. Financial outcomes
• Revenue model
• Lifetime value
• Revenue
• Gross margin
2. Non-financial outcomes
• Social impact
• Mission-related objectives
• Behavior changes
Key Resources & Internal
Alignment
• Degree of board and other critical path stakeholder buy-in
• Physical resources needed
• People resources needed
• Intellectual resources needed

22. Validate Problem / Solution Fit
Do I have a problem worth solving?
Problem/solution
fit
Product/market
fit
Scale

23. Problem/Solution Fit - Lean Canvas
P S UVP UA CS
KA CH
C$ R$
Top 3 problems Top 3 features Single, compelling
clear message
that states why
you are different
and worth buying
Can’t be easily
copied or bought
Target
customers
Activity that
drives retention/
revenue
Path to
customers
Customer acquisition costs
Distribution costs
Hosting
People, etc.
Revenue model
Life time value
Revenue
Gross margin

24. Achieve Product / Market Fit
Have I built something people want?
Problem/solution
fit
Product/market
fit
Scale

25. Product development gets in the way of learning
Very little learning
Requirements Development QA Release
Some learning
Most learning happens
here

26. Involve customers throughout product dev
Requirements Continuous
Deployment
Release
Customer
Validation
Customer
Discovery

27. Product/Market Fit - Lean Canvas
P S UVP UA CS
KA CH
C$ R$
Top 3 problems Top 3 features Single,
compelling clear
message that
states why you
are different and
worth buying
Can’t be easily
copied or bought
Target customers
Activity that
drives revenue/
retention
Path to
customers
Customer acquisition costs
Distribution costs
Hosting
People, etc.
Revenue model
Life time value
Revenue
Gross margin

28. Scale - Lean Canvas
P S UVP UA CS
KA CH
C$ R$
Top 3 problems Top 3 features Single, compelling
clear message
that states why
you are different
and worth buying
Can’t be easily
copied / bought
Target customers
Activity that
drives revenue/
retention
Path to
customers
Customer acquisition costs
Distribution costs
Hosting
People, etc.
Revenue model
Life time value
Revenue
Gross margin

29. After Product / Market Fit
Problem/solution
fit
Product/market
fit
Scale
Validated learning
Pivots
Growth
Optimizations

30. Start with what matters
P S UVP UA CS
KA CH
C$ R$
Problem #1
Problem #2
Problem #3
Feature #1
Feature #2
Feature #3
Founders
Marketers

31. But also tackle the riskiest part
P S UVP UA CS
KA CH
C$ R$
Problem #1
Problem #2
Problem #3
Feature #1
Feature #2
Feature #3
Founders
Marketers
Something that
can’t be copied
or bought
Personal
authority
Website
Subscription model: $49 / mo.

32. Formulate falsifiable hypotheses
Leap of Faith: Being known as an “expert” will drive early adopters
Hypothesis: Blog post will drive > 100 early sign-ups

33. Build accessible dashboards
Hypothesis Metrics Week 1 Week 2
Hypothesis Metrics Week 1 Week 2
Hypothesis Metrics Week 1 Week 2
CH
CS
P
Personal authority will drive early adopters
Early adopters will primarily be pre-product/market fit companies
Problem fit
Blog post will drive > 100 early sign-ups Number of teaser 72 20
page sign-ups
Conduct 30-50 customer interviews within Number of customer 5 9
4 weeks interviews
80% of early adopters will be founders Percentage of 4/5 6/9
interviewees that fit this description
80% of early adopters will vote problem Number of must- 3/3 7/9
as must-have have votes from customer interviews

34. Make the results auditable

35. Run board meetings in a lessons learned format

36. Scale vs. product/market fit
Problem/solution
fit
Product/market
fit
Scale
Validated learning
Pivots
Growth
Optimizations

37. After product/market fit, some level of success
is almost always guaranteed.

38. True False
False True
Revenue
No Yes
No
Usage
Yes
Beware the “false positives”

39. Pivots are about finding a plan that works
Optimizations are about accelerating that
plan

40. Pivots
Experiments: Validate
Goal: Course
correction
Optimization
Experiments: Refine
Goal: Efficiency

41. You stand to learn the most when the probability
of the expected outcome is 50%; that is, when
you don’t know what to expect.

42. Scale - Lean Canvas
P S UVP UA CS
KA CH
C$ R$
Top 3 problems Top 3 features Single, compelling
clear message
that states why
you are different
and worth buying
Can’t be easily
copied / bought
Target customers
Activity that
drives revenue/
retention
Path to
customers
Customer acquisition costs
Distribution costs
Hosting
People, etc.
Revenue model
Life time value
Revenue
Gross margin

43. While revenue is the first form of validation,
retention is the ultimate form of validation

44. Every process works until you add people; key
is balancing your hiring with equal number of
Experimenters Specialists

45. Problem/solution
fit
Product/market
fit
Scale
Your goal: Learning
Your investor’s goal: Growth
Your goal: Growth
Your investor’s goal: Growth
Ideal time to raise funding

46. Leverage your advisors for good advice but
don’t follow it, apply it.
Advice <> judgment or validation
Advice = identifying and prioritizing risk

47. Thanks!
Steve Guengerich
@sguengerich
703-957-0797