This document contains notes from a Lean LaunchPad class at NYU, including: 1) An agenda for the class covering activities, resources, costs, financials, and presentations. 2) A calendar of class topics for 2015 covering business models, customer development, and product development. 3) Discussions of different types of startups, funding sources for for-profit and non-profit organizations, and key resources including financial, physical, human, and intellectual resources.

1. Class 6 / 12
March 23, 2014
Jen van der Meer | jd1159 at nyu dot edu
Josh Knowles | chasing at spaceship dot com
LEAN
LAUNCHPAD
AT NYU ITP

2. 6:30 – 7:30: Activities, Resources and Costs and Financials
7:30 – 8:30 – Presentations
8:30 Focus on MVP – Josh
9:00 – 9:30 Alex Herrity – Signals
TODAY:

3. .
CLASS TIMEFRAME 2015
2/2
Business Models
Customer Development
2/9
Value Proposition
Research tools
2/16
President’s Day
2/23
Customer Segments
Research Tools
3/23
Spring Break
3/9
Customer Relationships
Product Development
3/23
Resources
Activities + Costs
3/30
Product Development
UX and User Interface
Design
4/6
UI UX Part 2
4/13
Product Development
User test
4/20
Product development
4/27
Product MVP
May!
Delicious Celebration
Lessons Learned
3/2
Revenue Streams
Distribution Channels

5. Financial
Physical
Intellectual
Human
KEY RESOURCES

6. FUNDING: YOU USED TO HAVE TO PICK A LANE

7. NOW IT’S A PARADOX OF CHOICE

8. WHICH MAKES SENSE FOR YOUR .CO OR .ORG?

9. KEY DIFFERENCES

10. WHICH WILL YOU CHOOSE

11. BOTH REQUIRE MONEY (AND LOVE)
TO SUSTAIN AND GROW

12. ENTREPRENEURSHIP IS ACTUALLY DOWN
http://www.brookings.edu/~/media/research/files/papers/20
14/05/declining%20business%20dynamism%20litan/declini
ng_business_dynamism_hathaway_litan.pdf
A sharp uptick in early-
stage firm failure rates
are playing an increasing
role over time. The
failure rate of firms
aged one year—the
youngest firms in our data
outside of freshly
launched ones—
increased from a low of
16% in 1991 but rose
steadily and persistently
to reach 27% by 2011.

13. IN TECH FIRMS ESPECIALLY (VS. WHAT WE BELIEVE FROM
TECH INDUSTRY COVERAGE)
http://www.kauffman.org/~/media/kauffman_org/research%20rep
orts%20and%20covers/2014/02/declining_business_dynamism_i
n_us_high_tech_sector.pdf
Less well known is that the
share of young firms in
the high-tech sector has
exhibited a
more pronounced secular
decline in the post-2002
period than in the rest of
the economy. Consistent
with that pattern, we have
found that the pace of
business dynamism, as
measured by the pace of
job reallocation, has
declined in the high-tech
sector in the post-2002
period at a pace that
exceeds that of the overall
economy.
Tech firms = 4.1% of all US
firms

14. NON PROFITS ARE 5% US GDP, 10% JOBS
http://www.nytimes.com/2014/03/09/business/for-
nonprofits-a-bigger-share-of-the-economy.html?_r=0
All told, roughly 1.6 million
nonprofits employed 10 percent of
the domestic work force in 2010
and accounted for 5 percent of
G.D.P. Nonprofits are all exempt
from corporate taxes.

15. Financial
Equity
Friends Family
Angel
VC – growth
Social impact investing
Equity Crowdfunding
Convertible Debt
Debt that converts to equity
Debt
Small business loans
Trade finance
Working capital debt
Line of credit
Non dilutive grants
SBIR, STPR grants
Open Innovation prizes (XPRIZE,
Kaggle)
Social impact foundations (RWJF)
Project Crowdfunding
KEY RESOURCES: FINANCIAL

16. FOR PROFIT FUNDING SOURCES

17. • “A startup is a human institution designed to deliver a new product or
service under conditions of extreme uncertainty.” – Eric Ries
• “A startup is a company designed to grow fast.” –Paul Graham. Y
Combinator.
– For a company to grow big, it has to make something a lot of people
want. To reach and serve all of those people.
• “A startup is a temporary organization designed formed to search for
a scalable repeatable business model.” – Steve Blank.
– Most startups change their business model multiple times.
– A scalable startup is a special class of startup – world class team,
large vision, large target market, passionate belief and a reality
distortion field.
ARE YOU A STARTUP, OR A SCALABLE STARTUP?

18. NOT ALL NEW COMPANIES ARE GROWTH STARTUPS
Consulting
29%
Services:
Other
17%
Technology:
Internet
14%
Real Estate
14%
Service:
Business
Service
13%
Retail
Store
13%
Source: Kauffman Foundation Legal Zoom Startup Environment Index 2012

19. FOR PROFIT HYBRIDS
• Social enterprise social or
environmental purpose, may be willing
to limit scale opportunities to meet more
local goals, or directly serve the need.
• B-corps are a type of social enterprise
that also agrees to transparently share
financial results.
• Social businesses (Yunnus): for profits
that re-invest to meet a social need.
• Social impact growth aiming for scale
and for social/environmental outcomes,
and high growth returns to investors.

20. NOT FOR PROFIT FUNDING SOURCES

21. WHICH WILL YOU CHOOSE
BOTH BENEFIT FROM CUSTOMER DISCOVERY – REDUCE YOUR RISK
AND VALIDATE THERE IS A PROBLEM TO SOLVE

22. Office building/office
Factory/processing
Vehicles
Machines
Hardware
Raw materials/ingredients
Components
KEY RESOURCES: PHYSICAL

23. KEY RESOURCES

24. Co-founders
Employees
Contractors
Development firms, contract manufacturing
HUMANS – COMPANY

25. Mentors – make you smarter about your career
Teachers – provide specific subject matter expertise
Coaches – help you achieve a goal
Advisors – help you make your company succeed
Board members – help the investors succeed
Surround yourself with people that give critical feedback, and help you
through a major founder failure point – when you believe your vision is fact.
HUMANS – MENTORS, ADVISORS

26. Developer/engineer
Designer
Marketer
Scientist
Community manager
When do you need a CEO?
A CFO?
An HR person?
A VP of Sales?
A Chief Revenue officer?
TALENT
https://medium.com/spook-studio/why-happiness-should-be-your-
business-model-f866d92cd898

28. Income statement
Balance sheet
Cash flow
Are these the financials you need to understand?
Yes, because it’s the language investors speak, and it’s good to understand
the flows of financial reporting –but this is a system used to compare
financial performance for investors.
These do not supply execution metrics to help you make decisions and
formulate/test hypotheses.
COSTS

29. COSTS – EXECUTION METRICS

30. Viral coefficient
CAC
LTV
Conversion rate
Retention rate
What are vanity metrics?
Registered users, downloads, and raw pageviews. A mobile apps could have
millions of downloads but only a few hundred thousand active users, or a
freemium website might see exploding traffic growth but barely any
conversions to paying users. They are metrics that make you feel good, bad
for guiding execution.
What metrics will drive you through MVP?
COSTS – EXECUTION METRICS

31. UNIT ECONOMICS

32. 32
WHAT CAME BEFORE STEVE AND ERIC

33. FOR NEXT TIME
3/30/15

34. .
POST BREAK PREP:
We’ve toured the canvas.
But you’re not done.
For March 30: Prepare to run through the canvas:
• What is your clear value proposition, how have you validated.
• What segment(s) are you pursuing, how have you validated.
• What resources will you need to get to MVP, and what are the costs?
• What other key elements of the business model canvas do you need to test.
• What remaining hypotheses do you have?
We are here for you, all of the mentors and advisors. Please reach out even if
you don’t think you need help.

35. NEXT: CANVAS REVIEW AND
FEEDBACK