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LEAN
STARTUP
HristoNeychev

HristoNeychev

@HristoNeychev
I’M HRISTO NEYCHEV
I bring new ideas to life

INTERESTS
cloud, mobile, web

EXPERIENCE

13 years, 4 industries, 3 startups
neychev
dance
studio
what is the most
resilient parasite?
bacteria?

virus?
IDEA
GROWS LIKE A VIRUS
1+1 = 1+1

1+1 = 2+2
“…and even the smallest seed of
an idea can grow. It can grow to
define or destroy you!”
SUCCESSFUL
BUSINESS

BRIGHT
IDEA
SUCCESSFUL
BUSINESS

BRIGHT
IDEA
BRIGHT
IDEA

Time
Resources
Funding
People
Etc…

SUCCESSFUL
BUSINESS
SUCCESSFUL
BUSINESS
Time
Resources
Funding
People
Etc…

BRIGHT
IDEA
LEANSTARTUP
THE LEAN STARTUP
by Eric Ries

LEAN MANUFACTURING

(JIT) Just In time Delivery

JAPAN

Manufacturing Industry
Lean startup methodologies apply to any
individual, team, or company looking to introduce
new products or services into the market.
LEAN
slender
agile
quick
fast
rapid
swift
nimble…
STARTUP

“A human institution designed to create a
new product or service under conditions of
extreme uncertainty”

Eric Ries
CREATE
EXTREME
UNCERTAINTY
„If you don’t know
what you are doing…

…better do it fast“
Put a process/methodology around it.
VALIDATED LEARNING!
Get ready to FAIL!
You rarely hit
the bull's-eye,
but this never
stopped you
from playing!
INNOVATION
AT ESSILOR OF AMERICA
US HQ
50+
Manufacturing
Labs
500+
Sales Reps
30,000+

1.9 years
repurchase cycle

Eye Care Professionals
(ECPs)
150,000,000+
People wearing eyeglasses
EYE
EXAM
BUY
EYEGLASSES
BUT, YOU HAVE TO WAIT!
THE IDEA
Tablet device will
educate patients
while they are waiting
• Educate patients
• Help make the right decision
• Improve eye-care
• Better eye health

• Increase market share
• Improve capture rate
• Increase revenue per customer
Can this be
done?
…why and how?

?
WHY AND HOW
• Tablet or TV? Why?
• Education or advertising? Or both? How?
• Before or after the eye exam? Why?
• Self-service or someone will help? Who? Why?
• Should we sell it or give it away? Why? How?
Business Model Canvas
I prefer the
LEAN
CANVAS
Problem (1)

Solution (4)

Unique Value Proposition (3) Unfair Advantage (5) Customer Segment (2)

Can’t be easily copied
or bought

Top 3 features

Top 3 problems

Key Metrics (8)

Key activities you
measure

Single, clear, compelling
message that states why you
are different and worth
buying

Channels (9)

Path to customers

Cost Structure (7)

Revenue (6)

Customer Acquisition Costs
Distributing Costs
Hosting
People, etc.

Revenue Model
Lifetime Value
Revenue
Gross Margin

Target customers
Problem (1)

Solution (4)

Unique Value Proposition (3) Unfair Advantage (5) Customer Segment (2)

Tablet + videos
Customers are unaware
of the key benefits of
premium lenses
Opticians do a poor job
explaining them

Key Metrics (8)

Learn all you need to know
about your eyes and the
lenses you need. Make the
right choice. Take care of your
eyes’ health.

Capture rate
Revenue per customer
Share of ECP sales

We sell the most
premium lenses on
the market

Channels (9)

Eyeglass wearers

Path to customers

Cost Structure (7)

Revenue (6)

Tablets, videos, software, distribution

Increased purchases in ECP channel
TOOLS TO HELP YOU
• Research
• Surveys
• Interviews – ask for commitment
• Focus groups
• Test market
• [Genchi Genbutsu] – “go and see for yourself”
• EXPERIMENT
COMMITMENTS
TIME

– meetings, trials, etc.

REPUTATION – intro, testimonial,
CASH

case study, etc.
"go and see for yourself"
現地現物 [Genchi Genbutsu]

“the real place”
“the crime scene”

現場 [Gemba]
A key principle of the Toyota Production System
“Design an EXPERIMENT that
attempts to answer the question!”
Eric Ries

Create series of FAST and CHEAP
micro-experiments that lead you to
VALIDATED LEARING!
VALIDATED
LEARNING
The unit of progress
for Lean Startups
PROGRESS IN
MANUFACTURING

=

NUMBER
OF UNITS
PROGRESS IN
STARTUPS

=

VALIDATED
LEARNING
THE TRADITIONAL
APPROACH
1. Slow
2. Expensive
3. Gives you ONLY ONE attempt to
succeed/fail (in a 20%/80%
game)
RESULT: You build something
that nobody wants!
• PIC
Build it and
they will come!
Traditional
Sequential
Approach

Lean Startup
Approach
THE LEAN STARTUP APPROACH
1. FAST and Cheap
2. MULTIPLE full iteration cycles
3. Gives you MULTIPLE opportunities to LEARN/VALIDATE
your thinking
4. Gives you MULTIPLE attempts to SUCCEED/FAIL
5. Gives you MULTIPLE opportunities to PIVOT
Traditional
Sequential
Approach

Lean Startup
Approach
Minimum Viable Product
MVP
Crappy
products
nobody
wants

MINIUM

VIABLE

Expensive
products
that require
to much
time and
money
“Any additional work beyond what was required to
start learning is waste, no matter how important it
might have seemed at the time.”

The Dropbox MVP
“The first version of Gmail was literally written in a day.” –
Paul Buchheit (creator and lead developer of Gmail)
“Entrepreneurship in a lean startup is really a series of
MVP’s” – Eric Ries
“If Apple can launch a smartphone without Find or Cutand-Paste, what can you cut out of your product
requirements?” – Sramana Mitra
MVP
MVP #5
MVP #1

PowerPoint Deck
+ Hristo Neychev
VALIDATED ASSUMPTIONS/HYPOTHESIS
• Customers are willing to spend time to learn
more about eyeglass lenses
• Explaining the benefits of high quality lenses
changes customers buying decision (upsell)
MVP #2

Info in the deck fits
your prescription
MVP #3

Self-service deck
(no Hristo Neychev)
MVP #4

Simple video playing
from my laptop
MVP #5
Ugly tablet plays 5 videos
based on your prescription
KEY LEARNING
• Build multiple MVPs
• Don’t spend months waiting for a nice product
and then change the company's direction
• Adapt your plan incrementally, inch by inch,
minute by minute
• Genchi Genbutsu - "go and see for yourself"
WHAT DO I VALIDATE?
Test the founders hypothesis about:
1. Customer problem
2. Product concept
3. If the minimum feature set solve that problem
What if I fail to validate the hypothesis?
Change in the strategy without
changing the vision
PIVOT
“Structured course correction designed to test a new fundamental
hypothesis about the product, strategy, and engine of growth”
Eric Ries

The direction of your PIVOT
depends on your vision!
PIVOT EXAMPLE 1

WAS: “The Point” began as a platform for mobilizing
groups of people towards action for various causes
PIVOTED TO: only one group action - group buying
PIVOT EXAMPLE 2

WAS: blended elements of Foursquare and Mafia Wars in
a mobile app
PIVOTED TO: remove everything except the photosharing feature, thus renamed to “Instagram”
PIVOT EXAMPLE 3

WAS: “application that will allow individuals to "beam" sums of
money between handheld devices such as mobile phones, Palm
Pilots, and pagers” 07.27.99
PIVOTED TO: online payments
PIVOT EXAMPLE 4

WAS: Cloud-based IDE for desktop development

THEN: Cloud-based IDE for Mobile development
THEN: Cloud services for hybrid mobile developers

NOW: Cloud platform for Mobile development
Action Plan
Idea

MVP3

First product

PIVOT
or

PERSEVERE

Quick research

MVP3
PIVOT
or

Business model
canvas

Hypothesis /
Assumptions

PERSEVERE

MVP1

MVP2

Abandon this
direction
ASSUMPTIONS
1. List all assumptions
2. Create MVP(s) to VALIDATE all assumptions
3. BUILD-MEASURE-LEARN
4. List all new assumption
5. Create MVP(s) to VALIDATE all new assumptions
6. BUILD-MEASURE-LEARN
…rinse and repeat
YOUR BIGGEST FEAR?
•No money?
•No time?
•No good ideas?
•No motivation?
•No co-founder?
CREATING
THE
WRONG
THING!
CLOSING WORDS
Build
PRODUCT

IDEAS

Learn

Measure
DATA

• Move as fast as possible
• Learn as much as possible
• Don’t be afraid to PIVOT
• Don’t be afraid to FAIL
• VALIDATE everything
HAPPY VALIDATION!
Thank you!
Hristo Neychev
HristoNeychev
HristoNeychev
@HristoNeychev

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