What are important things to consider when trying to run a lean startup? Dominic Bortolussi, founder of The Working Group, shares his strategy in a slide show presented during the 2014 Funding Roadshow.
22. @twg #techraking
1. CUSTOMER SEGMENTS &
PROBLEM
• List the 3 biggest
problems your
customer has
• List existing
alternatives
23. @twg #techraking
2. UNIQUE VALUE
PROPOSITION
• Single compelling
message stating your
difference and value.
• Target early adopters
• Focus on finished
story benefits
25. @twg #techraking
4. CHANNELS
• Channels are how
your business will
reach its customers
• They let people
know about your
product
• PR, SEO,Word of
Mouth
26. @twg #techraking
5. REVENUE STREAMS AND
COST STRUCTURE
• How will you make
money?
• How much money
do you need to
make?
27. @twg #techraking
6. KEY METRICS
• One or two key
activities that will
drive people to use
your product
• One or two key
activities that prove
your product is
useful
28. @twg #techraking
7. UNFAIR ADVANTAGE
• Channels are how
your business will
reach its customers
• They let people
know about your
product
• PR, blogging, email
31. “IN A STARTUP NO
FACTS EXIST
INSIDE THE
BUILDING. ONLY
OPINIONS”
- @SGBLANK
32. @twg
Test the hypotheses of your Lean Canvas
Learn as much as you can about your
customers and their pain
Keep going until you stop learning
CUSTOMER DISCOVERY
35. @twg
Ask about their problems. “What is the
hardest part about _____.”
Learn about their pain, and what they
currently do to resolve it.
Listen, romance, repeat, record
CUSTOMER DISCOVERY
“PROBLEM” INTERVIEWS
36. @twg
Tell your customers your value prop and
solution details. Present something.
How are they solving it today? Is this
better?
Will they commit to trying it and a price?
CUSTOMER DISCOVERY
“SOLUTION” INTERVIEWS
37. @twg
THEN WHAT?
Repeat, interview, and fine tune your Solution.
Do this until you feel ready to create your ‘Minimum
Viable Product’ to launch.
Track the metrics.. looking for traction.
40. @twg
CUSTOMER - STARTUPS
Early Stage Software Startups - developing and
testing their MVP.
Have 25K+ now to allocate to design, development,
testing of their MVP.
Planning to raise more significant investment once
Market fit has been established.
41. @twg
PROBLEM - STARTUPS
Software production - need to iterate their MVP on
the web, or in mobile.
Hiring - need to find talent to design, build, test
Investment - need to build relationships with investors
Experience - don’t know everything about growing
and running a business.
42. @twg
UVP - STARTUPS
Augment your Startup with an investment from Canada’s top
designers and developers.
Work with an investor who can roll up their sleeves and work
alongside you, building and testing your product.
43. @twg
SOLUTION - STARTUPS
A partner who invests by delivering on the design, coding,
and testing for your MVP
A partner who invests by finding and growing your design
and tech team
A partner who can show you the best practices in Lean and
Agile approaches to software development. Validate MVP.
A partner who has a deep and active investor network
A partner who helps fill the gaps in knowledge and
experience
45. @twg
REVENUE - STARTUPS
Average early stage VC’s have .300 ‘winners’ batting
average
Average early VC’s stage aim for over 8X on their
winners
Our batting average so far is .600 (so far..)
And we need only a 2 - 3 X on our winners
47. @twg
PROBLEM - INVESTORS
Inexperienced teams (technology, business,
marketing).
Product needs to still be validated
Unknown cost to build and iterate product
48. @twg
UVP - INVESTORS
De-risk your investment in Startups with a Partner
investment from one of Canada’s top software design and
development firms.
49. @twg
SOLUTION - INVESTORS
A partner who can help the Startup validate their MVP.
A partner who can teach best practices in Lean and Agile software
dev.
A partner who can deliver design, code, and testing for their MVP
A partner who can help grow their design and tech team
A partner who has a deep and active startup network
A partner who helps fill their gaps in knowledge and experience
A partner who does some or all of the above as an investment.
I run a web and mobile software development company.
Software in the hands of innovators
Emissary from the tech world, to help with a problem that everyone is talking about.
Problem: The News business is being disrupted.
Tool or methodology you might be able to use to solve it - Lean Startup Methodology.
Got Fired
Began TWG with the help of a close friend who was a struggling journalist.
Paul McGrath who now works at the CBC.
Full circle.
Viralnova ISN’T A NEWS SOURCE. THEY AREN’T PROFESSIONAL JOURNALIST but they’re capturing people’s attention.
With a team of 50, Upworthy ...
Huffington Post and Forbes, benefitting from free contributor content. 100s articles
Competition for attention, and the enormous supply of advertising space - dropped revenue.
Traditional revenue models in the News Biz aren’t compatible with new trends. Clearly Ad rev down.
The news industry is limited:
Fixed cost base
Historical factors: Long print and paper contracts, organizational structure
Integrity - editorial vs revenue
This has happened before (theatre, cinema, radio, television)
EVERY INDUSTRY GOES THROUGH THIS - YOU ARE NOT ALONE
HOW DID CINEMA GET THROUGH THIS? THEY TRIED NEW THINGS. SOME WORKED, SOME DIDN”T, SMART EXPLORATION OF IDEAS
What are good ones? Hard to tell at first.
Jessica E. Lessin
Left WSJ to found The Information (Publication for professionals who need the inside scoop on technology news and trends.)
Covered Silicon Valley and the technology industry for eight years at the Wall Street Journal before launching The Information
Similar model to Jason Calacanis’ launch.co
The business model depends first and foremost on what's in the writing".
Unique value proposition based on contact list & access to breaking news, transformed into a product people are (hopefully) willing to pay for.
More info
Beacon (http://www.beaconreader.com) NEW REVENUE MODELS FOR JOURNALISTS
“A simple platform that lets writers connect with readers that value their work.”
Supported by startup incubator Y Combinator & individual investors
A reader funds a writer for $5 a month and in return gets access to all of the content on the site. Writers receive 70 percent of their subscription revenue each month, with another portion going toward a bonus pool paid out to those who wrote the most recommended stories. The company keeps the rest.
100+ writers, “several thousand” subscribers
Exploring new revenue model by applying crowdfunding principles + subscription-based payments to individual storytellers.
More info
So there’s lots of examples out there of ideas for how to ride the disruption…
OF ALL THE DIFFERENT THINGS WE COULD BE DOING,
HOW DO WE VALIDATE WHAT WE SHOULD BE DOING
- LEAN CANVAS
How can you avoid smell-o-vision?
Reasonably smart people can rationalize anything and entrepreneurs are
especially gifted at this.
We’re not experts on journalism, so I’ll spare you the exasperation
There’s a method that we use that produces consistently higher quality results.
Familiar with the media space, CBC, CFC, TSN, Torstar, startups like Front Porch Forum.
Perspective I’ll be taking is that of the guys who help innovators and entrepreneurs test and build products.
Front Porch Forum: Knight News Challenge. FPF won a $200,000 grant to build on its successes in connecting neighbors in Vermont through a system that is a mixture of message board, listserv, and local newspaper.
Old: Idea, customer input, build, release, pray.
Hope that if you have to modify, you do so before you run out of money.
New: Short cut the cost to first figure out if you have a customer.
This is how we help startups…
Created by Ash Mauyra, The Lean Canvas is a fast alternative to creating a full business plan.
DO YOU HAVE A PROBLEM WORTH SOLVING?
“Reasonably smart people can rationalize anything and entrepreneurs are
especially gifted at this.” - Ash Maurya
1. Sketch a canvas in one sitting:
2. It’s okay to leave sections blank:
3. Think in the present.
4. Use a customer-centric approach. Start with customer
1. List top 3 problems
For the customer segment you are working with, describe the top 1-3
problems they need solved.
2. List existing alternatives
Then document how you think your early adopters address these problems
today. Unless you are solving a brand new problem (unlikely), most
problems have existing solutions. Many times these may not be a readily
obvious competitor.
As an example, the biggest alternative to most online collaboration tools is
not another collaboration tool, but email. Doing nothing could also be a
viable alternative for a customer if the pain is not acute enough.
3. Identify other user roles
Next identify any other user roles that will interact with this customer (customers are people who pay for your product. Anyone else is a user).
4. Hone in on possible early adopters
With these problems in mind, get more specific on the customer segment.
Narrow down the distinguishing characteristics of your prototypical
customer. Not just “parents” - “first-time moms with kids under the age of three”.
EXAMPLES:
BUZZFEED: THE CUSTOMER IS THE ADVERTISER PAYING FOR SPONSORED CONTENT. THE READER IS THE USER
A single, clear compelling message that states why you are
different and worth buying.
Be different, but make sure your difference matters
Target early adopters
Focus on finished story benefits
EXAMPLE
If you are building a résumé-building service:
- a feature might be “professionally designed templates”
- the benefit would be an “eye-catching résumé that stands out”
- but the finished story benefit would be “landing your dream job”.
For each problem you have identified, come up with a feature/capability that solves that problem.
For each problem you have identified, come up with a feature/capability that solves that problem.
What you charge for your product is the most complicated and most important things to get right.
What do you need to charge in order to break even?
Plug Tom’s talk on “avoiding vanity metrics” for multiplicity.
[email_address]
“A real unfair advantage is something that cannot be easily copied or bought.”
- Jason Cohen
Jessica E. Lessin “THE REPORTREPRENEUR”
Left WSJ to found The Information (Publication for professionals who need the inside scoop on technology news and trends.)
Covered Silicon Valley and the technology industry for eight years at the Wall Street Journal before launching The Information
Similar model to Jason Calacanis’ launch.co (Subscription payment for the promise of great content). “When we write great stories, we get great subscribers. In today's competitive market, the business model depends first and foremost on what's in the writing".
Unique value proposition based on contact list & access to breaking news, transformed into a product people are (hopefully) willing to pay for.
More info
So what you have now is some opinions / assumptions / hypotheses about what you might like to build.
But you won’t know if they’re right until you go out and talk to people.
Stop fixating on your idea
Test assumptions
Take all of the pieces apart
(Express Newspaper Building)
Speaking with customers face-to-face is a critical part of building a startup
Show video:
https://www.youtube.com/watch?feature=player_embedded&v=RNwX0-KJfeo
Interview part one = Problem Interview: As A journalist you should have a good bullshit detector
Interview part two = Solution Interview.
Customer Discovery
- What is the problem interview?
1. Is it something customers want? (must-have)2. Can it be solved? (feasible)3. Will they pay for it? If not, who will? (viable)
What is the problem interview?
This is just the beginning!
Resources: All on the Lean Canvas worksheet
Tom Walsham - Mentor - Speaking at Multiplicity about metrics next month - talk to Holly for more info