Lean Startup Analytics and MVP – Lecture and Workshop at Zeppelin University

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This lecture and workshop was held at E-Entrepreneurship Summer School at Zeppelin University, Friedrichshafen.
The first part explains the differences and challenges between of a new idea driven startup and proof of concept startup (aka copycat).
The first Workshop part is on the key assumptions and hypothesis of the business ideas in the course.
The second part of the lecture is about the validation of the problem/solution fit using interview techniques.
The third part is on the Minimum Viable Product concept and 6 different MVP cases.
The second workshop is on developing a MVP concept for each of the business ideas in the course.
Finally some fundamental quantitative analytics (split testing, cohort analysis) are explained.

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Lean Startup Analytics and MVP – Lecture and Workshop at Zeppelin University

  1. Sebastian Fittko on Startup Analytics and MVP at E-Entreprenuership Summer School 2013, Zeppelin Universität 1
  2. What is a startup? Workshop: hypothesis Presenting results Startup analytics 1 What is a MVP? Workshop MVP Presenting results Startup analytics 2
  3. What is a startup? Workshop: hypothesis Presenting results Startup analytics 1 What is a MVP? Workshop MVP Presenting results Startup analytics 2
  4. Image curtsey: http://www.flickr.com/commons
  5. "Success consists of going from failure to failure without loss of enthusiasm." – Winston Churchill Image curtsey: http://www.flickr.com/commons
  6. Image curtsey: http://steveblank.fi/press.html
  7. "A startup is an organization formed to search for a repeatable and scalable business model." – Steve Blank Image curtsey: http://steveblank.fi/press.html
  8. Traction Startup XY Time Problem/ Solution Fit Product/Market Fit Focus: Discovery, Validated Learning Experiments: Iteration, Pivots Methodology: Qualitative, Quantitative BIG thanks to © Ash Maurya! Scale
  9. Traction New idea startup Time Problem/ Solution Fit Product/Market Fit Scale
  10. Traction New idea startup Time Problem/ Solution Fit Product/Market Fit Image curtsey: http://www.flickr.com/commons Scale
  11. Image curtsey: http://www.flickr.com/commons
  12. What are you aiming for? „Being in a good market with a product that can satisfy that market.“ – Marc Andreessen Image curtsey: http://www.flickr.com/commons
  13. Go where the beef is and people want your stuff!! Image curtsey: http://www.flickr.com/commons
  14. Traction Product/Market Fit Find a product the market wants! Time
  15. Traction Time Problem/ Solution Fit Product/Market Fit Scale Focus: Efficiency, Growth Experiments: Optimizations Methodology: Quantitative
  16. Traction Start here = Copy cat Time Problem/ Solution Fit Product/Market Fit Scale Focus: Efficiency, Growth Experiments: Optimizations Methodology: Quantitative
  17. Start here = Copy cat Image curtsey: http://www.flickr.com/commons
  18. Traction Product/Market Fit Start here! Time Problem/ Solution Fit Product/Market Fit
  19. Traction Product/Market Fit Start here! Achieve this! Time Problem/ Solution Fit Product/Market Fit
  20. Where is the pain? Insights Image curtsey: http://www.flickr.com/commons
  21. Image curtsey: http://www.flickr.com/commons
  22. Image curtsey: http://www.flickr.com/commons
  23. „Everybody has a plan until they get punched in the mouth.“ – Mike Tyson
  24. Image curtsey: http://www.flickr.com/commons
  25. Day Month No. Who are our Key Partners? Who are our key suppliers? Which Key Resources are we acquiring from partners? Which Key Activities do partners perform? What Key Activities do our Value Propositions require? Our Distribution Channels? Customer Relationships? Revenue streams? What Key Resources do our Value Propositions require? Our Distribution Channels? Customer Relationships? Revenue Streams? What are the most important costs inherent in our business model? Which Key Resources are most expensive? Which Key Activities are most expensive? What value do we deliver to the customer? Which one of our customer’s problems are we helping to solve? What bundles of products and services are we offering to each Customer Segment? Which customer needs are we satisfying? What type of relationship does each of our Customer Segments expect us to establish and maintain with them? Which ones have we established? How are they integrated with the rest of our business model? How costly are they? For whom are we creating value? Who are our most important customers? Through which Channels do our Customer Segments want to be reached? How are we reaching them now? How are our Channels integrated? Which ones work best? Which ones are most cost-efficient? How are we integrating them with customer routines? For what value are our customers really willing to pay? For what do they currently pay? How are they currently paying? How would they prefer to pay? How much does each Revenue Stream contribute to overall revenues? This work is licensed under the Creative Commons Attribution-Share Alike 3.0 Unported License. To view a copy of this license, visit http:/ /creativecommons.org/licenses/by-sa/3.0/ or send a letter to Creative Commons, 171 Second Street, Suite 300, San Francisco, California, 94105, USA. BIG thanks to Alex Osterwalder! You can download the here: http://www.businessmodelgeneration.com/downloads/business_model_canvas_poster.pdf Year
  26. Day Month No. Who are our Key Partners? Who are our key suppliers? Which Key Resources are we acquiring from partners? Which Key Activities do partners perform? What Key Activities do our Value Propositions require? Our Distribution Channels? Customer Relationships? Revenue streams? What Key Resources do our Value Propositions require? Our Distribution Channels? Customer Relationships? Revenue Streams? What are the most important costs inherent in our business model? Which Key Resources are most expensive? Which Key Activities are most expensive? What value do we deliver to the customer? Which one of our customer’s problems are we helping to solve? What bundles of products and services are we offering to each Customer Segment? Which customer needs are we satisfying? What type of relationship does each of our Customer Segments expect us to establish and maintain with them? Which ones have we established? How are they integrated with the rest of our business model? How costly are they? For whom are we creating value? Who are our most important customers? Through which Channels do our Customer Segments want to be reached? How are we reaching them now? How are our Channels integrated? Which ones work best? Which ones are most cost-efficient? How are we integrating them with customer routines? For what value are our customers really willing to pay? For what do they currently pay? How are they currently paying? How would they prefer to pay? How much does each Revenue Stream contribute to overall revenues? This work is licensed under the Creative Commons Attribution-Share Alike 3.0 Unported License. To view a copy of this license, visit http:/ /creativecommons.org/licenses/by-sa/3.0/ or send a letter to Creative Commons, 171 Second Street, Suite 300, San Francisco, California, 94105, USA. BIG thanks to Alex Osterwalder! You can download the here: http://www.businessmodelgeneration.com/downloads/business_model_canvas_poster.pdf Year
  27. Day Month Year No. Who are our Key Partners? Who are our key suppliers? Which Key Resources are we acquiring from partners? Which Key Activities do partners perform? What Key Activities do our Value Propositions require? Our Distribution Channels? Customer Relationships? Revenue streams? Hypothesis What value do we deliver to the customer? Which one of our customer’s problems are we helping to solve? What bundles of products and services are we offering to each Customer Segment? Which customer needs are we satisfying? Hypothesis What type of relationship does each of our Customer Segments expect us to establish and maintain with them? Which ones have we established? How are they integrated with the rest of our business model? How costly are they? For whom are we creating value? Who are our most important customers? Hypothesis Hypothesis Hypothesis What Key Resources do our Value Propositions require? Our Distribution Channels? Customer Relationships? Revenue Streams? Through which Channels do our Customer Segments want to be reached? How are we reaching them now? How are our Channels integrated? Which ones work best? Which ones are most cost-efficient? How are we integrating them with customer routines? Hypothesis What are the most important costs inherent in our business model? Which Key Resources are most expensive? Which Key Activities are most expensive? For what value are our customers really willing to pay? For what do they currently pay? How are they currently paying? How would they prefer to pay? How much does each Revenue Stream contribute to overall revenues? Hypothesis Hypothesis This work is licensed under the Creative Commons Attribution-Share Alike 3.0 Unported License. To view a copy of this license, visit http:/ /creativecommons.org/licenses/by-sa/3.0/ or send a letter to Creative Commons, 171 Second Street, Suite 300, San Francisco, California, 94105, USA. BIG thanks to Alex Osterwalder! You can download the here: http://www.businessmodelgeneration.com/downloads/business_model_canvas_poster.pdf
  28. What is a startup? Workshop: hypothesis Presenting results Startup analytics 1 What is a MVP? Workshop MVP Presenting results Startup analytics 2
  29. Workshop: 6 hypothesis Pitch your idea and the underlying hypothesis (1) Pain aka problem? (2) Pain relief? (3) Solution? (4) Get the user engaged? (5) Growth (6) Revenue? How? Amount?
  30. Bla Bla Bla Bla Image curtsey: http://www.flickr.com/commons Bla
  31. Image curtsey: http://www.flickr.com/commons
  32. How to present? Pitch your idea and the underlying hypothesis EACH - 5 minutes to pitch the idea & hypothesis - 10 minutes discussion
  33. What is a startup? Workshop: hypothesis Presenting results Startup analytics 1 What is a MVP? Workshop MVP Presenting results Startup analytics 2
  34. Hypothesis 1 Image curtsey: http://www.flickr.com/commons
  35. What is a startup? Workshop: hypothesis Presenting results Startup analytics 1 What is a MVP? Workshop MVP Presenting results Startup analytics 2
  36. How to gather customer insights and validate decisions? Image curtsey: http://www.flickr.com/commons
  37. Quantitative Measure customer behavior Image curtsey: http://www.flickr.com/commons
  38. vs.
  39. Qualitative Asking for customer intend Image curtsey: http://www.flickr.com/commons
  40. How to validate customer intend? Traction Product/Market Fit Problem/ Solution Fit Time
  41. We do this in two steps: 1st step Validate Problem 2nd step Validate Solution Do they care? Do they need it? Do they have budget for it? Who really is they? Does our solution really solve their Problem? Do they understand the solution? Would they pay for it?
  42. Numbers are a horrible way to understand customer intend! Image curtsey: http://www.flickr.com/commons
  43. So go and ask your customers!
  44. “If I had asked people what they wanted, they would have said faster horses.” – Henry Ford Image curtsey: http://www.flickr.com/commons
  45. Henry Ford asked wrong! “If I had asked people what they wanted, they would have said faster horses.” – Henry Ford Image curtsey: http://www.flickr.com/commons
  46. The hard things in customer interviews Knowing who your customer is. Define narrow segmentation! 5-10 customers per segment.
  47. The hard things in customer interviews Ask the right way. Did or do, NEVER would. Don‘t ask for opinions. Don‘t assume problems.
  48. The hard things in customer interviews Use their feedback. Know what you want to learn. Test your riskiest assumptions. Learn or pivot.
  49. The hard things in customer interviews Be prepared to kill your idea!
  50. The interview Design a questionnaire based on your assumptions. Testrun the interview. Let them speak. Ask open questions. Let them be the expert. In person, no Skype, no online survey, no phone, no email! Don‘t do more interviews if feedback repeats!
  51. The interview – protocol No laptop. Use Post-its. Write down exact customer phrase.
  52. NEVER delegate interviews! Interviews should be done by the product deciders. Lern to talk and listen to your customers! Image curtsey: http://www.flickr.com/commons
  53. Review with your team! Use exact wording by the customer. Understand their answers in their context. Reflect and rethink your assumptions. Which assuptions turned out wrong? See what you‘ve learned. Adapt your solution.
  54. Validate Solution. Come back to interviewees. Focus first on current solution. Discuss flaws of current solutions. Show mockups and interactive demos. Get improvement feedback. Get them to commit. Pay a price? Build a MVP. or iterate.
  55. If you were wrong – be HAPPY! You don‘t wasted your money, time and money Iterate or pivot Usually a successful startup didn‘t start with the final solution Image curtsey: http://www.flickr.com/commons
  56. What is a startup? Workshop: hypothesis Presenting results Startup analytics 1 What is a MVP? Workshop MVP Presenting results Startup analytics 2
  57. Numbers are a great way to verify customers intend! Image curtsey: http://www.flickr.com/commons
  58. MVPs to verify problem/solution fit & product/market fit
  59. „New ventures rapidly assemble minimum viable products and immediately elicit customer feedback. Then, using customers’ input to revise their assumptions, they start the cycle over again, testing redesigned offerings and making further small adjustments (iterations) or more substantive ones (pivots) to ideas that aren’t working.“ – Steve Blank
  60. Example MVPs
  61. Video MVP
  62. Dropbox MVP
  63. Lessons learned Give the early adopters a hint of the product experience. The same feedback as if putting a product in their hand. Video had the waiting list (of emails) jump from 5000 to whopping 75000 in one single day Dropbox MVP
  64. Landing Page MVP
  65. Lessons learned Create a landingpage on the solution you offer. Drive traffic to your page: Google AdWord campaign or platform like betali.st Setup Google Analystics or other tool. Measure conversion and virality. Make questions easy, e.g. chat. Dropbox MVP
  66. Wizard of Oz MVP
  67. Zappos
  68. Lessons learned No stocking of items and no backend required. No scalable business: all of it done by the founder himself, and by hand. Validate the most important assumptions with little investment with a real life shopping experience Dropbox MVP
  69. Concierge MVP
  70. Food on the table
  71. Lessons learned Gather insides by offering a hands on real life service Add paying customers Start coding when you need to scale your service to satisfy demand Dropbox MVP
  72. Raise Funds from Customers
  73. Pebble Watch
  74. Lessons learned Gather early adopters and raving fans Stay in constant contact with your backers Get strong commitment by potential customers via investment Not every product has a strong consumer focus with clear added value Dropbox MVP
  75. Single Feature MVP
  76. Google
  77. Lessons learned Focus is about saying NO! Many relate that their first mistake was to make too many features. Adding more features will not make the product a must have Dropbox MVP
  78. What is a startup? Workshop: hypothesis Presenting results Startup analytics 1 What is a MVP? Workshop MVP Presenting results Startup analytics 2
  79. How to present? Pitch your idea and the underlying hypothesis - 5 minutes to pitch the idea & hypothesis - 10 minutes discussion
  80. What is a startup? Workshop: 5 hypothesis Presenting results Startup analytics 1 What is a MVP? Workshop MVP Presenting results Startup analytics 2
  81. Our MVP is … Image curtsey: http://www.flickr.com/commons
  82. What is a startup? Workshop: 5 hypothesis Presenting results Startup analytics 1 What is a MVP? Workshop MVP Presenting results Startup analytics 2
  83. Traction Product/Market Fit How to achieve? Time Product/ Markt Fit
  84. The big leap for the startup Achieve product/market fit Image curtsey: http://www.flickr.com/commons
  85. Numbers are a great for decision making! Image curtsey: http://www.flickr.com/commons
  86. The metrics have to be to actionable!
  87. Where is the difference Actionable metric Vanity metric An actionable metric is one that ties specific and repeatable actions to observed results. Vanity metrics which only serve to document the current state of the product but offer no insight into how we got here or what to do next.
  88. 3 rules to actionable metrics (1) Identify the right metrics (2) Create simple reports (3) Metrics are people, too
  89. (1) Identify right key metrics Image curtsey: http://www.flickr.com/commons
  90. Startup Metrics for Pirates •  •  •  •  •  Acquisition: users come to site from various channels Activation: users enjoy 1st visit: "happy experience Retention: users come back, visit site multiple times Referral: users like product enough to refer others Revenue: users conduct some monetization behavior AARRR! (note: If you re in a hurry, Google Startup Metrics & watch 5m video)
  91. Metrics Framework Acquisition Activation Retention Referal Revenue Product/ Markt Fit
  92. Product/Market Fit Providing a great first experience (Activation) and most important of all, that they come back. Image curtsey: http://www.flickr.com/commons
  93. Signup action Signup Specific Action Image curtsey: http://www.flickr.com/commons
  94. Retention action Revisits Churn – cancelation no activity Key Activity – usage pattern Image curtsey: http://www.flickr.com/commons
  95. (2) Create simple reports Reports that are hard to understand simply won’t get used 1-page reports and funnels
  96. Funnel Reports
  97. Conversion Funnel for June Sign-up 4200 (100%) Downloaded 3400 (81%) Did key activity 1880 (45%) Purchased 375 (9%) BIG thanks to © Ash Maurya!
  98. Split tests Variant A – Landing Page Variant B – Landing Page Sign-up Sign-up 4200 (100%) 4500 (100%) Downloaded Downloaded 3400 (81%) 3800 (84%) Did key activity Did key activity 1880 (45%) 2050 (45%) Purchased Purchased 375 (9%) 530 (12%) BIG thanks to © Ash Maurya!
  99. Variant A Variant B Conversion +30%
  100. “Freemium” vs. “Free Trial” experiment Free Trial (control group) Freemium Sign-up Sign-up 1000 (100%) 1500 (100%) Downloaded Downloaded 800 (80%) 1200 (80%) Did key activity Did key activity 400 (40%) 450 (30%) Purchased Purchased 100 (10%) 75 (5%) BIG thanks to © Ash Maurya!
  101. “Freemium” vs. “Free Trial” experiment Free Trial (control group) Freemium Sign-up Sign-up 1000 (100%) 1500 (100%) Downloaded 800 (80%) Improve engagementactivity Did key and 400 (40%) drive people to upgrade. Purchased 100 (10%) Downloaded 1200 (80%) Did key activity 450 (30%) Purchased 75 (5%)
  102. Cohort
  103. June Sign-up 4200 (100%) Downloaded 3400 (81%) Did key activity 1880 (45%) Purchased 375 (9%) June Week 1 June Week 2 June Week 3 June Week 4 Sign-up Sign-up Sign-up Sign-up 900 (100%) 1000 (100%) 1100 (100%) 1200 (100%) Downloaded Downloaded Downloaded Downloaded 750 (83%) 800 (80%) 850 (81%) 900 (80%) Key activity Key activity Key activity Key activity 380 (42%) 500 (50%) 650 (60%) 350 (30%) Purchased Purchased Purchased Purchased 95 (11%) 100 (10%) 180 (16%) 0 (0%) BIG thanks to © Ash Maurya!
  104. June Sign-up 4200 (100%) Downloaded 3400 (81%) DidWhat happened key activity here? 1880 (45%) Feature release? Purchased New intro video? 375 (9%) QA on the live app? June Week 1 June Week 2 June Week 3 June Week 4 Sign-up Sign-up Sign-up Sign-up 900 (100%) 1000 (100%) 1100 (100%) 1200 (100%) Downloaded Downloaded Downloaded Downloaded 750 (83%) 800 (80%) 850 (81%) 900 (80%) Key activity Key activity Key activity Key activity 500 (50%) 650 (60%) 350 (30%) Purchased Purchased Purchased Purchased 95 (11%) 100 (10%) 180 (16%) 0 (0%) 380 (42%)
  105. Retention Image curtsey: http://www.flickr.com/commons
  106. BIG thanks to © Ash Maurya!
  107. (3) Metrics are people, too! Image curtsey: http://www.flickr.com/commons
  108. Free Trial (control group) Sign-up 1000 (100%) Downloaded 800 (80%) Troubleshooting when things go wrong. Did key activity 400 (40%) benjamin@example.com Purchased sebastian@example.com 100 (10%) zu@example.com chris@example.com
  109. THX! contact: sebastian.fittko@gmail.com twitter: @forstartups XING – Linkedin
  110. Credits BIG Thx for inspiration go to Eric Ries Steve Blank Ash Maurya Dave McClure Alexander Osterwalder and to the Lean Startup Community Pictures by flickr.com/commons
  111. Must-reads!
  112. Tools Recommendet by Ash Maurya Dave McClure and myself
  113. Tools Acquisition Google Analytics (web analytics) google.com/analytics Google Keyword Tool (keyword research tool) adwords.google.com/select/KeywordToolExternal SEO Book Tools (SEO related tools) tools.seobook.com
  114. Tools Activation Crazy Egg (Visual Click Mapping) http://crazyegg.com Google Website Optimizer (A/B & Multivariate Testing) http://google.com/websiteoptimizer Optimizely (A/B Testing) https://www.optimizely.com Kissmetrics (A/B Testing, Event Tracking, Cohort) https://www.kissmetrics.com Marketo.com (B2B Lead Generation Management) http://marketo.com
  115. Tools Retention Campaign Monitor / MailChimp (Email Newsletter Software) campaignmonitor.com / mailchimp.com TriggerMail (Site-centric Email Management) triggermail.net Litmus (Email and Website Design Testing - Clients / Browsers) litmusapp.com Mixpanel Cohort Analysis https://mixpanel.com

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