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Lean Canvas & Experiment Board: Startup Validation

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A Startup Saturday talk for Headstart. Using two tools: Lean Canvas & Experiment Board for quick startup validation. At Startup Village. 2014.

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Lean Canvas & Experiment Board: Startup Validation

  1. 1. Lean Canvas & Experiment Board: Startup Validation @vishnugopal
  2. 2. Why?
  3. 3. Because a lot of things you do in a startup is not “intuitively” right.
  4. 4. “Gut feel” is wrong a lot.
  5. 5. 1 + 2 + 3 + 4 + 5 + … ∞ = ? ∞
  6. 6. 1 + 2 + 3 + 4 + 5 + … ∞ = - 1/12
  7. 7. “Gut feel” is wrong a lot.
  8. 8. One way to validate is to experiment cheaply.
  9. 9. Experiment cheaply = test as early as possible
  10. 10. 1st Tool: Experiment Board
  11. 11. My Gut Feel Idea: “A fast search engine to find cars”
  12. 12. Start here. Brainstorm with stickies, pull it over to the right to start your experiment. Experiments Customer Problem Solution Riskiest Assumption Method & Success Criterion Result & Decision Learning 1 2 3 4 5 >OVPZ`VYJZ[VTLY)LHZZWLJPÄJHZWVZZPISL Time Limit: 5 Min What is the problem? Phrase it from your customer’s perspective. Time Limit: 5 Min +LÄUL[OLZVS[PVUVUS`HM[LY`VOH]L]HSPKH[LKHWYVISLT^VY[OZVS]PUNTime Limit: 5 Min List the assumptions that must hold true, for your hypothesis to be true. Time Limit: 10 Min Need help? Use these sentences to help construct your experiment. To form a Customer/Problem Hypothesis: I believe my customer has a problem achieving this goal. To form your Assumptions: 0UVYKLYMVY̸hypothesis to be true, assumption needs to be true. Determine how you will test it: The least expensive way to test my assumption is... To form a Problem/Solution Hypothesis: I believe this solution will result in XHU[PÄHISLV[JVTL. To identify your Riskiest Assumption: The assumption with the least amount of data, and core to the viability of my hypothesis is... Determine what success looks like: I will run experiment with # of customers and expect a strong signal from # of customers. Project Name: Team Leader Name: GET OUT OF THE BUILDING! Download Experiment Board and watch case studies at www.javelin.com © 2014 Javelin. You are free to use it and earn money with it as an entrepreneur, consultant, or executive, as long as you are not a software company (the latter need to license it from us).
  13. 13. Start here. Brainstorm with stickies, pull it over to the right to start your experiment. OVPZ`VYJZ[VTLY)LHZZWLJPÄJHZWVZZPISL Time Limit: 5 Min What is the problem? Phrase it from your customer’s perspective. Time Limit: 5 Min +LÄUL[OLZVS[PVUVUS`HM[LY`VOH]L]HSPKH[LKHWYVISLT^VY[OZVS]PUNTime Limit: 5 Min List the assumptions that must hold true, for your hypothesis to be true. Time Limit: 10 Min Need help? Use these sentences to help construct your experiment.
  14. 14. Start here. Brainstorm with stickies, pull it over to the right to start your experiment. OVPZ`VYJZ[VTLY)LHZZWLJPÄJHZWVZZPISL Time Limit: 5 Min First time car buyers People with little knowhow about cars Car selling showrooms What is the problem? Phrase it from your customer’s perspective. Time Limit: 5 Min +LÄUL[OLZVS[PVUVUS`HM[LY`VOH]L]HSPKH[LKHWYVISLT^VY[OZVS]PUNTime Limit: 5 Min List the assumptions that must hold true, for your hypothesis to be true. Time Limit: 10 Min Need help? Use these sentences to help construct your experiment.
  15. 15. Start here. Brainstorm with stickies, pull it over to the right to start your experiment. OVPZ`VYJZ[VTLY)LHZZWLJPÄJHZWVZZPISL Time Limit: 5 Min First time car buyers People with little knowhow about cars Car selling showrooms What is the problem? Phrase it from your customer’s perspective. Time Limit: 5 Min Too many choices for cars Searching for cars is slow They don’t get reviews from friends +LÄUL[OLZVS[PVUVUS`HM[LY`VOH]L]HSPKH[LKHWYVISLT^VY[OZVS]PUNTime Limit: 5 Min List the assumptions that must hold true, for your hypothesis to be true. Time Limit: 10 Min Need help? Use these sentences to help construct your experiment.
  16. 16. Start here. Brainstorm with stickies, pull it over to the right to start your experiment. OVPZ`VYJZ[VTLY)LHZZWLJPÄJHZWVZZPISL Time Limit: 5 Min First time car buyers People with little knowhow about cars Car selling showrooms What is the problem? Phrase it from your customer’s perspective. Time Limit: 5 Min Too many choices for cars Searching for cars is slow They don’t get reviews from friends +LÄUL[OLZVS[PVUVUS`HM[LY`VOH]L]HSPKH[LKHWYVISLT^VY[OZVS]PUNTime Limit: 5 Min Customers are only interested in cost, fuel efficiency, List the assumptions that must hold true, for your hypothesis to be true. Time Limit: 10 Min Terms like Bhp, Cc is too technical looks Customers trust reviews from friends Need help? Use these sentences to help construct your experiment.
  17. 17. Start here. Brainstorm with stickies, pull it over to the right to start your experiment. Experiments Customer Problem Solution Riskiest Assumption Method Success Criterion Result Decision Learning 1 2 3 4 5 OVPZ`VYJZ[VTLY)LHZZWLJPÄJHZWVZZPISL Time Limit: 5 Min What is the problem? Phrase it from your customer’s perspective. Time Limit: 5 Min +LÄUL[OLZVS[PVUVUS`HM[LY`VOH]L]HSPKH[LKHWYVISLT^VY[OZVS]PUNTime Limit: 5 Min List the assumptions that must hold true, for your hypothesis to be true. Time Limit: 10 Min Need help? Use these sentences to help construct your experiment. To form a Customer/Problem Hypothesis: I believe my customer has a problem achieving this goal. To form your Assumptions: 0UVYKLYMVY̸hypothesis to be true, assumption needs to be true. Determine how you will test it: The least expensive way to test my assumption is... To form a Problem/Solution Hypothesis: I believe this solution will result in XHU[PÄHISLV[JVTL. To identify your Riskiest Assumption: The assumption with the least amount of data, and core to the viability of my hypothesis is... Determine what success looks like: I will run experiment with # of customers and expect a strong signal from # of customers. Project Name: Team Leader Name: GET OUT OF THE BUILDING! Download Experiment Board and watch case studies at www.javelin.com © 2014 Javelin. You are free to use it and earn money with it as an entrepreneur, consultant, or executive, as long as you are not a software company (the latter need to license it from us).
  18. 18. Experiments Customer Problem Solution Riskiest Assumption 1 2 3 4
  19. 19. Start here. Brainstorm with stickies, pull it over to the right to start your experiment. OVPZ`VYJZ[VTLY)LHZZWLJPÄJHZWVZZPISL Time Limit: 5 Min First time car buyers People with little knowhow about cars Car selling showrooms What is the problem? Phrase it from your customer’s perspective. Time Limit: 5 Min Too many choices for cars Searching for cars is slow They don’t get reviews from friends +LÄUL[OLZVS[PVUVUS`HM[LY`VOH]L]HSPKH[LKHWYVISLT^VY[OZVS]PUNTime Limit: 5 Min Customers are only interested in cost, fuel efficiency, List the assumptions that must hold true, for your hypothesis to be true. Time Limit: 10 Min Terms like Bhp, Cc is too technical looks Customers trust reviews from friends Need help? Use these sentences to help construct your experiment.
  20. 20. it over to the right to start your experiment. Experiments Customer Problem Solution Riskiest Assumption Method Success Criterion Result Decision Learning 1 2 3 4 5 OVPZ`VYJZ[VTLY)LHZZWLJPÄJHZWVZZPISL Time Limit: 5 Min your customer’s perspective. Time Limit: 5 Min +LÄUL[OLZVS[PVUVUS`HM[LY`VOH]L]HSPKH[LKHWYVISLT^VY[OZVS]PUNTime Limit: 5 Min true, for your hypothesis to be true. Time Limit: 10 Min construct your experiment. To form a Problem/Solution Hypothesis: I believe this solution will result in XHU[PÄHISLV[JVTL. To identify your Riskiest Assumption: The assumption with the least amount of data, and core to the viability of my hypothesis is... Determine what success looks like: I will run experiment with # of customers and expect a strong signal from # of customers. Project Name: Team Leader Name: First time car buyers Too many choices for cars Customers are only interested in cost, fuel efficiency, looks Inter view: More than 80% GET OUT OF THE BUILDING! © 2014 Javelin. You are free to use it and earn money with it as an entrepreneur, consultant, or executive, as long as you are not a software company (the latter need to license it from us).
  21. 21. The biggest learning from the experiment board?
  22. 22. Get out of the building!
  23. 23. Don’t build until you know it’s something that people want ( can pay for)
  24. 24. 2nd Tool: Brainstorming Tool
  25. 25. Lean Canvas
  26. 26. Business Model Canvas
  27. 27. Unfair Advantage 4 5 3 2 8 9 Revenue Streams LEAN CANVAS Channels Customer Segments Unique Value Proposition Problem Solution Top 3 problems 1 7 6 product market Customer Acquisition Costs Distributing Costs Hosting People, etc. Revenue Model Lifetime Value Revenue Gross Margin Top 3 features Single, clear, compelling message that states why you are different and worth buying Can’t be easily copied or bought Target Customers Path to customers Key Metrics Key activities you measure Cost Structure Designed by: Date: / / Project: Version #: This work is adapted from Lean Canvas (http://leancanvas.com/) and is licensed under the Creative Commons Attribution-Share Alike 3.0 Un-ported License.
  28. 28. Problem Solution Top 3 problems 1 4 Top 3 features Key Metrics Key activities you measure Project: ! Problem: Top 3 Problems ! What are the problems you are trying to solve? First time car buyers have too many choices and no simple way to pick cars People want to know only a few facts about cars: looks, mileage, cost, not technical terms There is no easy way to get reviews from friends about cars
  29. 29. Customer Segments 2 Target Customers Date: / / Version #: ! Customer Segments: Target Customers ! Who has these problems? First time car buyers People with less technical knowhow about cars Car showroom owners
  30. 30. Unfair Advantage Channels Unique Value Proposition Solution 3 4 Top 3 features Single, clear, compelling message that states why you are different and worth buying Can’t be easily copied or bought Path to customers Key Metrics Key activities you measure ! Unique Value Proposition ! USP. Why is your product different from competitors and worth buying? I have a team of experts ready to review cars I can poll social media opinion about cars come up with a comprehensive sentiment score I have a unique recommendation system for cars from friends
  31. 31. Unique Value Proposition Problem Solution problems 1 4 Top 3 features Single, clear, compelling message why you are different and worth Key Metrics Key activities you measure Project: ! Solution ! Top 3 key features of your solution. A simple curated list for cars. e.g: “Best car if you are starting a family” View curated reviews about cars from Facebook, Twitter, etc. Once you select a car, easily post a survey to Twitter/Facebook to ask friends about it
  32. 32. Designed by: Date: / / Version #: My sentiment analysis engine is awesome and hard to replicate Unfair Advantage Customer Segments Value Proposition I have a team of experts whose sole job is to go through cars and pick only 5 message that states worth buying Can’t be easily copied or bought Target Customers ! Unfair Advantage ! Can competitors easily copy your solution? If not, why? the best I have tied up with a lot of car dealers to promote my site 3 2
  33. 33. Revenue Streams Revenue Model Lifetime Value Revenue Gross Margin LEAN CANVAS 6 market This work is adapted from Lean Canvas (http://under the Creative Commons Attribution-! Revenue Streams ! How do you make money? What is the revenue model? ! What is the lifetime value of a customer? ! What is the projected revenue? ! What is the possible gross margin? Advertising Revenue Customers can opt for insurance through my site, I get a cut Advertising Projections: 10L in Y1 Insurance Projections: 20L in Y1 Gross Margin is High: ~80%
  34. 34. 7 product Cost Structure Customer Acquisition Costs Distributing Costs Hosting People, etc. ! Cost Structure ! What are possible expenses? ! Customer Acquisition Costs (like marketing) ! Distributing costs (30% of revenue in case of App Store) ! Hosting ! People Marketing Costs: 30L in Y1 No distribution costs Minimal hosting costs Good payment to experts review writers: 10L in Y1
  35. 35. 1 7 3 8 Acquisition Costs Key Metrics Key activities you measure Structure ! Key Metrics ! What will you measure for product success? ! Measure your USP. Site visits Conversions through site Insurance purchases through site
  36. 36. 3 2 Channels Revenue Streams 9 6 Revenue Model Lifetime Value Revenue Gross Margin Path to customers ! Channels ! How will you distribute to customers? ! Channels should be simple to understand, low friction. Online advertising App on App Store/Play Store Displays in dealer showrooms
  37. 37. Lean Canvas is to make you think.
  38. 38. If you are going to spend 3+ years of your life on a startup, spending 2 hours exploring it is not bad :)
  39. 39. Plus, it helps you write a business plan
  40. 40. Or a product deck
  41. 41. Startup Village is going to increasingly conduct Fundraising pitches. Being prepared is half the journey.
  42. 42. Finis. Questions?

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