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Lean Startup Kevin Shutta

Organizer at Lean Startup Machine

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Introductions

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What I will get from this workshop?•What is Lean Startup compared to other approaches•When to use it•What I will get out of it• How to do it•Where to can learn more

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Workshop Schedule

• Presentation & questions (1 hour ish)• Practice (coming up with experiment ideas)

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98% of Startups FAILBecause they never get customers to pay for their offering and/or build something nobody wants.

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Case Study(Not Lean)

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College Hobby

I created over 2,000 videos teaching myself how to speak in public. Practice generally included 10-60 second videos on skills that someone could practice on his/her own:

• Pronunciation• Gestures• Stance• Confidence• Etc.

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Startup Idea: Share this with the world through online network for public speaking

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Startup Weekend Washington, D.C. 2013

Top Competitor

SolutionResolve fear through skill-building using low cost, low effort, high feedback training online through a guided community and content.

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Successes

• 1st Place at Startup Weekend• Designed a few courses of content• Team of 4-7 working on this for 5 months• Investors LOVED the idea, they just wanted to see the PRODUCT

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It was NOT the product that was the problem. After attending a Lean Startup Machine workshop…

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Customers (Sales Pitch)

50 people in the streets of Washington, D.C.• 48 thought the idea would be good for other people, but not for

themselves• “This would be good for introverts, but not me”• “I take beta blockers before I speak, so I’m fine.”• “I’m a teacher. I got used to the stress a long time ago, so I don’t look for

solutions anymore.”• 1 Person liked it because he wanted to recruit me for network

marketing• 1 Person ACTUALLY wanted to give it a try

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Customers (Product Demo)

Demo in Asperger’s group• 100% (about 10 of 10) saw their speaking skills improve after their

combined content and video course• 0% wanted continued lessons

Online platform for Public Speaking

Customers

Money

Problem

Offering

Solves Problem for

customerCaptures Money

Scalable

Money to Build

Technology to Build

People to Build

Willing to Use $$$ to solve

Problem

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Wall of Shame

Lesson: you can’t forecast your user base if you don’t have any users. You can’t analyze your service against what others value if you haven’t talked with them

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Result

FAIL4 months of time that did not result in a successful businessHundreds of dollars (mainly on pizza and gas, luckily)

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Lesson Learned: forcing my idea on the world doesn’t work

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What is Lean Startup?

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Startup

A startup is a human institution designed to deliver a new product or service under conditions of extreme uncertainty.

- Eric Ries

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Lean Startup

Lean Startup is about finding the cheapest, fastest way toReduce the risk of your startup not succeeding,And rapidly iterating until you find the business that succeeds

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Your Startup idea is a set of [untested] Hypotheses

“I believe [Customer] has a problem with [Problem]”“I believe [Solution] will solve [Problem] for [Customer]”“I believe [Customer] will pay for [Solution]”“I believe [Customer] will repeat buy the [Solution] or recommend to a friend”

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So… identify and reduce your risks of failing by testing, validating, and getting to the right model

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Experiments Are your Answers

Hypothesis: “I believe [customer] has a problem with [problem]”

Experiment: Ask the customers. See if they exhibit the behavior of someone with that problem (discussed later)

Success Criteria: If I can find X of Y customers in this setting who have this problem, success and continue. If two or less, it’s not strong enough.

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Build Experiment

MeasureLearn

Create new experiments to validate / invalidate business models until you fine one that works

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Some Types of Experiments

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Types of ExperimentsExperiment Possible Tools Question it Answers

(Validation/Invalidation)Learning Available

Problem Interview

Open-ended questions

Does the customer have the problem I think they have? What problems do they have?

• Customer pain points (if any)• Alternative solutions• Customer Segments• Potential Use Cases (stories)

Solution Interview

PrototypeScreenshotsMock-ups

Could the solution work? • Identify early adopters• Features required / not required in

minimum viable productPitch MVP Scripts

Sales materials (e.g. screenshots)Letter of IntentLanding Page

Can we drive traffic? Can we get signups? Will people sacrifice time / money / emails / other currency to solve their pain (with our solution)?

• Sales & marketing tactics• Customer objections• Pricing information

Concierge MVP

A person (you)Simple technology (sometimes)

Does the manual version of my product solve the customer need? Do they return or refer others?

• Product optimization (features needed and not needed)

• Sales funnel optimization• Potential lifetime customer value and

sales model

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Customer / Problem Interviews

Find your potential customers and talk with them about their problems.

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Find your Customers

GET OUT OF THE BUILDING. Find customers who have the problem you think they have.

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Seriously…

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Find customers that have the problem

• Aware that they have the problem• Previously searched for a solution• Tried to solve it themselves• Have money to pay for solution

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Sample Problem Interview Script

IntroWhat are your top challenges with [area]?Why are those problems?What have you tried to do to solve this?

Hi, my name is Kevin. Have a minute? I’m doing a school project on vacations. Could you tell me about your last vacation?Could you tell me about your planning process?What was hard? Why?What have you tried to do to solve this?

General General

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Once you have customer and problem, SELL IT!

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Pitch MVP

Purpose: see if your customer with the problem will put something on the line to solve that problem

Script:• Intro and qualify them• Do you have a problem with [Problem]?• Present a solution (doesn’t have to work or exist!)• Ask for the currency (attention, money, email address, etc.)

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If people will not give up their email address for a promise to solve their problem, they will not pay money for a product that promises that it will.

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Landing Page

Purpose: See if your statement of value is enough for consumers to proceed with your offering

3% or more is great. You need to know if customers who do not already know you will convert. DO NOT use your friends.

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People are now signing up for my service. However, it doesn’t exist yet. How can we know if they will like it?

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Concierge

Purpose: see if the solution solves the pain

Experiment: manually do what your service is intended to do

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Concierge Sample

Grace NgLean Startup Machine@uxceo

Question: Will connecting people with websites and UX Designers for $$$ create a mutually beneficial experience?

1. Let customers fill out an online form that sends email to Grace2. UX Designers fill out form that submits email to Grace3. Grace manually introduces them in an email

Result: the experience was OK and Grace had more to improve

See the experiment at https://www.youtube.com/watch?v=-_MH8TENpwc

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Concierge Sample

Created PDF coupons and emailed them to customers (they didn’t just go build it)

Answered: Yes, there is demand for such a system

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What does Minimum and Viable mean?

The minimum feature set that solves the customer’s pain

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THIS Presentation: Minimum and ViableCustomer Pain points:

• Need to cover Lean Startup• Needs to be 1-2 hours

Iteration #1 (February 2015): junky black and white presentation that covers all essential topics. Takes ~ 1 hour

Iteration #2 (April 2015): junky black and white presentation, with a few improvements (note these are still peripheral needs. Customer pain points still addressed in iteration #1):

• “Questions” slide is actually at the end, not randomly in the middle• Overview of MVPs added• Some useless slides eliminated

Things I didn’t care about. Why? Because they don’t address the core value proposition.• Fonts• Animations• Spell check

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PivotsIf you find that your proposed hypothesis failed in the market, the market is telling you something. CHANGE YOUR MODEL (PIVOT) and try the new one. Otherwise, you are beating a dead horse.

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Facebook

Started As…Facemash, a site where you can choose which person was “hotter”

Now…

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Starbucks

Started as…Selling expresso makers and coffee beans

Ended as..

Pivots – What’s the Point?

If you can care more about the value you are delivering (and capturing) from customers, then chances are you will make more money than if you care only about the vision you want to share (impose) on the world.

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Case Study[Lean]

Vacation-Nation

Busy, adventuro

us travelers

Vacation

planning hard

Planning is a proble

m

Interview:

50%

Busy, persona

l traveler

sDon’t use

travel rewards effectiv

ely

People feel not using points

effectively

Interview:

10/20

Lived abroad, now live

U.S.

No access to favorite goods abroad

People attache

d to product

s

Interview

5/10

Lived 2+ Areas / Regions

Less than 50%

Pivot!Pains: travel

rewards, money, bookingNot pain:

destination, people

Few had problem; no pain

Pivot!

Rewards not a pain point for general market

8/8Persever

e!

Some: no search,

food only, or don’t

know exact item

11 of 18

Pivot

Miss product.

Searche

d but did not

find

Customers know exact

product

Interview:

10/20

Don’t track their

rewards points

Notifies users of

value trips

based on prefsPeople care about value

points provide

Pitch: 15/20

7 of 10Persevere

Travel Professiona

ls with Many Points

Most want food,not

pressing, or

found good way to solve

Validated service!

Note: you can use the previous slide (along with the downloadable version as an aid) to organize your experiments. The board is created by Lean Startup Machine.

However Excel is just as good.

Customers

Money

Problem

Offering

Solves Problem for

customerCaptures Money

Scalable

Money to Build

Technology to Build

People to Build

Willing to Use $$$ to solve

Problem

Vacation-Nation

Take a fraction of points. Not risky. Take a fraction of points. Not risky.

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See how there is less risks to the business failing?

I accomplished more in three days with Lean Startup than I did in 4-5 months without.

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Bottom Line

Customers

Money

Problem

Offering

Solves Problem for

customerCaptures Money

Scalable

Money to Build

Technology to Build

People to Build

Willing to Use $$$ to solve

Problem

Experiment. Fail. Pivot. Fail. Pivot.Go as fast as you can until you are in the green

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Lean Metrics

Measure things that matter:• Make an impact to your business• Measurable• Actionable

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Lean Metrics

• Acquisition – visit, signup, etc.• Activation – use of a core feature – create an account, play a game,

take an Uber ride, etc.• Retention – come and use again• Referral – invite others who are acquired• Revenue

Copyright: Dave McClure(Acquisition-Activation-Retention-Referral-Revenue)

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More Metrics

• Cohort metrics (for testing changes to your site)• Viral coefficient – average number of customers each person refers

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Recap

• Startups are risky• Paying customers or revenue-generating users are more important

than investors• Many risks can be eliminated cheaply and efficiently using lean

startup validation / invalidation, learning, and pivoting• An experiment is conducted to answer a question• Do things that matter• Actionable• Eliminate risk and uncertainty• Valuable to your business

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How you can do it

Find your customersIf you have an idea, try to sell itIf you have a product or prototype, test it with them

Find out as soon and as cheaply as possible if there is a problem with your model. Fix the problem, find an alternative, or ditch the model.

Note: Don’t worry too much about people stealing your idea. How many of you are going to build a vacation planning tool or rewards points optimizer?

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Lean Startup Machine

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Lean Startup Machine Experiment Board(next slide)

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http://www.javelin.com/(Download for a tweet)

Experiment Board is available at…

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Lean Startup MachineThe hands-on Lean Startup workshop

• Learn a repeatable process for finding products that succeed with companies• Hands-on guidance and practice from successful entrepreneurs and

leaders in Lean• April 17th-19th in Silicon Valley (three days)

https://www.leanstartupmachine.comhttps://www.leanstartupmachine.com/siliconvalley

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If you enjoy this session, please help us get the word out…Event Description

Lean Startup Machine is a 3-day discovery workshop where participants learn a repeatable process for finding products that will succeed with customers. During the workshop, participants identify customers, discover their needs, design an offering, and determine whether a business can be created. Participants are guided by experienced mentors, serial entrepreneurs, and thought leaders in the practice of Lean Startup. The Silicon Valley event takes place April 17th-19th and you can find out more at https://www.leanstartupmachine.com/cities/silicon-valley. Register today with 20% discount code lsm20.

TwitterLearn to create products customers love at @Lean #Startup Machine, coming to #SiliconValley Apr 17-19! http://tiny.cc/bl4lvx @Lean_BayArea

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Other Ways to Learn More

There are plenty of books out there these days.

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Questions

Contact InformationKevin Shuttakshutta@gmail.comLinkedin: www.linkedin.com/in/kevinshutta@KevinShutta

Other ContentLean Startup MachineGrace Ng

(Last slide before practice)

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Experiment Development

Some questions to ask:• Who is your customer?• Where can you find them?• What is their biggest problem in your area? Do they agree with you?• What do you need to know about your customers?• What makes you nervous or stressed about whether your product will

sell and get customers?• How can you find out if your product will work before creating it?