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Lean StartupRyan D. Hatch
October 2014
rdkhatch
#LeanStartup
Lean StartupRyan D. Hatch
October 2014
rdkhatch
#LeanStartup
1. Crash Course in Lean Startup2. Team Collaboration Workshop
About RyanFamily & Background
About Ryan Co-Founder, Dynamis
Recovering Developer
Lean Product Strategy & Agile Coach
Focused on Innovation, Software Startups
Helping teams accelerate new product growth
How Not to Waste Your LifeProvide Value to Others
Higher Rates of Startup Success.
Story Time
Gold Ore Mining
Meet Jim
Story Time
Jim’sCompany
Gold Ore Mining
Built Mine Price Drop
Gold is invisible.
only1 oz gold
63 tons of rock. Long, expensive process.
Challenge: Must find rocks with highest value.
Jim Burnellholding his X-ray gun
Fast Feedback. Before Investing.
Jim Burnellholding his X-ray gun
Fast Feedback. Before Investing.
Fast-Feedback InnovationCreate Value
Playing by a new set of rules.
Small teams can beat big teams
Use Fast-feedback Innovation – To play by a new set of rules.
My Startup - Dynamis
My Startup Experience After several startup failures, 4 co-founders
Started in 2009 - Help Employers Optimize Health Insurance Benefits
Early Success & Struggles. Had 5 early adopter customers.
Funded by Golden Angels, Spring 2012. CEO, CTO duo.
Product Owner – v2 Replatform – MVP for new customers
Customer Problem & Solution Interviews. Lost Sales Interviews.
Small, High-Impact Team
Focused on Return on Investment
Cash Burn Rate & Sales Transparency
Customer Success kicking into gear
“This will double my business in 1 year.”“Closed 9/10 Deals”“Please don’t tell my competitors”
Customer success being featured at tradeshows
Mockups
Customer HackActual Application
How well would thissolve your problem?
Customer Types in Product Lifecycle
Crossing the Chasm, Geoffrey Moore
CustomerGoal
Why Lean Startup?Rockets, Risks, and Hockeysticks
1.) Idea to Team building an awesome product
2.) Launch like Rockets & Hockeysticks
3.) Dominate
Reality check. 90% of New Concepts Fail.
Don’t Make TheseSame MistakesStartup Failures to Learn From
Myth: Build it. And they will come.
TruthNo business survives first contact with customers.
You build it, and no one cares.
Customers are often biggest risk. Not Technology.
Product development is a discovery process.
Sell before you Build.
Myth: It’s all about Execution
TruthAchieving Failure =
Successfully executing a flawed plan.
Startups don’t know enough to just execute.
No Proxies for Paying Customers Successful people who believe in & mentor you Networking with other Entrepreneurs Board of Director at National Realtor Association Board of Advisors at Wyndham Hotels Partnering with 2x PhD’s Building Talented Teams & Working Together Creating New Products Free Trials Beautiful marketing & UI
College Interns Exceptional New Technology Multiple Patent Applications Business Plan Contest Multiple Pilot Programs Busiest booth at trade shows Featured Articles in National magazines Friends with top industry leaders Awards in National publications
False Shadow Beliefs - Unspoken
Reality Distortion Field
“We know what customers want”
“We can accurately predict the future”
“Executing the plan is progress”
Approaches toNew Product Development
Uncertainty grows into Future
Long-term planning is… Guessing
Solution: KnownBusiness Model: Known
Traditional New Products - Waterfall
Business PlanRaise Capital
RequirementsDesignDevelopmentTesting
Sales
Solution: UnknownBusiness Model: Unknown
?Agile Product Development
Solution: UnknownBusiness Model: Unknown
Customer Development Agile Product Development
Sales
Lean Startup
What is a Startup? Temporary organization
Searching for a Repeatable, Scalable Business Model
Environment of uncertainty
Not a small version of a large company
No VP of xyz
No Sales Department
You’re not building a Product
You’re building a Business.
Key Benefits of Lean Startup Process for startups to follow
Learn very fast what people will buy & use.
Start selling as soon as possible.
Eliminates Risk Early.
Uses data to seek truth & avoid opinions / politics
Get more Swings at bat.
Minimizes cash burn rate.
Scales at the right time.
Much higher rates of success.
Customer Development
Customer Sales
& Usage
CustomerInput
Get to Customer Sales as fast as possible
Living Document
No Facts are inside your buildingThe Answers are outside.
Homeology – 2014 Chicago Lean Startup Challenge
Homeology – 2014 Chicago Lean Startup Challenge
Concept to Revenue in 90 days$10,000 revenue + $17,000 sales pipeline
Run Science Experiments - To Learn as Fast as possible
ramlijohn.com
Highest Paid Person’s Opinion
Don’t Delay Failure.Test your Assumptions.
Get to Business Failure Fast.And Learn what to Fix.
Ok, I get it. I want some.Most people just want to sound cool.
Tired of Buzz words & Fluffy pictures?
Stop using the Buzz words.
Start applying Lean Startup.
Myths of Lean Startup
Race to Learning
$
Time (Runway)
Cash
Burn Rate
Breakeven Burndown Running out of Cash & Time
Death
Profit
Sales
* plus variable costs
$
Time (Runway)
Cash
Burn Rate
Race to Scalable Business Model
Death
Scalable Business ModelValidated Learning
$
Time (Runway)
CashBurn Rate
Multiple Funding Rounds
Death
Profit
* plus variable costs
Cash
Sales
ScalableBusiness
Model
Scale
Scalable Solution10 Customers 100 Customers
Solution Commitment
High Value Problem Have I found customers with a problem worth solving?
Are customers committed to my proposed solution?
Have I developed a Scalable Business Model?
Let’s throw money at this puppy
Roadmap
custdevframework.com
Investment Portfolio
High Value Problem
Have I found customers
with a problem worth solving?
Scale
Scalable Solution10 Customers 100 Customers
Solution Commitment
High Value Problem
This is not about You. Get to know your Customers.
Discover Problems: Customer Discovery Interviews
What are your goals for the next year?
What could make the biggest impact on accomplishing those goals?
What are the barriers you are encountering?
How are you solving today?
CustomerGoals /
Job to be done
Barriers / Problems /Unsatisfied Outcomes
Jobs to be Done.
Job > Technology
Job: Portable Music
Jobs to be Done.
Job > Customer Profile
Ecosystem of Target Customer
B2B B2C
Raw Materials
Cash
Product
Ecosystem of Target Customer
Understanding the customerAllowed 3X the Price!
Problem Interviews Everyone is Lying to you - including your Mom!
The Mom Test = Would your mom tell you the truth?
Never talk about your solution ideas.
Ask specifics about the past.
Prioritize: Rank this problem more important / less important
What would a solution allow you to achieve? What impact value to business?
Have you tried to solve in the past? If so, How?
Was there a budget set?
Creative Problem Interviews
Fake Ad
Gated Outcomes 12 Customers confirmed Problem
Ranked Problem as MUST HAVE
Ranked Outcomes
Market is large & accessible enough.
Scale
Scalable Solution10 Customers 100 Customers
Solution Commitment
High Value Problem
Solution Commitment
What is the minimum proposed solution customers will commit to?
Scale
Scalable Solution10 Customers 100 Customers
Solution Commitment
High Value Problem
Solution Interviews1. Problem Confirmation
2. Usage Scenarios = Feature Validation
3. Demo - Low Fidelity MVP (Minimum Features necessary)
4. How well would your problem be solved with this solution?
5. Pricing Never ask what people will pay!
6. Ask for Commitment!
Event:Question:Player:Action:
When asleep at nightWould you & your family feel more safeIf we provided a device toMonitor your home for carbon monoxide gas and woke you up in case of an emergency?
Non-Scalable MVP
Non-Scalable MVP
Non-Scalable MVP Ad words + Landing Pages
Video MVP
Clickable Mockups MVP
App demo MVP
Wizard of Oz MVP
Concierge MVP
No code MVP
Pre-orders, Capture Commitments!
Non-Scalable Sales!
Start Removing Features!
Gated Outcomes Quantified Problem Value to Buyer
Minimum Solution will solve Problem
Validated Pricing
Customer Success
5 Early Adopters paying for Non-Scalable MVP
Am I ready to COMMIT to making this go?
Scale
Scalable Solution10 Customers 100
Customers
Solution Commitment
High Value Problem
Scalable Solution
Can I mold this into
a Scalable Business Model?
Scale
Scalable Solution10 Customers 100 Customers
Solution Commitment
High Value Problem
Scalable MVP
Source: @smarty
Scalable MVP
MVP = ?
Scalable MVP
MVP
Metrics that Matter
Customer Success – Value Hypothesis
Net Promoter Score
Achieving the Value Proposition?
Growth Hypothesis
Continuous Delivery
source: CollabNet
Development Production
Scalable MVP High-Fidelity
Silent Launch
Split A/B Tests
Fake Door / Mock Features
Sales & Marketing Positioning
All aspects of Business Model
Business Learning Sprints
franciscopalao.com
Innovation Accounting Growth Hacking Experiments
Flow Metrics
# of Customer Interviews
# of Hypotheses Tested
Pivot, Persevere, or Reboot?The Point
Instant Messaging Plug-in
Social community Fundraising
Gated Outcomes Paying customers (100+)
Repeatable Sales Roadmap
Scalable Business Model
Scale
Scalable Solution10 Customers 100 Customers
Solution Commitment
High Value Problem
Customer
acquisition cost
Revenue per
customer
exceeds
Myth: I must be the Hero
TruthShare your struggles.
Transparency sets you free from the hero burden
Builds Trust
Team effort – Let’s solve this together.
Be fair to employees & their families.
Do This Next
Do this Next
1. Persona & Lean Canvas
2. Rank Highest-Risk Assumptions
3. Identify fastest test possible.
Launch Weekend
Scalable Business
Test for Value. Then Execute.
Lean StartupRyan D. Hatch
October 2014
rdkhatch
#LeanStartup
Biobreak
source podiohelp.com
Activate Lean Startup Collaboration
source podiohelp.com
Persona CanvasFeel – EmpthyThink about the Job trying to be Done
Why?
Lean Canvas
Core Assumptions Experiment Design Test In-Progress
Validated Learning
LeanStartup Kanban
Break into Teams
5-second introductionsName, From, I’m in session Because…Max 5 per Team
Select Problem
clipartist.info
Problem #1 source: skai.gr
Education / Employment Gap
Truck Driver Turnover @ 93%Minimize Freight Cost
Problem #2 source: ata
Irrigation Circles cause land lossMaximize Fertile Soil
Problem #3 source: markzackpaints
Wife says I’m Clueless. I am.Maximize Ease of Cooking
Problem #4 source: nexxtlevelup.com
Select Problem
Post-it Guidelines
Use the Post-its!1 Primary thought per Post-itDon’t waste
source podiohelp.com
Identify Potential CustomerWho has the Pain?
Feel – EmpthyThink about the Job trying to be Done
Why?
Persona CanvasFeel – EmpthyThink about the Job trying to be Done
Why?
Proposed Solution
source podiohelp.com
Intended to be FunCan be Funny, RidiculousNot restricted in any wayNo Technology constraintsNo Resource or Financial constraints
Lean Canvas
1.) Move Persona Facts onto Customer Segments2.) Move Persona Goals & Pains onto Problem3.) Early Adopters4.) Existing Alternatives
Dude, Congrats on your Business Model!
Hypothesis BacklogCore Assumptions & Highest Risks
source podiohelp.com
Customer, Market, Revenue,Distribution, Cost, Technology, etc.
Core Assumptions Experiment Design Test In-Progress
Validated Learning
LeanStartup Kanban
Prioritize the 3 Highest Risks
source podiohelp.com
Core Assumptions Experiment Design Test In-Progress
Validated Learning
LeanStartup Kanban
Determine How to Test 3 Highest Risksas Fast as possible
source podiohelp.com
Core Assumptions Experiment Design Test In-Progress
Validated Learning
LeanStartup Kanban
Lean StartupRyan D. Hatch
October 2014
rdkhatch
#LeanStartup