Angel day - Governance and Investment in a Lean Way

Fredi Schmidli, Norbert Zeller & Dr. Christian Wenger

Zürich, 9. September 2015

Lean Innovation 2:Governance and Investment in a Lean

Way

109.09.15 www.pragmatic-solutions.ch

Fredi Schmidli

• Economist and Business Administrator• Management Teams in various functions• Entrepreneur• Business Angel and Board Member of www.startangels.ch• Managing Partner of www.pragmatic solutions.ch

09.09.15 www.pragmatic-solutions.ch 2

http://www.startangels.ch/

Norbert Zeller• Electrical & Computer Science Engineer, FH Winterthur• Master of Management, MZSG• Partner at Trivadis AG• Member of StartAngels Network• Agile executive coach at pragmatic solutions • Chairman of a Lean Startup


agility accelerates ...

AGENDA


Content• Part 1:• Introduction to the Lean Innovation Framework

for Newcomers

• Part 2:• Lean Governance

• Lean Investment: Lean Term Sheet



INTRODUCTIONTO LEAN INNOVATION FRAMEWORK FOR NEWCOMERS


angel-day-lean-innovation-how-to-increase-the-success-of-startups

Hier kommen Link & QR-Code zur Präsi auf Slideshare

Find last presentation on slideshare


http://de.slideshare.net/pragmaticsolutions/angel-day-lean-innovation-how-to-increase-the-success-of-startups

Goal: To improve the success rate

Source: Ash Maurya «Running Lean»

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• 66% of successful products/companies significantly change original business idea

• Develop products in half the time and at half the cost (GE)

• Reduce failure: “wrong” product and “premature” scaling

• "Using lean methods across a portfolio of start-ups will result in fewer failures than using traditional methods“.Steve Blank: https://hbr.org/2013/05/why-the-lean-start-up-changes-everything


https://hbr.org/2013/05/why-the-lean-start-up-changes-everything

https://hbr.org/2013/05/why-the-lean-start-up-changes-everything

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Why do startups fail?The vast majority of startups do NOT fail because they could not build a great product, but because no one wanted the product. Steve Blank

1./2.9.2015 www.pragmatic-solutions.ch

The majority of successful startups abandoned their initial plans and learned what would and would not work in the market. Clayton Christensen

Traditional versus lean approach

Source: Ash Maurya: Running Lean


Core Lean Principle

現地現物

1 2 3 4 5 6 7 8 909.09.15 www.pragmatic-solutions.ch 11

Lean Innovation is …

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a company culture touching all aspects:Values, Leadership, Incentives, Empowerment, Organization, Accountability, …

not a collection of tools

A culture can not be copied easily !


Lean Innovation Framework



ScaleProduct Market

fit

Problem Solution

fit

Customer Discovery

Customer Validation

Customer Creation

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Each assumption is validated via an experiment with BML feedback loop

Is problem worth solving, are people willing to pay, is business model profitable, repeatable and scalable

Assumption of plan A, …



LEAN CANVAS


Lean Canvas (by Ash Maurya / adapted from Osterwalder)

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guessguess guessguessguessguess

guessguess

guessguessguessguess

guessguessguessguess

guessguess


Early Adopters


2.5% 13.5% 34% 34% 16%

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BUILD – MEASURE - LEARN FEEDBACK LOOP


Feedback loop

Design experiment

Minimum Viable ProductResults

Analyze results:- persevere,- pivot or- quit?

weeks

not

years

Assumption/Hypothesis

Run experiment


Source: Eric Ries: The Lean Startup

BUILD: Design Experiment

We will know we have succeeded when [quantitative/measurable outcome] or [qualitative/observable outcome]

Janice Fraser

We believe that [customer type] have a need for [need/action/behavior]

The smallest thing we can do to prove that need is [experiment]



DISCUSSION



CUSTOMER DEVELOPMENT



BREAK


How?

Qualitative Validation

Quantitative Validation

Is Business Model profitable, repeatable and scalable?

1./2.9.2015 www.pragmatic-solutions.ch 31

By iterating Lean Canvas Ideas with Build-Measure-Learn Feedback Loop through 3 stages until we reach:

Problem/Solution Fit, Prod/M-Fit?

1./2.9.2015

See: http://practicetrumpstheory.com/2012/02/why-lean-canvas/

www.pragmatic-solutions.ch 32

Goal: Problem Solution Fit => ValueProblem Solution Fit

You validated with MVP and prospects that a specific solution will solve a know problem to such a degree that customer will buy it.

Brant Cooper

Value assumption – test whether a product or service really delivers value to specific customers once using it.

ScaleProduct Market

fit

Problem Solution

fit

Customer Discovery

Customer Validation

Customer Creation

Is the identified problem real?

Will the target customer pay?

Can the problem be solved?


The growth assumption – test how new customers will discover a product or service. Through what engine will you acquire new customers at affordable cost.

Goal: Product Market Fit => GrowthProduct Market Fit

Customer is willing to pay.

Cost of acquiring new customers is smaller than profit.

Evidence that market is large enough Brant Cooper

ScaleProduct Market

fit

Problem Solution

fit

Customer Discovery

Customer Validation

Customer Creation


Fredi Schmidli, Norbert Zeller & Dr. Christian Wenger

Zürich, 9. September 2015

Lean Innovation 2:Governance and Investment in a Lean

Way



LEAN GOVERNANCE


Content

• Risk Management

• Validation of Business Model

• Reporting progress

• Governing Startups

• Lean Investor

• Lean Investment Process



RISK MANAGEMENT


Lean Canvas: Where is the risk?

?09.09.15 www.pragmatic-solutions.ch 40

www.pragmatic-solutions.ch09.09.15

Lean Canvas: Prioritise risks and …

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De-risking with BML Feedback loop

Build experiment

Measure your Metric

Hypothesis + Success Metric + Goal


Compare result against forecast.Is the hypothesistrue or false?

Measure

Experiment Report

Why is it relevant?

Quantify your goalsset scope/timebox

Plan how to execute experiment

Results = Data

Document the learning (validated, invalidated or inconclusive)

Test value and growth hypothesis first

Move to next experiment

BuildLearn

09.09.15 43www.pragmatic-solutions.ch

Advantage of Validated Learning

Its all about facts and not opinions.

Build a culture of • generating facts instead of debating opinions• learning instead of being right


?!


VALIDATION OF BUSINESS MODEL


Measure progress without sales?

09.09.15

See: http://practicetrumpstheory.com/2012/02/why-lean-canvas/

www.pragmatic-solutions.ch 48

How?

ScaleProduct Market

fit

Problem Solution

fit

Qualitative Validation

Quantitative Validation

Is Business Model profitable, repeatable and scalable?


By iterating Lean Canvas Ideas with Build-Measure-Learn Feedback Loop through 3 stages until we reach:


REPORTING PROGRESS


Goal: Problem Solution Fit => ValueProblem Solution Fit

You validated with MVP and prospects that a specific solution will solve a know problem to such a degree that customer will buy it.

Brant Cooper

Value assumption – test whether a product or service really delivers value to specific customers once using it.

ScaleProduct Market

fit

Problem Solution

fit

Customer Discovery

Customer Validation

Customer Creation

Is the identified problem real?

Will the target customer pay?

Can the problem be solved?


The growth assumption – test how new customers will discover a product or service. Through what engine will you acquire new customers at affordable cost.

Goal: Product Market Fit => GrowthProduct Market Fit

Customer is willing to pay.

Cost of acquiring new customers is smaller than profit.

Evidence that market is large enough Brant Cooper

ScaleProduct Market

fit

Problem Solution

fit

Customer Discovery

Customer Validation

Customer Creation


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Four sequential experiments


Experiment 1; 10% success

Refine customer segment


Refine customer segment



qual. quant.

Positive Negative

# in

terv

iew

s

10% 20% 33%

33%

http://www.sebastiensacard.fr/articles/2014/stop-invalidating-start-refining-as-a-gold-digger/#more-2814

Measure

Experiment Report

Why is it relevant?

Quantify your goalsset scope/timebox

Plan how to execute experiment

Results = Data

Document the learning (validated, invalidated or inconclusive)

Test value and growth hypothesis first

Move to next experiment

BuildLearn



GOVERNING STARTUPS


Lean Dash Board (Lean Stack)

FlowFlow


Lean Dash Board: Example

09.09.15 58

Customer Example:Insurance Company

www.pragmatic-solutions.ch

FlowFlow09.09.15 www.pragmatic-solutions.ch 59

FlowFlow09.09.15 www.pragmatic-solutions.ch 65


THE LEAN INVESTOR:MAKE LOTS OF LITTLE BETS. EXPECT MOST TO FAIL.


Dave Mc Clure @http://500.co

• Silicon Valley VC fund + startup accelerator

• 40 people / 15 investing partners

• 2000+ founders / 200+ mentors

• 900+ Portfolio Co’s:• Wildfire USD 350

• MakerBot USD 400


Lean Innovation Investment Process

Source: Hans Däpp, StartAngels Network09.09.15 www.pragmatic-solutions.ch 68

Assumption/Goal: Halving & Slicing of Angel Investments

FFFF

Lean Canvas V12, Problem Solution fit & Product Market fit & Dash Board R

esu

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t

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1

Lean

Inve

stm

ent

wh

en?

Inve

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ay

Bu

sin

ess

Pla

n V

1.0

EffortManpower (%) 1 10 80Elapsed time (month) 1 - 3 2 - 3 18 -…

Public BPcoursemachine still running

No/few public Lean InnovationTrainingsavailable

Lean Innovationis part of BAinvestment(= risk insurance)

Goal:On portfolio basis toGet higher Success Rate & less get funds & more quits


SUMMARY: BENEFITS


Savings Potentials

• Lean Canvas instead of Business Plan

• Indentification & priorisation of risks instead of testing the whole Business Model

• Solution interviews instead of Market Research

• Pretotype/MVP instead of perfect Product

• Speed has biggest impact on profit



DISCUSSION


More Information• [email protected]• [email protected]• Lean Investor: http://de.slideshare.net/dmc500hats/angel-investing-101-41532531

• Lean Term Sheet:http://venturebeat.com/2014/05/18/why-investors-need-to-practice-lean-startup-principles-too/

• Nächste Lean Innovation Trainings in Zürich:• 1./2. Dezember, 2015http://pragmatic-solutions.ch/training.php?KP=20&TITLE=Lean%20Innovation%20Training


mailto:[email protected]



http://de.slideshare.net/dmc500hats/angel-investing-101-41532531






http://venturebeat.com/2014/05/18/why-investors-need-to-practice-lean-startup-principles-too/

http://venturebeat.com/2014/05/18/why-investors-need-to-practice-lean-startup-principles-too/

http://pragmatic-solutions.ch/training.php?KP=20&TITLE=Lean%20Innovation%20Training





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Feedback Door1. How likely is it that you would recommend this AngelDay introduction to a friend or colleague?


Source: NetPromoter Score

2. What changes would we have to make for you to give us one point more?

……………………………………………………………………………………………………………


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Angel day - Governance and Investment in a Lean Way

Business

Transcript of Angel day - Governance and Investment in a Lean Way