CS419 Info. Technology Entrepreneurship

Building a Lean, Scalable Startup

Fall 2012 – 2013Emre Oto

www.CS419online.comFollow on Twitter: @CS419Bilkent

«Get Out of the Building» Do we really understand the customer’s

problem?

Do enough people really care enough about the problem for this to become a huge business?

And will they care enough to tell their friends?

For web/mobile product development time is shorther and feedback comes faster: Develop low-fidelity MVP website or mobile app Later test with a high-fidelity MVP

Design Tests and Pass/Fail Experiments Design experiments, run them with speed, tempo and

fast cycle time.

What is the simplest pass/fail test I can run to learn?

Example: Assume your hypothesis is you can acquire 5M users spending $1M on AdWords. Then yout pass-fail test should be to spend $500 in AdWords, and test if you can get 2,500 clicks for 20 cents per click Test for 3 different landing pages Also test how fast you can get there

Build Your Low Fidelity MVP

Once again, goal of the Low-Fi MVP: Do you understand the customer problem or need? When you do, do lots of customers care?

Low-Fi MVP can be as simple as a landing page with: You value proposition Benefits summary Call to action to learn more Answer a short survey Preorder etc.

It can even be a quick website prototype in PPT or built with a landing page creation tool or wireframe prototype

Very basic page without anything fancy

Build your Low-Fi MVP Get the MVP live as quickly as possible, often the day you

start the company

Start with a low-fi website that: Describes the problem’s severity in words or pictures

(«Does your office look like this?») Describes the problem, encouraging users to «sign up to

learn more» Shows screenshots of the solution («Pay your bills this

way»)

Consider other simple MVP components like, a YouTube video showing or discussing the problem, a short online survey on the issue, blog asking visitors their opinion

Build Your Low-Fi MVP Invite consumers to respond as thoroughly as possible, giving

them several options for doing so

Start by asking for a response as simple as signing up to learn more

Next most importnat measure is whether they will rush to tell lots of their friends, which tests the visitor’s view of the importance or magnitude of the problem

Invite more detailed feedback via an e-mail or a survey tool, ask if the user would welcome a phone call to discuss product/company

The Low-Fi MVP Key idea: Have the simplest response mechanism:

«Sign up to learn more» The more you ask, the less likely the user will respond

How to Build a Low-Fi MVP (for coders): Pick a website wireframe prototyping tool (e.g. JustinMind

or Balsamiq) 99 Designs for «good enough» graphic design Themeforest has ready-to-go templates Create wireframes and simulate your Low-Fi website Create a fake sign-up/order form to test customer

commitment

How to build a Low-Fi MVP (cont) Alternatively use LaunchRock or KickoffLabs to

create a «viral» landing page

Embed a slide show on your site with Slideshare, or embed a tour video using YouTube or Vimeo

Do user interface testing with Usertesting or Userfy

Don’t underestimate the long-term value of design and the importance of user interface, but at this stage you do not need UI perfection.

Using Multiple MVPs Try multiple landing pages to test different problem

descriptions

Example: say you have a payment management website, test as fastpay, ezpay, flexipay Address different problems: Speed, ease of use

flexibility Buy Google AdWords for each URL, and present the

problem three different ways in the AdWords space and langing page

Rotate listings so each is on top of the Google stack exactly 1/3 of the time

Which approach generates the most clicks/sign ups/referrals?

Low-Fi MVP Problem Test Start inviting people to experience the MVP, at

most a few hundred at a time

Follow the plan outlined in your «get customers» hypothesis, accelerating the pace of customer acquistion slowly

Watch every action or inaction closely

Three basic ways to invite people to engage on your site: Push, pull or pay

Low-Fi MVP Problem Test

Push people toward your site or app by using e-mails, their friends, or social media

Pull them with SEO and pay-per-click or other devices

Pay: Buy lists, clicks or other tools that deliver eyeballs.

Low-Fi MVP Problem TestPush, Pull, Pay

Push Contacts Need Referral Sources: Reach out to friends and contacts usng e-mails,

texts, FB, Twitter, and LinkedIn

Encourage them tto reach out to other people

Goal is to obtain the longest possible list of e-mail addresses, you can worry less about the details

Provide a draft messaage your friends can use when reaching out on your behalf

Pull strategies: Can be ads, textlinks or AdWords and natural search

driving people to the MVP, app, or site.

Solves three problems:

No need to nag everyone for e-mail addresses Only people interested in the issue, problem or need will

respond People who are pulled are more likely to respond, perhaps

repeatably

Low-Fi MVP Problem TestPush, Pull, Pay

Pull strategies(examples): Google AdWords

Display ads or textlinks on social networks or relevant websites

Press releases with links to a survey or site about the problem

Getting bloggers to blog about the problem and invite commentary

Low-Fi MVP Problem TestPush, Pull, Pay

«Pull» Strategies: Google AdWords

Display ads or textlinks on social networks or relevant websites

Press releases with links to a survey or site about the problem

Getting bloggers to blog about the problem and invite commentary

Low-Fi MVP Problem TestPush, Pull, Pay

«Pay» for Contacts: Typically the least attractive startup option for $

reasons, but the fastest option

E-mail lists: Buy permission-based e-mail lists

Online survey tools: Buy a package of respondents, survey design and implementation and a guaranteed number of taget responses from providers like Markettools

Hire a publication: Some publications can survey their readers for you at a cost

Low-Fi MVP Problem TestPush, Pull, Pay

Missteps to avoid when testing the Low-Fi MVP Customer discovery slips from the hands of founders and

becomes a task for specialists (consultants, employees etc)

Comments are summarized, averaged, amalgamated etc. to blur or hide «outlier» comments that often lead to iterations and pivots

Understand laws on messaging and privacy

Online tools provide very little chance for context and idalogue that «drill down»

Missteps to avoid when testing the Low-Fi MVP As a rule, people pay less attention filling out online

surveys than they do in face-to-face conversation

Online feedback is not a substitute for leaving the building and talking directly to customers, some of whom can be initially identified online

People lie on the web

If you are depending only on web data you’ll never know it

See their pupils dilate for real data You don’t have real data unitl you have seen their pupils dilate

Interview some of the sources of your web data in person

Interviews also test how well your MVP is explaining the need or problem

Can the customer «play back» the value proposition or problem statement?

Do they get excited, or do they politely meander through the discussion?

See their pupils dilate for real data Talk about how extensively this problem affects

their friends or coworkers Would they be willing to buy a product that solved

this problem?

Be on the watch for outliers and comments like: It would be much more important if you did this

Isn’t that the same as procut x, which never works right?

You are most likely to find pivots and comments in these one-off comments

Drive traffic and start counting Use web analytics to track hits, time spent on-site and

source

Once you move beyond your initial, simple MVP, consider a more advanced analytic platform than Google Analytics: Kissmetrics, Mixpanel, Kontagent etc. Create an account to measure user satisfaction:

GetSatisfaction, UserVoice, etc

Measure how many people care about the problem or need, and how deeply they care

How many people register to learn more?

Drive traffic and start counting How many people share?

Include widgets for forwarding, sharing, and Tweeting the MVP

Focus on conversion rates If the MVP got 5,000 page views and 50 sign-ups, stop and

analyze What percentage of people invited to the test actually came? What percentage of people in each test:

Provided an e-mail address? Referred or forwarded the MVP to firends? Egaged further in a survey, blor or other feedback activity?

Of those who answered, how many declared the problem «very important» vs. «somewhat important»?

Drive traffic and start counting Questions like these yield richer customer

feedback: Is there anything preventing you from signing up? What else would you need to know to consider this solution?

Collect e-mail addresses so you have away to contact people for more in-depth conversations

Use the «Net Promoter Score»: Guage customer interest in the problem or need

Asks custoemrs to answer a signle question on a 0-10 scale where 10 is «extremely likely» and 0 is «not at all likely»

Example: «How likley is that you would recommend our comapny to a friend or colleague?»

Drive traffic and start counting People fall into three groups:

Promoters (9-10 rating) Passives (7-8 rating) Detractors (0-6 rating)

The percentage of detractors is subtracted from the percentage of promoters to obtain an NPS. An NPS of +50 is considered excellent