From Idea to a Business

Getting from an Idea to a BusinessWorkshop 1: Discover your business model using the Lean Canvas

Rory Cawley [email protected]://ie.linkedin.com/in/rorycawleyAll based on Running Lean by Ash Maurya

mailto:[email protected]

http://ie.linkedin.com/in/rorycawley

TECHNICAL PRODUCT CONSULTINGLinkedIn © 2013 All Rights Reserved 2

Workshop aims

1. Understand what to do once you have a startup idea

2. Learn a systematic technique to reduce the risk of your startup failing

3. Create a framework for your startup that can progress you further

LinkedIn © 2013 All Rights Reserved

What to do once you have a startup idea


You have a big idea, what’s next?

Don’t waste any more time – let’s BUILD IT!



Don’t waste any more time – let’s BUILD IT! Entrepreneurs love to create things This creative work will only last as long as there

is money in the bank When the money runs out that’s it!



Don’t waste any more time – let’s BUILD IT! Life is too short building something no-one wants

– this is the top reason startups fail


Why is building successful products so hard?

It’s a myth that a visionary entrepreneur just comes up with the product and builds it to great applause from the market

Startups who just focus on building their imagined product mostly find there is a poor market fit and poor customer demand

The result is very costly failure


Most Startups fail!

Startups that are capable of changing their plan to eventually find one that works before running out of resources have the best chance of success

Most initial plans FAIL


Facts versus opinions

A strong vision is vital but it needs to be backed by facts not just opinions


Vision backed by facts

Initial vision is largely a set of untested assumptions

To strengthen the vision all assumptions need to be tested to ensure the vision is upheld with facts


Write down your initial vision


Share your vision with people


Understand the problem

“A problem well stated is a problem half-solved” – Charles Kettering

“Customers don’t care about your solution. They care about their problems” – Dave McClure

You must figure out what customers want and will pay for as quickly and cost effectively as possible


Learning from the customer

“It’s not the customer’s job to know what they want” – Steve Jobs

“If I had asked people what they wanted they would have said faster horses” – Henry Ford

In the case of Ford, the customer really had a problem with transport speed and that was the problem Ford set out to solve


Learning as startup progress

It’s up to you to help customers clearly spell out what their problems are

The customer isn’t expected to come up with a solution however! Instead of pitching your solution focus on learning from people –

customers, team members, advisors, investors

In fact, learning is the true measure of progress for a startup


Have enough runway to deliver your product

Your startup can keep going as long as it has enough resources – usually money

Entrepreneurs pitch their idea (the solution) to internal stakeholders or investors to get enough of a runway to deliver the product

However, people and especially investors don’t really care about your amazing and innovative solution


What do investors care about?

Investors want a return on investment so the first thing they seek is evidence of traction, engagement with your customers or markets

Investors want to know about your cost structures and revenue streams (margins) or how you will build a scalable and profitable business

Investors care about what the market size is, how big is this problem

Investors worry about how easy it would be to keep other people from just copying your business


Traction

Internal stakeholders or investors care about traction more than anything else

Traction is the engagement of your product with customers Therefore before going to investors it’s best to start off with

customers


What do customers care about?

Customers don’t care (that much) about the solution Customers buy products that solve the underlying problems they

have The way you tell customers about your product is through a well

crafted Unique Value Proposition (the promise) The UVP is the intersection of the customers top problems and

your solution The UVP starts the conversation, it should get you noticed – it

doesn’t close the deal Important to start by identifying who needs your solution the most If you try to market to everyone then you market to no-one, start

with early adopters Price is very important for customers – the price of your product

needs to be in line with the value it brings


The solution versus the business model

We’ve seen that a successful business needs to appeal to customers and investors

We saw that the entrepreneur needs to initially write out your assumptions about:

– The top customer problems– The unique value proposition– The market size– How to show traction– What makes your idea difficult to copy– Costs involved in running the company– Price of the product– The ways customers can find and buy your product– And of course the amazing solution

All the above can be covered by creating a business model The business model is the real product


What to do with the business model

The initial working business model consists of a bunch of assumptions

The job of the entrepreneur is to – systematically de-risk this business model over time – through a series of conversations– With

Customers Internal team Competitors Investors Advisors

The true benefit of the model is when it facilitates learning from other people


One page format for your business model


Learn a systematic technique to reduce the risk of your startup failing


The three stage approach


Stage 1: document your plan A on a lean canvas

Divide and conquer Take the tough parts of creating a business Break them into smaller bits to make it more manageable Do a separate canvas for each possible customer segment A suggested order to fill in the boxes is on the canvas below Some of the models can be eliminated straight away


Stage 2: identify the riskiest parts of your plan

Standard project management Start with the riskiest stuff first Avoid some last minute surprises as you approach deadline Test what’s riskiest in the business model vs. what’s easiest The riskiest part is often not the solution but the problem


Stage 3: systematically test your plan

Test your assumptions going from highest risk to lowest risk Run experiments to test the assumptions and get answers Test multiple models in parallel At this stage some models might be prioritised on review of the

answers from certain customer segments Feedback the results to adjust the plan


Create a framework for your startup that can progress you further


Creating a lean canvas for your startup step by step


Lean Canvas Example


The Problem – Customer Segment pair drives model

ProblemTop 3 Problems

Existing Alternatives

Customer Segments

Early Adopters


What’s unique about your product?

Unique Value Proposition

High-level concept


What features would solve the top problems?

Solution


Channels – getting your product to customers

Channels


Revenue Streams and Cost Structure

Revenue Streams Cost Structure


Key Metrics

Key Metrics


Unfair Advantage

Unfair Advantage


Where to next?

TECHNICAL PRODUCT CONSULTING

Lean Canvas:Problem Solution Unique Value

PropositionUnfair Advantage

Customer Segments

Cost Structure Revenue Streams

Key Metrics Channels

Date: Version Name:

name

12th May 2013 First brainstorm

Top 3 problems.

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.

Early Adopters:

Personas:

Activity that drives retention/revenue.

Path to customers.

Customer Acquisition CostsDistribution CostsHostingPeople, etc.

Revenue ModelLifetime valueRevenueGross Margin

From Idea to a Business

Business

Transcript of From Idea to a Business