How to Run a Lean Startup

HowtoRunaLeanStartupAugust22nd,2016Amancio Bouza,PhD

WhoamI

Amancio Bouza,PhDAdventurousIntrapreneur andDotConnector

Let’sconnect:https://ch.linkedin.com/in/amanciobouza

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90%ofallStartupsFail

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Let’sfailfast&cheap

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Still90%Failures

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What’sthe

secret?Source:Ehapa/Promo

2outof3successfulStartupsadapttheirplan

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LeanStartup:Measure&LearnandAdaptYourPlan

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#0ROADMAP

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Everythingstartswithanidea

Weallhaveideas

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“Nie mehr aufdem Trockenensitzen”

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Thesecondsthatmatter

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Entrepreneurs,incontrasttoemployees,

realizetheirideas

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However,

mostPlanA’sdon’twork

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IteratefromPlanAtoaPlanThatWorks

EssenceofRunningLean

1. DocumentyourPlanA

2. Identifytheriskiestpartsofyourplan

3. Systematicallytestyourplan

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Step1:DocumentYourPlanA

CaptureYourBusinessModelHypotheseswithLeanCanvas

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Sharewithatleastoneotherperson

What is your Product?

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YourProductisNOT yourProduct

Your“BusinessModel”istheproduct

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SolutionProblem

Cost Structure

Key Metrics

Unique Value Proposition

Unfair Advantage

Channels

Customer Segments

Revenue Streams

BusinessModelCanvas

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LeanCanvasvs BusinessModelCanvas

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Step2:IdentifytheRiskiestParts

ofYourPlan

TheThreeStagesofaStartup

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Problem/Solution

Fit

Product/Market

FitScale

Stage 1 Stage 2 Stage 3

Stage1:Problem/SolutionFit

Q:DoIhaveaproblemworthsolving?• Desirability• Viability• Feasibility

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Problem/Solution

Fit

Product/Market

FitScale


Source:http://forty.co

Stage2:Product/MarketFit

Q:HaveIbuiltsomethingpeoplewant?• MinimalViableProduct(MVP)• Testhowwellyoursolutionsolvesthe

problem

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Problem/Solution

Fit

Product/Market

FitScale


Stage3:Scale

Q:HowdoIaccelerategrowth?

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Problem/Solution

Fit

Product/Market

FitScale


PivotBeforeProduct/MarketFit,OptimizeAfter

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Problem/Solution

Fit

Product/Market

FitScale

Validated LearningPivot

GrowthOptimization

FocusExperiment

FocusExperiment

Pivot:Findaplanthatworks(effectivity)Optimization:acceleratethatplan(efficiency)

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Step3:SystematicallyTest

YourPlan

AnExperimentisOneCycleintheBuild-Measure-Learn-Loop

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Iteration-Meta-Pattern

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Understand Problem

Define Solution

Validate Qualitatively

Problem/Solution Fit Product/Market Fit

Verify Quantitatively

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#1DOCUMENTYOURPLANA

BrainstormPossibleCustomers

Distinguishbetweencustomeranduseracustomerpaysforyourproduct,auserdoesn’t

SplitbroadcustomersegmentsintosmalleronesYoucan’tcreateaproductforeveryone

SketchaLeanCanvasforeachcustomersegmentstartwiththetoptwoorthreecustomersegments

PuteveryoneonthesamecanvasatfirstEasiertostart

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SketchingLeanCanvas

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SolutionTop 3 Features

ProblemTop 3 Problems

Cost StructureCustomer Acquisition CostsDistribution CostsHostingPeople, etc.

Key MetricsKey activities you measure

Unique Value PropositionSingle, clear, compelling message that states who you are different worth buying

Unfair AdvantageCan’t be easily copied or bought

ChannelsPath to customers

Customer SegmentsTarget Customers

Revenue StreamsRevenue ModelLifetime ValueRevenueGross Margin

HowtoSketchaLeanCanvas:

Tips:

Gofrom1to9

Sketchacanvasinonesitting(<15min)

It’sOKtoleavesectionsblank

Beconcise

Thinkinthepresent

Useacustomer-centricapproach

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ProblemandCustomerSegments

Listthetoponetothreeproblemsofcustomerseg.

ListexistingalternativesHowdocustomerssolvetheproblemnow?

IdentifyotheruserrolesWhatuserinteractwiththecustomer?

FocusonEarlyAdopter

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Cost StructureCustomer Acquisition CostsDistributing CostsHostingPeople, etc.







1 2

UniqueValueProposition(UVP)

UVP:Whyyouaredifferentandworthbuying gettingattention

Bedifferent,butmakesureyourdifferencemattersDerivefromnumberoneproblem

Targetearlyadopters

Answer:what,who,andwhy

Createahigh-conceptpitch

Focusonfinishedstorybenefits

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UniqueValueProposition(UVP)

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Solution

DON’TDEFINETHESOLUTIONYET

Allyouhaveareuntestedproblems

Sketchoutthesimplestsolutiontoaddresseachproblem

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4

Channels

Freerversuspaid

Inboundversusoutbound

Directversusautomated

Directversusindirect

Retentionbeforereferral

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RevenueStreamsandCostStructure

RevenueStreams– ButwhyforanMVP?PriceispartoftheproductPricedefinesyourcustomerGettingpaidisthefirstformofvalidationTip:pricingagainstexistingalternatives

CoststructureHowmuchtointerview 30-50customers?HowmuchtobuildandlaunchMVP?Burnrate offixedandvariablecosts?

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Revenue StreamsRevenue ModelLifetime ValueRevenueGross Margin 67

KeyMetrics

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Source:DaveMcClure’sPirateMetrics

UnfairAdvantage(akaTheHardestOne)

InsiderinformationTheright“expert”endorsementsAdreamteamPersonalauthorityLargenetworkeffectsCommunityExistingcustomersSEOranking

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#2IDENTIFY THERISKIESTPARTS

OFYOURPLAN

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PrioritizeWheretoStart

Uncertainty:Lackofcompletecertainty.Existenceofmorethanonepossibility

Risk:Astateofuncertaintywheresomeofthepossibilitiesinvolveanundesirableoutcome

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HowtoQuantifyRisk

P(Risk)xLO$$(Risk)

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ThreeCategoriesofRisks

ProductRiskGettingtheproductright

CustomerRiskBuildingapathtocustomers

MarketRiskBuildingaviablebusiness

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SolutionProblem

Existing Alternatives

Cost Structure

Key Metrics


Unfair Advantage

Channels

Customer Segments

Early adopter

Revenue Streams

PC

M C

P

MM

C

P

P

M

Product Risk Customer Risk Market Risk

HowtoRankYourBusinessModels

1. Customerpainlevel(Problem)2. Easeofreach(Channels)3. Price/grossmargin(RevenueStreams/CostStructure)4. Marketsize(CustomerSegments)5. Technicalfeasibility(Solution)

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SeekExternalAdvice

Avoidthe10-slidedeckJustuncovertheLeanCanvas

Devote20%oftimeto,80%toconversationListen,Listen,Listen.Everybodyhasanopinion

AskspecificquestionsWhatistheriskiestaspectoftheplan?Havetheyovercomesimilarrisks?How?ArethereotherpeopleIshouldspeakwith?

“AdvisorParadox”Don’tfollowadvice,applyit.

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GetReadytoExperiment

AssembleaProblem/SolutionTeam

ProblemTeamInterviews,Tests

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SolutionTeamDevelopingMVP

Source:InnovationProcessTechnologyAG Source:InnovationProcessTechnologyAG

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“Getoutofthebuilding.”– SteveBlank

Product/SolutionTeam:twotothreepeopleStartwithsmallestteampossible

Communicationiseasier

Youbuildless

Youkeepcostslow

Youneed:DevelopmentDesignMarketing

NEVER outsourcelearningaboutcustomers!56

Source:InnovationProcessTechnologyAG

RunningEffectiveExperiments

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Focus

Speed

Learning

MaximizeforSpeed,Learning,andFocus

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Speed

FocusLearning

Premature optimization Chasing your tail

Running out off resources

The optimal learning loop

FormulateaFalsifiableHypothesis

Formulaforfalsifiablehypothesis:[SpecificRepeatableAction]will[ExpectedMeasurableOutcome]

Examples:Bad: Beingknownasan“expert“willdriveearlyadoptersGood: Blogpostwilldrive100signups

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ValidateQualitatively,VerifyQuantitatively

DotheSmallestThingPossibletoLearn

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LessonsLearnedReportWhatweThought

Insights

What’sNext

KeyMetrics

LeanCanvas

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“Startupsthatsucceedarethosethatmanagetoiterateenoughtimesbeforerunningoutofresources.”

– EricRies

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#3SYSTEMATICALLYTEST

YOURPLAN

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“IfIhadaskedpeoplewhattheywanted,theywouldhavesaidfasterhorses.”

– HenryFord

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“Itisnotthecustomer’sjobtoknowwhattheywant.”

– SteveJobs

ApplyingtheIterationMeta-PatterntoRisks

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Understand Problem

Define Solution




S1.Understandtheproblem

Who,What,Howsolvedtoday?

S2.Definethesolution

Demo,Pricing?

S3.Validatequalitatively

MVP,softlaunch.Gettingpaid?

S4.Verifyquantitatively

Scale?Viable?

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SolutionProblem

Existing Alternatives

Cost Structure

Key Metrics


Unfair Advantage

Channels

Customer Segments

Early adopter

Revenue Streams

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1 2

2

234

3

4

2

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Product Risk Customer Risk Market Risk

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TakeHome:YourPlanAwillNOTwork

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IteratefromPlanAtoaPlanThatWorks

Understand Problem

Define Solution




How to Run a Lean Startup

Small Business & Entrepreneurship

Transcript of How to Run a Lean Startup