Lean Startup Minder Chen, Ph.D. Professor of MIS Martin V. Smith School of Business and Economics...

Lean Startup

Minder Chen, Ph.D.Professor of MIS

Martin V. Smith School of Business and EconomicsCalifornia State University Channel Islands

[email protected]

mailto:[email protected]

Lean Startup - 2© Minder Chen, 2012-2014

The Startup Owner’s Manual• A startup is a temporary

organization designed to search for a repeatable and scalable business model (under extreme uncertainty).

- Steve Blank, The Startup Owner’s Manual

Steve Blank video at http://www.youtube.com/watch?v=6t0t-CXPpyM


Resources

• http://theleanstartup.com/

• http://wiki.mbalib.com/zh-tw/ 精益创业 • http://en.wikipedia.org/wiki/Lean_startup

• http://steveblank.com/• http://steveblank.com/2012/11/27/open-source-entrepreneurship/• http://www.slideshare.net/sblank/lean-launchpad-educators-handbook-sept-2013

– Video: Steve Blank on entrepreneurship 1, 2, 3, 4 and 5

– Video: Steve Blank, the start-up owners manual

– Slides: Steve Blank, the nine deadly sins of start-ups

– Paper: Steve Blank, the nine deadly sins of start-ups

• http://theleanstartup.com/ – Video: Lean Start-up (Eric Ries)

– Slides: Principles of the Lean Start-up (Eric Ries)

– Paper: Lean Start-up Methodology (Eric Ries)


The Lean Startup Method

• Entrepreneurs are everywhere.

• Entrepreneurship is management.

• Validated learning.

• Build-Measure-Learn.

• Innovation accounting.

– Eric Ries, The Lean Startup: How Today's Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses, 2011.


10 Top Ten MistakesMistakes of Entrepreneurs1. Multiplying big numbers by 1%

2. Scaling too soon

3. Partnering

4. Pitching instead of prototyping

5. Using too many slides and too small a font

6. Doing things serially

7. Believing 51% = control

8. Believing patents = defensibility

9. Hiring in your own image

10. Befriending your VCs & Thinking VCs can add value

Guy Kawasaki, The Top 10 Mistakes of Entrepreneurshttps://www.youtube.com/watch?v=HHjgK6p4nrw

Lean Startup - 6© Minder Chen, 2012-2014Source: http://businessmodelgeneration.com/canvas

Video

Lean Startup - 7© Minder Chen, 2012-2014images by JAM

customer segments

key partners

cost structure

revenue streams

channels

customer relationships

key activities

key resources

value proposition

Osterwalder’s Business Model - Insight

(c)2010 K+S Ranch Consulting Inc. www.steveblank.com 7


Cash Flow

How

What

Who

Source: Alexander Osterwalder & Yves Pigneur, Business Model Generation (Preview version), 2009.


The Use of the Business Model Canvas

• Describe

• Discuss

• Design

• Challenge

• Improve

• Innovate

• Invent

• Pivot

• Choose

Your Business Model


Reverse Engineering Facebook’s Business Model with Ballpark Figures

http://www.businessmodelalchemist.com/


Questioning Business Model Components


A Starting Point of Innovation

A customer friction is a (re)discovered of relevant and often unmet needs in a recognizable situation from a target group.

– Adapted form http://www.innovationexcellence.com/blog/2011/07/08/solve-customer-frictions/


Value Proposition Canvas

• http://www.businessmodelgeneration.com/downloads/value_proposition_canvas.pdf

• http://www.franciscopalao.com/english/value-proposition-canvas-get-to-know-your-customers-and-improve-your-value-proposition/


Lean Canvas


Key Metrics

• Diffusion / Spreading - active users - number of cities/countries in which events have been created so far

• Depth of customer relations - created events - average amount of received ratings

• Monetization - standard advertising metrics - percentage / total number of premium users


“Get out of the building approach” – It is not a business plan.

No startup business plan survived first contact with customers.

Validate Your Business Model

• Most startups lack a structured process for testing their business model hypotheses.


Marketing Sizing: TAM, SAM, and TM

• Total Addressable/Available Market

http://en.wikipedia.org/wiki/Total_addressable_market


TAM

http://aiti.mit.edu/media/programs/india-bms-summer-2013/materials/step_4_calculate_the_tam_---trepreneurship_101.pdf


Adoption of Innovative Things


Technology Adoption Cycle


Crossing the Chasm

http://ewthoff.home.xs4all.nl/Weppage%20documents/Summary%20Crossing%20the%20Chasm.pdf


太肯運動科技• 【店家資料】太肯運動科技• 官網 https://www.titan-tech.com.tw/創業資金初期投入 150萬元 (為開發產品， 2012年投入 300萬元、 2013年再投入 600萬元 )去年營收 1800萬元 (獲利再投入研發、行銷，年度盈餘剩 50萬元 )


太肯的機能運動襪•年賣 1800萬運動襪跑出商機• https://www.titan-tech.com.tw/static/aboutus

•擁有亞洲頂尖研發團隊之人員共同開發– 臺灣師範大學運動科學研究所– 國際生物力學學會– 台灣運動科技發展協會

Source: http://www.appledaily.com.tw/appledaily/article/finance/20140324/35720083/

(link)

許景泰


Biomechanics生物力「就是一種希望“活用生物力學，創新運動科技”的執著，襪子是腳與鞋的唯一介面，全世界那麼多的製鞋大廠不惜耗費鉅資研發鞋類，但卻很少有人重視襪子！」 - 相子元教授

https://www.titan-tech.com.tw/truestory/research3

Video: https://www.youtube.com/watch?v=ndEnngIOxCI


他山之石可以攻錯•為了研發出最適合國人走路、運動穿的專業襪子，他不惜在短短不到三年的時間，飛往世界各國，砸下台幣 20多萬，買了將近 300雙的襪子，還不包括旅費在內！

•「所有能買的 " 機能性 " 襪子，我幾乎都買了… ..最貴的，一雙就要2000多塊台幣…」相子元教授收藏的 300雙襪子，遍佈五大洲，除了日本、韓國、美國、加拿大、紐西蘭、澳洲和歐洲各國，包括德國、擁有最好的織襪機台的義大利等，甚至遠到南非，他也去了一趟。

Video: https://www.youtube.com/watch?v=ndEnngIOxCI

Source: https://www.titan-tech.com.tw/truestory/research3


Source: 　 Link


Pressure

https://www.youtube.com/watch?v=dldpSlkPLew

https://www.titan-tech.com.tw/sport_socks/low_arch_pro_basketball_socks


Six Steps to Successful

Elevator Pitch


10 Things to Include in Your Startup Pitch Presentation1. Cover Page: The cover page should have your logo, business name and a tagline. Your tagline should give insight into your company and be easy to remember, for example, “We are the Groupon for X." Remember to include your contact information — you would be surprised how many people forget it. Especially if your deck was forwarded, it should be easy for a person to track you down.

2. Summary: Summarize all of the information before you present it, and use this opportunity to get your audience interested in your company. Talk up the most interesting facts about your business, as well as any huge milestones you may have hit.3. Team: Investors are not only putting money toward your idea, they’re investing in your team. It’s important they know the people who are going to make the concept successful. Make sure to include your background too, and how it relates to your new company. Highlight any of your team's successful exits. Investors like to see that you can take a company to acquisition.

If applicable, emphasize that your team has worked together in the past or for a long period of time. It shows you can and like to work together. If you have any important advisors, list them, but make sure they know you’re using their name.

http://mashable.com/2011/06/24/startup-pitch-presentation/


4. Problem: You need to be able to explain the problem your concept is going to solve. Further, you need to prove why investors should care about solving it with your product or service.

5. Solution: This is the value proposition you are bringing to the table. It should solve the problem you just mentioned. If you have a demo of your product, this is the time to show it. Include any case studies to show that your product has worked for existing customers.

6. Marketing/Sales: You'll want to show the market size for your product. This can include profiles of target customers, but be prepared to answer questions about the cost of acquiring these customers. Not knowing this information is a red flag to investors. If you already have sales, you can discuss your growth and forecast future revenue.7. Projections or Milestones: It is difficult to create financial projections for a startup. If you don’t have a long financial history, your forecast is really just an educated guess. Instead, you should present the milestones that you've already reached. For instance, include that you acquired 1,000 customers by X date, that you have a partnership with company Y, that you signed a major customer or that you will be cash flow positive by Q3.


8. Competition: Every business has competition even if you think you're offering something new and unique. List your competition and why your product/service is different from their model. If your competitors have been acquired, list acquisition prices and who acquired them.

9. Business Model: Every investor wants to get his money back, so it's important to tell them how you plan on generating revenue. Show a list of the various revenue streams for your model and the timeline for each of them. How will you price your product and what does your competition charge? You should also discuss the lifetime value of your customer and how you will keep him engaged.10. Financing: If you have already raised money, you will want to talk about how much, who invested and what you did with it. If you have not raised money yet, talk about what you have accomplished with minimal funding. If you have personally funded your startup, make it known. Investors like to see entrepreneurs who have invested their own money. If you’re pitching to raise capital, list how much you're looking to raise and how you intend to use the funds.


Learning and Assumptions Testing

Start-upBig Company


Hypotheses Testing and Insight

Hypotheses

Facts

Business Model


Customer Problem: known

Product Features: known

Waterfall / Product ManagementExecution on Two “Knowns”

Requirements

Design

Implementation

Verification

Maintenance

Source: Eric Rieshttp://startuplessonslearned.blogspot.com

More startups fail from a lack of customers than from a failure of product development


The Customer Development Process

1. Try many times before you get it right. 2. It is OK to fail so plan to learn from it.3. Only move to the next stage when you learn

enough and reach the “escape velocity”http://www.ctinnovations.com/images/resources/Startup%20Owners%20Manual%20-%20BlankDorf.pdf

More startups fail from a lack of customers than from a failure of product development


BioIQ.Com Case Study


The Startup Owner’s Manual

• Customer Discovery– Phase 1: State Your Business Model Hypotheses

– Phase 2: Get out of the building to test the problem: “Do people care?”

– Phase 3: Get out of the building to test the product solution.

– Phase 4: Verify the business model and “Pivot or proceed?”

• Customer validation– Phase 1: Get ready to sell

– Phase 2: Get out of the building to sell

– Phase 3: Develop product and company positioning

– Phase 4: The toughest question of all: “Pivot or Proceed?”


The Lean Start-Up

Steve Blank, "Why The Lean Start-up Change Everything," HBR, May 2013. (link)


What Is Pivot?

• Pivot: A change to business model component based on customer feedbacks. A pivot is not a failure.

• Pivot is a structured course correction designed to test a new fundamental hypothesis about the product, strategy, engine of growth, etc.

– Eric Ries, The Lean Startup, 2013.

• Pivots are vision driven.


MVP

• In product development, the Minimum Viable Product (MVP) is a strategy used for fast and quantitative market testing of a product or product features. It is an iterative process of idea generation, prototyping, presentation, data collection, analysis and learning.


An MVP Example

Why is Dropbox more popular than other programs with similar functionality?

•Well, let’s take a step back and think about the sync problem and what the ideal solution for it would do:

– There would be a folder.

– You’d put your stuff in it.

– It would sync.

Source: http://michaelrwolfe.com/2013/10/19/why-is-dropbox-more-popular-than-other-programs-with-similar-functionality/


Source: http://startitup.co/guides/294/becoming-a-lean-startup-guru


http://upscalability.com/


http://upscalability.com/lean-startup/


Not Seeing the Opportunities

1. Cannot see at its nascent stage

2. Don’t take it seriously once seen

3. Don’t understand when it has become successful

4. Wait until it is too late

視而不見見而不屑察而不懂行已不及

先見之明人棄我取摸透產業先人一著


Transition/Buyout

Transition/Buyout

Large Company

Large Company

ScalableStartup

ScalableStartup

Sustaining Innovation

• Existing Market / Known customer

• Known product feature needs

From Startup to Large Company Sustaining

Innovate or Evaporate

Disruptive Innovation• New Market• New tech, customers, channels

Goal is to solve for: unknown customer

and unknown features Search Execute

Build

Exit Criteria- Business model found- Total Available Market > $500m- Can grow to >$100m/year- Can be Venture capital funded


Lessons Learning

• The search for the business model is the front end of the startup process

• The goal is to find a repeatable/scalable model, and then execute

• Customer and Agile Development are the processes to search and build the model

• Execution requires operating plans and financial forecasts

• Product management is the process for executing the model

• This is true in the smallest startup or largest company

http://steveblank.com/2012/03/05/search-versus-execute/


SCRUM Process

Source:　https://www.youtube.com/watch?v=WxiuE-1ujCM


Lean Startup = Customer Development + Agile Method


Startup vs. Large Company

http://steveblank.com/2012/03/05/search-versus-execute/


Lean Startup

Lean Startup Minder Chen, Ph.D. Professor of MIS Martin V. Smith School of Business and Economics...

Documents

Transcript of Lean Startup Minder Chen, Ph.D. Professor of MIS Martin V. Smith School of Business and Economics...