Lean StartupAn overview
Disclaimer
Disclaimer
• No silver bullets
• No substitute for experience
• Just one tool
• Not the whole tool
Disclaimer
• No silver bullets
• No substitute for experience
• Just one tool
• Not the whole tool
Disclaimer
• No silver bullets
• No substitute for experience
• Just one tool
• Not the whole tool
Disclaimer
• No silver bullets
• No substitute for experience
• Just one tool
• Not the whole tool
“Lean Startup”
What is a startup?
What is a startup?
“The act or fact of starting something; a setting in motion.”
-Dictionary (useless)
What is a startup?
“Startups are fresh, new companies trying to do cool stuff.”
-Instinctive (still mostly useless)
What is a startup?
“A startup is an organization formed to search for a repeatable and scalable business model.”
-Steve Blank
What is a startup?
“A startup is a human institution designed to deliver a new product or service under conditions of extreme uncertainty.”
-Eric Ries
What is a startup?
“...essentially a startup is a new business designed for scale.”“A startup is a small company that takes on a hard technical problem.”
-Paul Graham
What is a startup?
“A startup is a business which has ambitions and plans to grow by a large factor over the next few years.”
-Me!
Key points
• Uncertainty, search, difficulty
• Ambition, growth
• Methods, plans
• Business, money
How should I build a startup?
Some typical approaches that don’t
work
1. First, write a business plan...
2. Raise lots of money and then figure it out
3. Plan it, build it and they will come
4. Get lots of users and figure the rest out later
5. Don’t spend anything at all.
A better method... “Lean”
Lean is not...
• Cheap
• Rigid
• Limited to simple ideas
• The magic key to success
Lean is...
• A method to organise the chaos
• Less waste
• Less risk
• More learning
• A common language
The fundamental principle of “Lean”
• A business is there to achieve a purpose
• Building things people don’t need is waste
• Building large things that people don’t need is large waste
• You have no idea what you’re doing
• You have no idea what to build
• A business is there to achieve a purpose
• Building things people don’t need is waste
• Building large things that people don’t need is large waste
• You have no idea what you’re doing
• You have no idea what to build
• A business is there to achieve a purpose
• Building things people don’t need is waste
• Building large things that people don’t need is large waste
• You have no idea what you’re doing
• You have no idea what to build
• A business is there to achieve a purpose
• Building things people don’t need is waste
• Building large things that people don’t need is large waste
• You have no idea what you’re doing
• You have no idea what to build
• A business is there to achieve a purpose
• Building things people don’t need is waste
• Building large things that people don’t need is large waste
• You have no idea what you’re doing
• You have no idea what to build
Sounds hard!
The “Lean” approach:
Build the smallest, easiest, smartest thing that teaches you what you need to learn
The “Lean” approach:
Build the smallest, easiest, smartest thing that teaches you what you need to learn
What do you need to learn?
Do people want it?
Can I sell it?
Can I build it?
A startup plan
1. Do people want it?
2. Can I sell it?
3. Can I build it?
The “Lean” approach:
Build the smallest, easiest, smartest thing that teaches you what you need to learn
Minimum Viable Product
Minimum Viable Product
• Landing page
• Paper prototype
• Presentation/pitch
• Anything that enables you to learn!
•
Minimum Viable Product
• Landing page
• Paper prototype
• Presentation/pitch
• Anything that enables you to learn!
•
Minimum Viable Product
• Landing page
• Paper prototype
• Presentation/pitch
• Anything that enables you to learn!
•
Minimum Viable Product
• Landing page
• Paper prototype
• Presentation/pitch
• (Fake) demo video
• “Concierge MVP”
• Anything that enables you to learn!
Minimum Viable Product
• Landing page
• Paper prototype
• Presentation/pitch
• (Fake) demo video
• “Concierge MVP”
• Anything that enables you to learn!
Minimum Viable Product
• Landing page
• Paper prototype
• Presentation/pitch
• (Fake) demo video
• “Concierge MVP”
• Anything that enables you to learn!
MVP
• MVP is not a crappy version of the product.
• MVP is driven by the questions you need answered.
The Lean Cycle
The Lean Cycle (backwards)
Metric
Hypothesis Experiment
Text
Lean Toolkit
Metrics
Up and to the right...
Vanity metrics
• User signups
• Traffic
• Retention rate
• Any metric in a vacuum
Good metrics
• Mostly: A/B test results
• Cohort breakdowns
• Retention rates over time
• Activity stream
• Any metric that’s actionable
Actionable?
• Must be related to the key engines of your business...
Engines:value and growth
Engine of value
• How much value is your startup delivering?
• Is it enough to be worth paying for?
• Do people perceive that and agree?
Engine of growth
• How does your startup acquire new customers?
• Paid
• Viral
• Sticky
Engine of growth
• How does your startup acquire new customers?
• Paid (CAC & LTV)
• Viral (Viral Coefficient)
• Sticky (Retention rate)
Actionable Metrics
• Actionable metrics are the ones which lead to a change which you know will impact your key drivers.
“Innovation Accounting”
Lean reporting
• If you only report usage/revenue, that’s what you’ll be judged on
• Track validated learning instead
Pivots(hot buzzword alert)
Experiment failed... what now?
• Why did it fail? Which assumption was wrong?
• Can the assumption be tweaked, or does it need to be thrown out?
• How can we rework the business model now we know that we know this?
Experiments succeeded, but...
• If it’s not working well enough to build a sustainable business, it’s not working, period.
• Zoom-in pivot: single feature becomes the whole product
• Zoom-out pivot: the product becomes a feature of a larger product
• Customer segment pivot: some customers like us, but not the ones initially targeted
• Customer need pivot: the product doesn’t solve a big enough problem for our customers
• Business architecture pivot: low margin, high volume, vs. high margin, low volume
• Value capture pivot: change the way you monetise
But... don’t abuse pivots.
Let’s recap...
Startups are experiments
Test critical things as quickly as possible
Work back from what you want to test...
Metric
Hypothesis Experiment
Text
Actionable metrics, not vanity metrics
Report on learning progress
Pivot when assumptions are wrong
Lean is just a method Be smart
Get advice
Where to go from here...
• “The Lean Startup” - Eric Ries
• “Running Lean” - Ash Maurya
• “The entrepreneur’s guide to customer development” - Brant Cooper & Patrick Vlaskovits
• Numerous blogs online...
• Mentors...
• EXPERIENCE!
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