Key Concepts & Best Practices for Entrepreneurs
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Creating, Launching & Growing a Successful Technology Start-Up - What they can’t teach you at Business School
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Key Concepts & Best Practices for Entrepreneurs
- 1. Creating, Launching & Growing a Successful Technology Start-Up Key Concepts & Best Practices for Entrepreneurs Presentated to the Business & Technology Group Rotman School of Business at the University of Toronto December 1, 2011 © Arnold Wytenburg & others
- 2. Creating, Launching & Growing a Successful Technology Start-Up © Arnold Wytenburg & others
- 3. About me… Seasoned technology entrepreneur, investor, biz consultant & advisor 75+ Fortune 1000 projects 25+ Start-ups Noted expert in tech- enabled biz innovation © Arnold Wytenburg & others
- 4. So, what is a start-up anyway? “ A start-up is an idea in search of a © Arnold Wytenburg & others business model Steve Blank ”
- 5. The entrepreneur’s task is to find a successful business model as quickly & effectively as possible © Arnold Wytenburg & others
- 6. A business model describes the rationale of how an organization creates, delivers, and captures value w/thx to Alex Osterwalder and Yves Pigneur © Arnold Wytenburg & others
- 7. In traditional business, we create value by delivering products or services to customers … But in a startup, the product and customer are unknowns © Arnold Wytenburg & others
- 8. Priority #1 is to discover who is the customer and validate the product or service offering with them w/thx to Steve Blank, Alex Osterwalder & Yves Pigneur © Arnold Wytenburg & others
- 9. “ More start-ups fail from a lack of customers than a lack of product development © Arnold Wytenburg & others Steve Blank ”
- 10. Focus on customers for whom the need to solve a problem outweighs the risks of taking on a new product or vendor w/thx to Geoffrey Moore © Arnold Wytenburg & others
- 11. “ All my life, I wanted to be a somebody - now I realize I needed to be more specific © Arnold Wytenburg & others Lily Tomlin ”
- 12. Segment your target market into clusters of users who share common needs and interests, who have access to each other, and who reference one another * * HINT: a segment–ISthink in customeruse casesor industry vertical NOT a terms of persona © Arnold Wytenburg & others
- 13. “ The difference is in © Arnold Wytenburg & others the details ”
- 14. Seek to position your product or service as “top of mind” with targeted audiences by uniquely tailoring the value and benefits of your offering to the needs of each segment © Arnold Wytenburg & others
- 15. “ Product/market fit is the Holy Grail of start-up success © Arnold Wytenburg & others ”
- 16. Aim for strong demand from a sizeable group of passionate users representing a viable market… Real customers willing to pay you Cost of acquiring those customers less than what customers will pay Enough market potential to support your business objectives © Arnold Wytenburg & others
- 17. “ Nail it before you © Arnold Wytenburg & others scale it Steve Blank ”
- 18. Produce only “the smallest feature set that customers will pay for” in your first release (aka “minimum viable product”) w/thx to Steve Blank © Arnold Wytenburg & others
- 19. Combine iterative product development with customer development to maximize learning with the least effort and expense w/thx to Steve Blank, Eric Reis, Brant Cooper, and Patrick Vlaskovits © Arnold Wytenburg & others
- 20. Keep the venture as a project for as long as you can before turning it into a business … you’re aiming for a “low burn” © Arnold Wytenburg & others
- 21. Nothing is a complete failure - it can always be used “ as a bad example © Arnold Wytenburg & others ”
- 22. Quickly “pivot” one or more parts of your customer-problem-solution hypothesis when failure strikes © Arnold Wytenburg & others
- 23. “ Get out of the building Steve Blank ” © Arnold Wytenburg & others
- 24. Speak with as many living, breathing customers as possible to test the validity of your assumptions © Arnold Wytenburg & others
- 25. “ If youth is wasted on the young, wisdom is wasted © Arnold Wytenburg & others on the old ”
- 26. Where youth sees only chaos, experience can see pattern and meaning find a mentor set up a panel of advisors expand your industry contacts © Arnold Wytenburg & others
- 27. Capital is scarce and expensive, so look for creative ways to bootstrap your venture Sweat Equity + Revenues + Financing + Investment = Capital © Arnold Wytenburg & others
- 28. “ Chaos is just order to which we haven’t been properly introduced © Arnold Wytenburg & others ”
- 29. The path forward is the one you lay down as you walk Mobilize… Understand... Design... Implement... Manage... w/thx to Alex Osterwalder, Yves Pigneur , and Damien Newman © Arnold Wytenburg & others
- 30. Questions? © Arnold Wytenburg & others
- 31. Future Research Directions © Arnold Wytenburg & others
- 32. We need a “start-up friendly” definition of value that recognizes validated learning about customers 1 2 3 4 opportunity / problem / product / enterprise / objectives solution market industry fit fit fit fit ? ? ? ? © Arnold Wytenburg & others
Notas del editor
- Remember that “customers are what make paydays possible”
- There are typically passionate, early users of a new technology or product who understand its value before mainstream markets1) Seek out new technology or products to solve their (or their companies’) problems, not just for the sake of owning the newest thing2) Are not inclined to rely on references from others to make buying decisions – while they may be influenced by other early adopters, their main concern is solving a known problem or satisfying a known need3) Are willing and interested in helping you and want you to be successful – early adopters enjoy opportunities to be heroes, especially by solving real problems
- … Start by focusing on only one audience to create a beachhead…A segment is made up oflike people, who share a common interest, who have access to each other, and who look to one another as a trusted reference - The point isn’t that individuals within a segment actually communicate with each other, but rather that they “have access” to do soWhy segment?… Word-of-mouth works best among those who share a need and have at hand a means to communicate a solution… “Access to each other” indicates a common methodology to reach them… Knowledge of like individuals buying a product, such as through PR, testimonials, etc, is a powerful influence
- This is the “tipping point” in the start-up life cycle where your venture becomes “investable”
- We don’t all wear size 8 ½ brown shoes. Each audience segment you identify will have different needs, desires, and perceptions. You need to understand and cater to each of these individually.Positioning – some additional points:… Forms the basis for all communications with customers, investors, partners, employees, etc.… For customers, the goal is to have them understand what benefit they will receive from you and why you are better than everyone else… Your differentiator is the benefit your offering provides, not the offering itself
- This is the “tipping point” in the start-up life cycle where your venture becomes “investable”
- Experience suggests that ‘fitness’ requires at least 40% to 50% of your customers saying they would be “very disappointed” without your offering
- From Eric Reis: “that version of a new product which allows the team to collect the maximum amount of validated learning about customers with the least effort”… Intermediate MVPs are useful to validate learning and minimize risk along the path to the correct business model… To be a true test of viability, all MVPs require a trade of some scarce resource such as time, money, or attention… maximize your use of prototypes: “If a word is worth 10 to the minus 3 pictures, then a picture is worth 10 to the minus three prototypes.” or in plain English, If a picture is worth a thousand words, then a prototype is worth a thousand pictures.”
- … The Customer Development Team works on testing assumptions about who the customer is, the problem they hope to solve, and what the solution should be, while the product development team focuses on building the solution… The Product Development process receives input from customers indirectly through customer development, and when possible, by measuring product use directly… Product Development iterates on the product continuously, releasing new or changed functionality directly to the customer as quickly as possible… The Customer Development process receives input from customers indirectly through Product Development reports about feature usage, and directly via Customer Development processes and analytics… Customer Development iterates on core business assumptions, product functionality, and customer acquisition and conversion assumptions, resulting in updated hypotheses and honed messaging, positioning, feature requirements, and marketing and sales tactics
- … Use open-source technologies… Use “agile” development methods… Engage in ferocious customer-centric rapid iteration… Use powerful, low-cost, easy-to-use analytics tools
- “Failure” is inevitable when you’re starting up – it’s what you do next that makes the difference
- … But take care not to throw out the baby with the bathwater... From Eric Reis:“Each failed hypothesis leads to a new pivot where we change one element of the business plan – we don’t abandon everything we learned”… The sooner you realize your hypothesis is flawed, the faster you can update it and retest… Remember, the aim is to get you to one of two desired outcomes as quickly and efficiently as possible:1)A thriving successful company, or2) The realization that there is no market, or that the market is too small to support the business you want to build
- … do this the same way you would like to vote or to get paid: “early and often”… The intent is to minimize both the real and opportunity costs of building your business… Analytics, surveys, and other automated user-facing test tools complement but are not substitutes for “getting out of the building”
- Consider alliances, lease-backs, etc.
- Entrepreneur’s need to be skilled in “pattern language” aka “chaos-speak”Where order is about repetition, chaos is about “one-offness”… consider a universe that’s a “one-off”, a wholly singular and unique event or “thing”, or as Lee Smolin calls it, “a work of art”.