Introduction and overview to the lean process for startups. An evidence based approach to validate early hypothesis and develop a solid Business Model before launch. Involving Customer Development, Hypothesis testing, Minimum Viable Product, (MVP) to get to Product/ Market fit and ultimately A replicable scalable business model. This simple but disciplined approach takes the guess work out of taking an idea and turning it into a viable company.
Based on Eric Reis, Steve Blank and Alex Osterwald's work with Lean Startup, Lean launchpad, customer development and Business Model Canvas. Now in practice by multiple Incubators, Accelerators, Universities and now the National Science Foundation through ICorp to validate business ideas with before investing.
3. Key Points
1. A Business Model,
Not a Business Plan
2. Fast Learning Loops:
Build-Measure-Learn
3. Business Model Validation:
Get Out of the Building!
4. MVP - It’s Not What You Think
5. The Lean Startup Path
8. • Building on Invalid Assumptions
• Premature Scaling
• Lack of Customers and Markets
• Change Your Business Model at
Scale
• Run Out of Money
The Path to Disaster
9. Discover a
Business Model
that works before
you run out of
Money and Time.
(Nail it, then Scale it.)
Your Job as an
Entrepreneur:
10. Questions
• Is this problem worth solving?
• Who’s problem are you solving?
• How are they solving it now?
• Does anyone care about your solution?
• Will they buy it?
• How do you create value for your customers?
• How will you grow?
• What’s your unfair advantage?
• What channels will you use to get to your customers?
• What are your acquisition costs per customer?
• What is the lifetime value of your customer?
• What’s your unit cost model? Unit revenue model?
20. Key Partners
Who are our Key
Partners?
Who are our key
suppliers?
Which Key
Resources are we
acquiring from
partners?
Which Key Activities
do partners perform?
Key Activities
What Key Activities
do our Value
Propositions require?
Our Distribution
Channels?
Customer
Relationships?
Revenue streams?
Value
Propositions
What value do we
deliver to the
customer?
Which one of our
customer’s problems
are we helping to
solve?
What bundles of
products and services
are we offering to
each Customer
Segment?
Customer
Relationships
What type of
relationship does
each of our Customer
Segments expect us
to establish and
maintain with them?
Customer
Segments
For whom are we
creating value?
Who are our most
important customers?
Key
Resources
Do our Value
Propositions
require?Distribution
Channels, Customer
Relationships,
Revenue Streams?
Channel
Through which
Channels do our
Customer Segments
want to be reached?
Cost Structure
What are the most important costs inherent in our
business model?
Which Key Resources are most expensive?
Which Key Activities are most expensive?
Revenue Streams
For what value are our customers really willing to pay?
For what do they currently pay?
How are they currently paying?
How would they prefer to pay?
How much does each Revenue Stream contribute to
overall revenues?
Customer/Value Hypotheses
?
?
?
?
??
??
?
21. Customer Interviews
• Customer Demographics (Discover
Subsegments)
• Validate Their Top Three Problems
• Discover New Problems
• Rank the Problems
• How Do They Solve Them Now?
• Document existing workflow.
1
2
3
4
5
How to do customer interviews videos: http://vimeo.com/groups/204136/videos/
22. Solution Hypotheses
Key Partners
Who are our Key
Partners?
Who are our key
suppliers?
Which Key
Resources are we
acquiring from
partners?
Which Key Activities
do partners perform?
Key Activities
What Key Activities
do our Value
Propositions require?
Our Distribution
Channels?
Customer
Relationships?
Revenue streams?
Value
Propositions
What value do we
deliver to the
customer?
Which one of our
customer’s problems
are we helping to
solve?
What bundles of
products and services
are we offering to
each Customer
Segment?
Customer
Relationships
What type of
relationship does
each of our Customer
Segments expect us
to establish and
maintain with them?
Customer
Segments
For whom are we
creating value?
Who are our most
important customers?
Key
Resources
Do our Value
Propositions
require?Distribution
Channels, Customer
Relationships,
Revenue Streams?
Channel
Through which
Channels do our
Customer Segments
want to be reached?
Cost Structure
What are the most important costs inherent in our
business model?
Which Key Resources are most expensive?
Which Key Activities are most expensive?
Revenue Streams
For what value are our customers really willing to pay?
For what do they currently pay?
How are they currently paying?
How would they prefer to pay?
How much does each Revenue Stream contribute to
overall revenues?
Online model tool http://canvanizer.com/new/business-model-canvas
24. Solution Interviews
• Recap Demographics and Problem
• Describe and Show Solution (don’t
sell it!)
• Does it Resonate?
• What’s most important, what’s
missing, what can you take away?
• How do they find out about
solutions to this problem?
• Will they pay $X?
1
2
3
4
5
6
28. More on MVP
• Not one snapshot,
but a progression
of experiments
• Early experiments
have no product.
• At some point, you
need to start
development.
That’s where Agile
comes in
29. Groupon: Wordpress Blog, Widget from The Point, PDF Coupons via
email.
Foursquare used Google Docs to collect customer feedback. No code,
no maintenance.
Grockit puts up a notify-me-when-you-release form on steroids.
Auto e-commerce site uses manualation and flintstoning for their
backend.
Allicator uses Facebook ads: “Ditch Digger? Feeling spread thin? Click
here to complete a survey and tell us about it.”
ManyWheels uses Microsoft Visio to build clickable web demos for
prospective customers.
Cloudfire uses a classic customer development problem presentation.
Example MVPs
30. Key Partners
Who are our Key
Partners?
Who are our key
suppliers?
Which Key
Resources are we
acquiring from
partners?
Which Key Activities
do partners perform?
Key Activities
What Key Activities
do our Value
Propositions require?
Our Distribution
Channels?
Customer
Relationships?
Revenue streams?
Value
Propositions
What value do we
deliver to the
customer?
Which one of our
customer’s problems
are we helping to
solve?
What bundles of
products and services
are we offering to
each Customer
Segment?
Customer
Relationships
What type of
relationship does
each of our Customer
Segments expect us
to establish and
maintain with them?
Customer
Segments
For whom are we
creating value?
Who are our most
important customers?
Key
Resources
Do our Value
Propositions
require?Distribution
Channels, Customer
Relationships,
Revenue Streams?
Channel
Through which
Channels do our
Customer Segments
want to be reached?
Cost Structure
What are the most important costs inherent in our
business model?
Which Key Resources are most expensive?
Which Key Activities are most expensive?
Revenue Streams
For what value are our customers really willing to pay?
For what do they currently pay?
How are they currently paying?
How would they prefer to pay?
How much does each Revenue Stream contribute to
overall revenues?
Continue Validating Hypotheses
7
8
1
4
23
5
9
6
31. Use Canvas As a Weekly Scorecard
Week 3
Week 2
Week 1
Useful tool for tracking weekly updates: https://www.launchpadcentral.com/
37. Post Launch
Fast Feedback Loops
You have real users and precise usage data
- Analyze it! (By cohort)
Make small changes fast
(hours, not weeks to get into production)
When you make changes
- A/B test (or multivariate w/ traffic.)
39. Investment Readiness Level
Mkt Size/Competitive analysis
Complete first-pass canvas
Problem/Solution Validation
Low Fidelity MVP Experiments
Validate Product/Market fit
Validate right side of canvas
Prototype High-Fidelity MVP
Validate left-side of canvas
Validate metrics that matter
Friends and Family
Angel investors
Venture Capital
None
Validation Stage Investment Type
41. What Does Traction Look Like?
*cost of acquisition is less than 1/3 lifetime value;
$1 in, $3+ out
Typical AngelList Investments $1M raise (2013)
• Enterprise: 1000 seats @ $10/seat/mo.,
• Big Enterprise: 2 pilot contracts and some $
• Social: 100,000 downloads/signups
• Marketplace: $50,000 revenue/mo.
• E-Commerce: $50,000 revenue/mo.
LTV > 3X CAC?
42. Common Mistakes
• Too Broad a Segment
• Not a Big Enough Problem
• Surveys Instead of Interviews
• Conflate Problems and Solutions
• Confuse Users and Customers
• Build Too Much (Fat Experiments)
• Don’t Test Revenue Model Early Enough
• Stop Experimenting When You Have Customers (No Metrics)
• No UX and No Agile
43. Summary
1. A Business Model,
Not a Business Plan
2. Fast Learning Loops:
Build-Measure-Learn
3. Get Out of the Building!
4. MVP - It’s Not What You Think
5. The Lean Startup Path
Business Model - ComplicatedMaking a Business work is a complicated thing. Rationale - how you create, deliver and capture value. It’s interrelated. There's lots of moving parts that need to work together. Usually, there's lot's of ways to approach it. [business model canvas]