Certified 8(a) and MBE. The Lean Startup. by Eric Ries

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1 Certified 8(a) and MBE The Lean Startup by Eric Ries

2 What s a startup Our definition: A startup is a human institution designed to create a new product or service under conditions of extreme uncertainty Includes both Garage startup: the stereotypical view of a startup AND An established company s attempts to create a new product or service 2

3 Problems faced by startups Startups don t know who customer is or what product should be Two approaches 1) Detailed business plan = Market research + forecasting + planning + whiteboard strategizing OR 2) Just do it! Wing it and hope for the best 3

4 Traditional business planning Traditional strategic planning is useless because In a startup (as we ve defined it), you DON T KNOW: o o Who is the customer? What is the product or service that is in demand? It takes months to complete by which time the marketplace could have changed End-result: You re left spinning your wheels via market research studies/ focus groups/ whiteboard strategizing analysis-paralysis 4

5 Why not just do it? If you just do it, you are guaranteed to succeed at seeing what happens! You may get 5 customers and 5 different opinions what s next?! If you have unclear hypothesis, the next step is unclear; and subsequent steps even more so A handful of the just do it camp will succeed via luck and they ll write books about how they succeeded because they stuck to their original vision, and be feted for their foresight. The sad truth is that their stories are all expost-rationalization ( survivor bias ) 5

6 Lean startup idea Helps you address extreme uncertainty that is single biggest challenge of a startup Can begin immediately Instead of complex full-blown plan, you start with Initial hypothesis Assumptions behind the hypothesis A Minimum Viable Product or Service Offering (MVP) to test this hypothesis Testable experiments instead of market research/ focus groups/ whiteboard strategizing/ just doing it 6

7 Build-Measure-Learn model Ideas Learn Build Data Product Measure 7

8 Build-Measure-Learn (BML) model Step 1: Build a Minimum Viable Product (MVP) per initial hypothesis (BUILD) Step 2: Run experiments in market to measure performance vs ex-ante projections (MEASURE) Step 3: Based on data, you validate or refute your hypothesis and original assumptions (LEARN) Step 4: Decide whether you want to stick with original idea (PERSEVERE), refine (PIVOT) or shut down Ultimate goal: to minimize total time through the BML feedback loop 8

9 Build Start with an initial hypothesis Convert this idea into a product Minimum Viable Product (MVP) Don t worry about quality beyond what is minimum required to test the hypothesis, because if you don t know who the customer is, you don t know what quality is! All you re looking for is something that enables you to do a full turn of the Build-Measure-Learn loop i.e, to test fundamental business hypothesis 9

10 Measure Four steps 1) Use MVP to establish real data on where company is right now 2) Tune engine from baseline towards ideal 3) Measure progress and then determine whether to 4) Pivot or persevere 10

11 Learn Critical: the goal of a startup is not How much is being built OR How much is being learnt ( I learnt a lot is oldest excuse in book for failure of execution!) True goal of a startup = Validated learning! Validated learning: Not ex-post rationalization or a good story designed to hide failure Should help refute or validate hypothesis STRONGLY! More concrete, more accurate & faster than market forecasting or classical business planning 11

12 Learn Fundamental duty of startup is to 1) Turn ideas into products 2) Measure how customers respond i.e, find out what they really want, NOT what they say they want, or what we think they should want. Most of the time customers don t know what they want in advance 3) Then decide whether to pivot or persevere 12

13 Decision time: Pivot or persevere MVPs often result in failure Don t give up immediately Option could be to Persevere if aspects of hypothesis still hold promise OR Pivot i.e, keep one foot rooted in what we ve learned so far, while refining strategy. 13

14 About String-A decade of experience in Title & Mortgage 1 of 500 fastest growing companies in US 2007 Successfully weathered mother of all storms 2009 A TRUSTED name in Title Insurance String starts operations in US 2008 Smart CEO Future 50 Award 2011 Certified under ISO 27001:2005 Highlights Affiliations Citations HQ in Wash DC Metro area 3 global delivery centres Strong local presence Over 350 processes for 75 customers Serving the Top-4 Underwriters 14

15 SERVICES INDUSTRIES Services Portfolio Making the real estate industry more efficient Residential Mortgage Title Insurance Commercial Real Estate Loan Processing Underwriting Closing Support Post-Closing Support Title Production Closing Support Curative Processing Other VMC Services Title Plant Building Property Management Leasing & Brokerage Facilities Management Investment Management Corporate Real Estate Services Compliance Quality Assurance Data, Research & Analytics Software Development & Integration Consulting 15

16 THANK YOU!