Intro to lean startup

Transcription

1 Intro to lean startup

2 hello! Ryan MacCarrigan Chief LeanStudio Partner & Lean Startup Machine Organizer - LSC: Corporate Intrapreneurship Meetup Past Co-Organizer - NYC Lean Startup Meetup & SF LSC Head of Marketing - Several tech startups in NYC & SF

3 agenda 1. Intro to Lean Startup 2. Exercise 1: Identifying Risky Assumptions 3. Exercise 2: Risk Prioritization and Testing 4. Exercise 3: Customer Personas 5. Exercise 4: Mock Interview Prep 6. Scheduled Interviews + Critique

4 special requests 1. Please speak English during exercises so that we can listen in and assist you as needed. 2. Use English and ALL CAPS when writing on sticky notes. 3. Please be concise and legible when writing on sticky notes. 4. Feel free to ask questions at ANY time.

5 something is fundamentally wrong

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8 why do startups fail?

9 big idea #1 The vast majority of startups fail not because they couldn t build their product But because nobody WANTED their product.

10 big idea #1 By the time the founders figure out their idea isn t good enough it s too late to make it better.

11 Source:

12 why do startups succeed?

13 big idea #2 The vast majority of [successful] startups abandoned their initial plans and learned what did and did not work in the market. Clayton Christensen, The Innovator s Dilemma

14 successful pivots

15 background & core concepts

16 customer development

17 customer development Four Steps Customer Discovery Customer Validation Company Creation Company Building

18 customer development Get out of the building! Learning activity focused on gaining deeper insight into the PROBLEM your solution is solving for. No business plan survives first contact with customers. - Steve Blank

19 customer development Focus on customer behavior to reveal underlying motivations: Attitudes, Needs, & Goals

20 customer development Founders often fear talking to customers Fear that their idea is embarrassingly bad. Fear that their ego will become tarnished. Fear that they don t possess innate wisdom.

21 customer development Search Execute Customer Discovery Customer Validation Company Creation Company Building

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24 ta l k t o p e o p l e

25 customer development Search Execute Customer Discovery Customer Validation Company Creation Company Building Today s Primary Focus

26 Lean startup

27 va l i d ate d l e a r n i n g Learn Build If [ we do this ], then [ # or % ] will [ exhibit behavior ]. Measure

28 Lea(R)n START HERE w/ Customer Discovery Learn Build If [ we do this ], then [ # or % ] will [ exhibit behavior ]. Measure

29 reduce risk 1. Building the wrong thing 2. Premature optimization

30 customer development Search Execute Customer Discovery Customer Validation Company Creation Company Building

31 product-market fit Search Execute Customer Discovery Customer Validation Company Creation Company Building Product-Market Fit

32 definition 1 Product-Market Fit The point at which you have captured sufficient customer demand in a defined market for a given solution such that the business model delivering the solution can sustain itself economically through customer demand alone. - Tristan Kromer, Lean Startup Circle

33 $

34 definition 2 Product-Market Fit The point at which a company can begin investing resources into scaling marketing, because at least 40% of surveyed customers would be very disappointed if they could no longer use the product or service; your product is a must have for those users. - Sean Ellis, GrowthHacker.com

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36 wa r n i n g Customer Development is NOT Scalable It s a valuable learning process that helps you reach customer validation as quickly as possible. Exception: Direct Sales Businesses (e.g., Avon)

37 learn faster

38 wa r n i n g Do NOT Confuse Problem-Solution Fit w/ Product-Market Fit If someone is excited that a solution exists for the problem you are validating, it does NOT mean you have product-market fit.

39 customer discovery PRE Product-Market Fit POST Product-Market Fit Customer Discovery Customer Validation Company Creation Company Building Pivot Around Problem-Solution Fit

40 pivot!

41 types of pivots Customer Segment Pivot Customer Need Pivot Zoom-In Pivot Zoom-Out Pivot Technology Stack Pivot Customer Channel Pivot Platform Pivot

42 customer validation PRE Product-Market Fit POST Product-Market Fit Customer Discovery Customer Validation Company Creation Company Building Look for Currency & Traction

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44 customer validation What is Currency? How much time or attention is an earlyvangelist willing to spend to obtain or learn more about your product or service? How much money is an earlyvangelist willing to spend on your product or service? Time, Attention, Money

45 customer validation Do I Have Product-Market Fit?? Begin pitching your solution. Clearly define your value proposition, and design experiments that test customer demand. Pitch a hypothetical solution. Look for currency. Are they foaming at the mouth? Look for a clear signal. Could you scale the business model based solely on the economics of customer demand? If not, pivot back to Customer Discovery.

46 foaming at the mouth?

47 customer validation No Customer Validation? Properly identified customer needs and goals? Understand current behaviors? Targeting the correct customer segment? Effectively positioning product benefits? Mentioning the correct set of features? Too few features? Too many? Not priced correctly? Et al.

48 customer development PRE Product-Market Fit POST Product-Market Fit Customer Discovery Customer Validation Customer Company Creation Company Building Scale Sales & Marketing ($$$)

49 customer discovery Start Here interaction with early adopters focused on the problem to understand past b eh av i o r and urgency.

50 customer discovery Define Objectives and Learning Goals Before getting out of the building and talking to people, identify the riskiest assumptions about your target customer and business model. Prioritize which assumptions are most urgent to validate or invalidate. Test those FIRST.

51 risky assumptions? unknown riskiest low impact High Impact known

52 customer discovery Who Does Customer Discovery? Never outsource to agencies, market research analysts, UX contractors, etc. The founders need to test their own vision against reality.

53 customer discovery Remember Why > What

54 customer discovery Why > What Targeted Conversations w/ HUMANS Online Surveys Website Analytics Market Research

55 customer discovery Qualitative How should I design the new one? Do people use it? What s wrong with this? How could I make this better? Why do people do that? What do people love about it? How can I improve conversion? Why is there dropoff? What do they think this should do? Quantitative Do people use it? Which is better? Did we do the right thing? Are these results good? Are we making progress? CLOSED-ENDED QUESTIONS OPEN-ENDED QUESTIONS Why > What

56 learning goals 1. WHO do we want to learn from?

57 learning goals 2. What do we need to validate or invalidate first? (Risk)

58 learning goals 3. How will we find the right people to interview?

59 learning goals 4. How do we ensure quality control throughout the process?

60 learning goals 5. How do we draw conclusions based on our data?

61 Who are they? Think about your solution hypothesis and envision all possible use-cases. Who are the target customers for what you believe is the most viable use-case?

62 Who are they? Example: We re going to build a wearable, hands-free camera that allows people to capture high-quality video effortlessly and spontaneously. Use-Cases: Security Officers and Policemen Athletes in Training Socially-Connected Millennials Parents with Young Children Search and Rescue Dogs and Cats

63 Who are they? B2C Example: We re going to build a wearable, hands-free camera that allows people to capture high-quality video effortlessly and spontaneously. Use-Cases: Security Officers and Policemen Athletes in Training Socially-Connected Millennials Parents with Young Children Search and Rescue Dogs and Cats

64 Who are they? Who in this target segment is foaming at the mouth to buy our product before anyone else can get their hands on it? i.e., who is your early adopter?

65 early adopter 1. Has the problem. 2. Aware he/she has the problem. 3. Has previously searched for a solution. 4. Has tried to hack together own solution. 5. Willing/able to pay for a solution.

66 early adopter Total Addressable Market Not yet Customer Segment 1 Customer Segment 2 Customer Segment 3 Customer Segment 4 Early Adopters Start small

67 Who are they?

68 Who are they? Learn another time

69 exercise Outline Core Assumptions

70 1. work with your team 2. discuss each prompt 3. write your answer (3 mins)

71 assumptions exercise 1. Our target customer is Describe current customer hypothesis in one sentence.

72 assumptions exercise 2. The problem our customer needs to solve is What (observable) problem are they currently struggling with?

73 assumptions exercise 3. The customer s needs can be solved with What s the simplest pitch you can write for your current solution hypothesis?

74 assumptions exercise 4. Why can t the customer solve this today? What is lacking in the current market, or what hurdles are making it hard for customers to find a solution?

75 assumptions exercise 5. What outcome does the customer want to achieve? What specific and measurable changes in the customer s life/behavior will make them loyal to your product?

76 assumptions exercise 6. What is the primary channel for customer acquisition? Eventually there will be multiple channels what is your best guess for what will be the biggest acquisition channel?

77 assumptions exercise 7. Who is the early adopter in my target customer segment? We can t cross the chasm until we ve validated an early version of the product. What are the key traits of early adopters in our current target customer segment?

78 assumptions exercise 8. What s the revenue model? How will customers pay for our solution?

79 assumptions exercise 9. Who are our primary competitors? Think about both direct and indirect competition.

80 assumptions exercise 10. How will we beat the competition? What are the true differentiators between us and them? What clear advantages do we currently possess?

81 assumptions exercise 11. What is the biggest risk to financial viability? What factor(s) might prevent the business from breaking even?

82 assumptions exercise 12. What is the biggest technical or engineering risk? What is the biggest technical challenge that might hinder the product from meeting customer expectations, competitive pricing pressures, or window of market opportunity?

83 assumptions exercise 13. What other risky assumptions are there? What things, if proven untrue, would fatally break the business?

84 1. create 4x4 grid on table 2. arrange post-it notes according to risk (10 mins) 3. prioritize testing (5 MINS)

85 exercise 3: evaluate risk [ 10 min ] unknown low impact high impact known

86 exercise 3: evaluate risk KNOWN VS. UNKNOWN How much research have you done? What is your level of confidence? HIGH VS. LOW IMPACT What things, if proven untrue, would fatally break the business?

87 evaluate risk unknown riskiest low impact high impact known

88 prioritize testing [ 5 min ] urgent high cost low cost not urgent

89 prioritize testing urgent test first high cost low cost not urgent

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91 lunch

92 b2b Customer discovery B2B Customer Discovery Requires Tenacity You need to do your homework and truly understand the company before reaching out to them. This is the only way you ll know the right questions to ask. Leverage your personal network, LinkedIn, and industry events or meetups, to find someone at the target company who can make a strategic introduction for you.

93 b2b Customer discovery Target Company Research Read all relevant about pages on the prospect company s website Search for all positive and negative media coverage over the past 3 years that can give you a better sense of where things stand. Research LinkedIn to discover the backgrounds and connections of senior management, or the people on the team you will meet. Read social media posts on Twitter, Facebook, YouTube, etc. to understand how the company wishes to position itself.

94 b2b Customer discovery Strategic Point of Entry Who is incentivized to champion your cause inside the company? Who gets bonus points or a promotion if they champion something new that turns out to be successful? Director of Marketing? Product Owner? VP Sales?

95 b2b Customer discovery Getting Intros from Sales People Sales Account Managers are some of the most sympathetic people you can talk to for introductions to decision makers. Sales people do what you re trying to do for a living. They know how difficult it is to reach decision makers, and with a little bit of luck and tenacity you might be able to get them on your side

96 b2b Customer discovery Tell a Compelling Story Remember in B2B Customer Discovery, there is a possibility you could also sell an early version of your product. Explain to the point-of-entry person that you are building something that will help their company improve sales, streamline operations, reduce costs, reduce internal or external risk, increase overall revenue etc.

97 b2b Customer discovery Leveraging the Power of LinkedIn This platform has revolutionized B2B customer discovery and sales. Search for current and past employees of the company in search of a point-of-entry. Contact partners of the target for advice on dealing with them. Find sellers of complimentary products & services for advice on how they gained entry.

98 b2b Customer discovery Once You ve Got the Meeting Scheduled Customer Development is the complex discovery-driven sale. In real B2B sales you sell by asking questions and paying careful attention to the answers not only their content but their implications and what s left unsaid. - Sean Murphy

99 b2b Customer discovery Include These Open-Ended Questions* 1. Could you describe the problem you re having in your own words? 2. Could you describe on a high-level your current work flow? 3. What are you primary constraints? 4. What s the end result you hope to achieve by finding a solution? 5. What have you previously tried to do to solve the problem? 6. What are the key metrics you d like to use to evaluate a new solution? *Questions developed by Sean Murphy

100 segmentation

101 example Learn another time

102 segments a set of actual or potential customers for a given set of products or services who have a common set of needs or wants, and who reference each other when making a buying decision. - Geoffrey Moore, Crossing the Chasm

103 segments The smaller and more specific your segment, the easier it is to understand and target.

104 segments What is their pain (compelling reason to buy)? How much budget authority? What is their buying process? Who do they listen to? Where do they congregate? What content do they read? What are likely product requirements? What is the method of finding and reaching them? - Brant Cooper, The Lean Entrepreneur

105 segments Have all or most in common What is their pain (compelling reason to buy)? How much budget authority? What is their buying process? Who do they listen to? Where do they congregate? What content do they read? What are likely product requirements? What is the method of finding and reaching them? - Brant Cooper, The Lean Entrepreneur

106 example

107 what s the point? Identify and verify customer segment Visual communication tool Fosters common understanding Promotes empathy w/ customer Easy to reference and revise over time Isn t meant to be 100% perfect

108 running experiments

109 ( lean startup ) in practice

110 what you will learn 1. what is an mvp? 2. what are the 3 mvp stages? 3. what does the mvp test? 4. real-life examples

111 prioritize testing urgent test first high cost low cost not urgent

112 minimum viable product? mvp = experiment

113 mvp = experiment MVE

114 mvp = experiment MVE Acquire customers through a particular channel

115 customer discovery PRE Product-Market Fit POST Product-Market Fit Customer Discovery Customer Validation Company Creation Company Building Pivot Around Problem-Solution Fit

116 customer validation PRE Product-Market Fit POST Product-Market Fit Customer Discovery Customer Validation Company Creation Company Building Look for Currency & Traction

117 define hypothesis

118 we believe that busy mothers with young children become frustrated when they are unable to record special or spontaneous moments on video.

119 make a prediction

120 make a prediction fa ls i f i a b l e t e s t

121 Build Measure If [ we do this ], then [ # or % ] will [ exhibit behavior ]. Learn

122 Build Measure If [ we interview 50 mothers with young children ], then [ 25% or more ] will [ express deep frustration ]. Learn

123 if successful persevere

124 if not pivot

125 what s the logic? 1. what do you need to learn? 2. test riskiest assumption 3. set minimum success criterion 4. pivot or persevere? 5. move faster!!

126 essentials 1. maximum validated learning with minimum amount of effort 2. minimal opportunity cost (risk) 3. rapid testing & iteration

127 MVP STAGES 1. Problem Exploration 2. Product Pitch 3. Concierge

128 MVP STAGES 1. Problem Exploration 2. Product Pitch Customer Discovery Customer Validation 3. Concierge Customer Validation

129 what to test 1. outline assumptions 2. identify riskiest one 3. test that first

130 Evaluate risk unknown low impact high impact known

131 Evaluate risk unknown riskiest low impact high impact known

132 prioritize testing urgent high cost low cost not urgent

133 prioritize testing urgent test first high cost low cost not urgent

134 va l i d ate d? Results must meet or exceed prediction

135 MVP STAGE II PRODUCT PITCH solution solves the pain?

136 MVP STAGE II an exchange of the product pitch for some form of currency which tests the riskiest assumption of your solution hypothesis.

137 collect currency 1. time 2. attention 3. money

138 collect currency 1. time (how long?) 2. attention (how eager?) 3. money (how much?)

139 product pitch low / medium opportunity cost

140 product pitch wireframes va l u e p r o p landing pages

141 product pitch wireframes Learn another time va l u e p r o p landing pages

142 product pitch va l u e p r o p Test the Solution Hypothesis landing pages

143 A Purchase Tickets for a 3-Day Lean Startup Competition for Entrepreneurs in San Francisco B Purchase Tickets for a 3-Day Lean Startup Workshop for Entrepreneurs in San Francisco

144 A Purchase Tickets for a 3-Day Lean Startup Competition for Entrepreneurs in San Francisco B Purchase Tickets for a 3-Day Lean Startup Workshop for Entrepreneurs in San Francisco

145 A developers save time and money with our leading application monitoring software. B our application monitoring software helps developers fix bugs faster, saving time and money.

146 A developers save time and money with our leading application monitoring software. (target customer + currency + solution) B our application monitoring software helps developers fix bugs faster, saving time and money.

147 product pitch va l u e p r o p landing pages

148 landing pages 1. controlled experiment (mve) 2. tests a single, specific value prop 3. split test + iterate

149 traffic sources 1. adwords, bing, yahoo 2. social media channels 3. blasts 4. craigslist 5. print-outs

150 b2b traffic sources Warm Calling or ing Personal Network LinkedIn Research Agency Channels Niche Communities Industry Events & Conferences Meetups (Check RSVP list!) Mattermark.com LeadGenius.com

151 traffic sources landing page CTA form

152 layout

153 layout

154

155

156 productivity experiment 1 2.1% experiment 2 2.3% experiment 1 2.1% experiment 2 4.2%

157 product pitch other approaches

158 pa rt i c i pato ry d es i g n

159 decreasing discount

160 better alternative ta l k t o t h e c u s t o m e rs o f t h e existing market leader. what do they love or hate?

161 MVP STAGE III CONCIERGE fa k e o u t yo u r c u s t o m e rs

162 MVP STAGE III CONCIERGE scalable & repeatable?

163 concierge manually deliver the value prop as a service, to test whether the experience matches expectations.

164 concierge medium / high opportunity cost

165 collateral

166 single use case

167 real-life simulation #photovino or tweet a photo of your favorite wine and receive two bottles within two days

168 #photovino

169 #photovino

170 #photovino

171 #photovino photo twitter landing page

172 real-life simulation #bebop manage and remember your dating conquests using a text message based crm tool

173 bebop

174 bebop

175 bebop print ad text message fa k e c r m

176 online tools landing pages: unbounce, striking.ly, hubspot forms: wufoo, surveymonkey, formstack, google analytics: kissmetrics, mixpanel, RJMetrics mobile hacks: google voice, twilio MORE:

177 exercise 4 Create an Experiment

178 1. Define hypothesis 2. make a prediction 3. design experiment

179 exercise 5 Mock Interviews

180 innovation accounting

181 innovation accounting RUNWAY = # of experiment iterations we can conduct before running out of money

182 innovation accounting How do we track, measure, and communicate whether or not our startup is making progress over a particular span of time?

183 pirate metrics

184 innovation accounting Financial accounting has standard practices that are internationally recognized and practiced. Entrepreneurs need similar standard practices: Are we learning from customers quickly enough, and adapting the business to the market effectively enough, to grow a successful business with our limited resources?

185 innovation accounting Experiment Experiment Experiment Experiment Experiment Time (each circle represents 1 month)

186 cohort analysis Experiment Experiment Experiment Experiment Experiment Acquisition Activation 304 signups 301 signups 412 signups 457 signups 452 signups 15% 15% 15% 16% 19% Revenue

187 cohort analysis Experiment Experiment Experiment Experiment Experiment Acquisition Activation 304 signups 301 signups 412 signups 457 signups 452 signups 15% 15% 15% 16% 19% Revenue

188 cohort analysis Experiment Experiment Experiment Experiment Experiment Acquisition Activation 304 signups 301 signups 412 signups 457 signups 452 signups 15% 15% 15% 16% 19% Revenue

189 cohort analysis Experiment Experiment Experiment Experiment Experiment Acquisition Activation 304 signups 301 signups 412 signups 457 signups 452 signups 15% 15% 15% 16% 19% Revenue

190 thanks Ryan MacCarrigan