intro to lean startup

Intro to Lean StartupIsaac Souweine

Head of Product @ Frank & Oak

Presented at the Oct., 2014

I. What is a startup?

What is a startup?

“A startup is an organization formed to search for a repeatable and scalable business model.”

- Steve Blank

Source: http://steveblank.com/2010/01/25/whats-a-startup-first-principles/

Let’s unpack that definition

A startup is an organization formed to search for a repeatable and scalable business model.

-Steve Blank

Source: http://steveblank.com/2010/01/25/whats-a-startup-first-principles/

So what is not a startup?

● A small business is not a startup● A large company is not a startup● Non-profits and govts are not startups

So what is not a startup?

● A small business is not a startup● A large company is not a startup● Non profits and govts are not startups● But all of these organizations can

learn from startups!

Why should you care about startups?

● You might want to start one!● You might want to work for one● You might need to engage with them● You can definitely learn from them

What can you learn from startups?

● How to deal with uncertainty● How to work with limited resources● How to create something genuinely new

II. What is a lean startup?

What is a lean startup?

"Lean Startup" is a system for developing a business or product in the most efficient way possible to reduce the risk of failure.”

Source: http://leanstartup.pbworks.com/w/page/65946049/Intro%20to%20Lean%20Startup

Let’s unpack that definition

● Startups are extremely risky● Lean startup is not about removing risk, it

is about managing risk ● Lean startups manage risk by linking

“investment” (quantum of risk) to validation (risk reduction)

Where does lean startup come from?

Where does it really come from?

● Lean manufacturing (Toyota) ● Agile development (Many folks)● Innovation theory (C. Christensen)● Customer development theory (S. Blank)

What is lean startup responding to?

NASDAQ 2000 - 2002PETS.COM

How is lean startup different?

● Engage with customers immediately● Launch fast and iterate● Set clear milestones for “investment”● Change direction as needed● Treat every aspect of the startup as a

hypothesis that needs to be proven

III. How do lean startups operate?

Lean Canvas

Lean Canvas

Every cell in the canvas is a hypothesis that is waiting to be proven.

Build - Measure - Learn

Source: http://www.400minutes.com/build-measure-learn-spiral/

● Build something● Measure results● Learn something● Rinse and repeat

Customer Development

● Formal technique for engaging with customers prior to product development

● Generally starts with interviews (problem or solution) cf Steve Blank

● Can also include various online tests and experiments before building a product

Customer Development

Customer Development

Customer Development

Source: http://blog.bufferapp.com/idea-to-paying-customers-in-7-weeks-how-we-did-it

Customer Development

Problem/Solution Fit

● The output of a successful customer development cycle

● Confirmation of:○ a well defined customer segment○ a real problem that the customer has○ a plausible solution to that problem

Problem/Solution Fit

Problem/Solution Fit

Source: http://blog.bufferapp.com/idea-to-paying-customers-in-7-weeks-how-we-did-it

Minimum Viable Product

“The smallest possible version of your product that delivers customer value.”

-Ash Maurya

Minimum Viable Product

Minimum Viable Product

Minimum Viable Product

Minimum Viable Product

Source: https://www.udemy.com/lean-startup-sxsw-2012-videos-and-presentations/#/lecture/74035

Pivoting

● Orderly response to “failure”● Product pivots - zoom in, out● Customer pivots - zoom in, out, switch● Other pivots - channel, platform etc.● The smaller/faster the pivot the better● The bigger the pivot, the more painful

Pivoting

Pivoting

Pivoting

Zoom In Pivot

Pivoting

Problem Pivot

Product/Market Fit

● The only thing that matters● Roughly corresponds to confirmation of a

scalable business model● Does not correspond to profitability● Lots of argument about how to define it ● Will trigger funding for scale/efficiency

Product/Market Fit

Product/Market Fit

A/B Testing

● Long time marketing technique embraced by lean startups

● More about incremental improvement● Becomes extremely relevant after

product/market fit

A/B Testing

A/B Testing

IV. What do lean startups believe?

Lean Startup beat “fat” startups

“Fat” Startups Lean Startups

Pre launch Stealth mode Landing page

Product Fully featured MVP

Initial Investment Large Small

Risk Super high Moderate

Note - that said, sometimes fat is the way to go

Startups are not like big companies, so they should not act like them

Big Company Startup

Customer Knows its customer Not sure about its customer

Product Mature product Immature product

Innovation Incremental Disruptive

Learning speed Slow Fast

Startups are learning organizations

● A startup is a series of hypothesis● The goal of the startup is to move from

hypothesis to fact● The customer is the only source of facts● The measure of an early stage startup is

the speed at which it produces facts

isouweine [at] gmail@sonofsarah