AngelCube Week 1

AC12 Overview
Overview, house-keeping, business models and customer
development. Adapted Steve Blank’s E245

Agenda
• Introductions.
• Program overview.
• Our expectations.
• Program objectives.
• Introduction to CustDev, Business Models & CustAcq.
• 5 x 5 minute exercises.
• Week one milestones.
• Week one housekeeping.
• Key reading for the program.

Mentors & Advisors
• VC’s / Entrepreneurs / and
SME experts e.g. Legal, UI/
UX etc.

• Their role is to help you
“get out of the building”

• Share contacts

• Offer real world
entrepreneurial advice

• Critical feedback

• Note: You should arrange
your schedule around them
not the other way round.

Weekly Schedule
• Monday’s 9am - 11am. Milestone session. Lessons learned.

• Tuesday 6-8pm - Mentor session’s *

• Wednesday 12-1pm - Weekly lunch.

• Thursday 6-8pm - Mentor session’s *

• Friday 9 - 11am - Weekly pitch practice.

• Friday 4-6pm - End of week drinks.

• Other sessions: Mentor speed-dating, adhoc sessions, ofﬁce hours.

Demo Day - Melbourne

July 10, 2012 (TBC)

Demo Day - Sydney

July 17th, 2012 (TBC)

Demo Day SV & US Trip

September 1st - 14th 2012
Optional 3 months at Startup House

Budgeting the $20,000
• Branding

• Trademarks

• Front-end design

• Brochures/materials

• Travel (domestic and international).

• Other (you tell us!)

• Make a rough budget - get it approved by us and (stick to it)

Survival
Nobody talks of entrepreneurship as survival, but that's exactly what
it is and what nurtures creative thinking - Anita Roddick, Founder, The Body Shop.

• Start charging as early in the • What are your other sources of
businesses lifecycle as you can. “after hours” cash ﬂow that
Pre-sales, bulk sales, 12 month contracts, require small investments of time?
selling waiting list space. Weekend work, teaching, consulting, web
development etc.
• Start learning how to raise
capital day #1 of the program. • Don’t fear being an enterprise
We will help you but start preparing sales or consulting company ﬁrst
yourself for investment right now. Try - this buys you time, experience and
raising $50k during the program. (C- deep customer understanding.You can
Note?) always productize your offering later.

• Look for leverage right now (3F’s, • Bootstrappers mentality. Never
Government grants, credit cards, loans buy what you can borrow, never borrow
etc). what you can beg for, never beg for what
you can steal ;)

Program goals
• Help you discover and validate your • Give you direct, honest and constructive
business model. feedback.

• Expand your existing network in the • Assist you work on the businesses
startup world. metrics, LTV, Cost of Acquisition, etc.

• Force you to test key assumptions the • Assist you develop marketing funnels
business is built on. (B2C) or sales/lead-gen strategy (B2B)

• Help you get traction (users, revenue and • Push you out of your comfort zone and
social proof) make you a more rounded entrepreneur.

• Help you improve your product and user • Improve your knowledge in a range of key
experience. startup areas, capital raising, marketing,
metrics, design, strategy, exit strategies
• Help you improve your branding, USP and
positioning. • Assist you raise further funding, during
and after the program.
• Help you build channel partners, affiliates,
key partners. • Give you confidence and skills to turn
your startup into a profitable business.

Our expectations of you
• That one of the founders spends a • That if you don’t have a product yet
minimum of 10-20 hours out of the you have a compelling mock-up
building and working on Customer or predesign that you can use to
Development. start building excitement.
• That you do whatever it takes to learn • That you strive to be the #1 brand in
from customers, understand the value your category via PR, marketing,
you could deliver, get their buy-in and audience building, social, content
lock in $$$ as early as possible. marketing, partnerships & getting your
brand noticed and talked about.
• That you document your
Mindshare.
customer development
journey, hypothesis’, tests and • That you don’t suck at email
learning every week (it is the best (hint: reply instantly to important
source of investor readiness you’ll ever people, customers and investors).
develop).
• That you treat each-other with
• That your branding, copywriting, respect, help each-other through good
landing pages or front-end and bad times, provide constructive
design look f#cking amazing. feedback to your peers and enjoy
the ride.

Give us plenty of constructive feedback you’re now founders of AngelCube too!

Be prepared for this

Paul Graham’s Startup Roller Coaster Seth Godin’s - The Dip

AngelCube by the numbers

• ~24 mentor sessions (2 per week).
• 13 milestone sessions (This is #1).
• X# of adhoc mentor sessions (usually last minute).
• 12 pitch practice sessions.
• 10-20 hours per week of Customer Development (biz founder)
• 10-20 hours per week of Agile Development (tech founder)
• 3 mentor speed-dating events.
• 1 hour per week blogging your learnings.

What AngelCube is about

• AngelCube is not just about mentor sessions.
• AngelCube is not just about “getting feedback”
• AngelCube is not just about learning to pitch.
• AngelCube is not just about making your product better.
AngelCube is really about the work you do
outside the building...
It’s the difference between a vision and a hallucination - Steve Blank

Six key area’s we focus on
• Going from idea or “a product” to a business.
– Business Model + Customer Development
– Hypotheses testing of the business model(s)
– Getting “out of the building”
– Execution. Product development/reﬁnement.

• Product/Market Fit.
• Positioning (Messaging, Branding & Mindshare)
• Economics (Acquisition, Activation, Retention, Referral)
• Growth (Marketing, PR, Partners, Momentum)
• Investor Readiness. (Pitching. Intro’s. Knowledge, etc)

Two types of Startups.
Before product market ﬁt.
& After product market ﬁt.

Marc Andreeseen, Founder Netscape & Andreeseen Horowitz Capital

What is Product/Market Fit?

The customer is willing to pay for the product.

The cost of acquiring the customer is less than
what they pay for the product. (LTV)

There’s sufﬁcient evidence indicating the market
is large enough to support the business.

Vlaskovits and Cooper, Entrepreneurs Guide to Customer Development

You can feel when product
market ﬁt is not happening

“The customers aren't quite getting value out of the
product, word of mouth isn't spreading, usage isn't
growing that fast, press reviews are kind of "blah", the
sales cycle takes too long, and lots of deals never close.”

http://cye.posterous.com/product-market-ﬁt-and-old-post-by-marc-andre

Fig 1. Entrepreneurs Guide to Customer Development.

Getting to PMF.
Customer Discovery.

Your team.

Fig 1A. Ash Mayura, Running Lean. 2010.

Problem solution team.

Biz co-founder Tech co-founder

Source: Eric Ries, Agile & Customer Development

Build the business around the customer
NOT the technology

Source: Service Design Model, 2011

But
Realize they’re hypotheses

Test the Riskiest
Assumption First! MVP

MVP #2

http://youtu.be/7QmCUDHpNzE

Interview tactics

Usually the riskiest assumption
is the value proposition!

DO CUSTOMERS WANT & NEED
THIS??? TEST.

Creating a hypothesis to test

Real Hypothesis are testable,
measurable and falsiﬁable.

Leaps of faith are not.

5x5 Minute Exercises
• Sketch out a draft of your business model canvas.
• Identify your riskiest assumption (one to test ﬁrst)
• Conceive a test or series of tests you will run this
week to validate or falsify this assumption (MVP).
• Develop the criteria to determine if your test has
passed or failed e.g. not a leap of faith test.
• List who you need to interview during the process
(user, end-user, decision maker etc).

Let’s talk about
pivoting

A pivot can be on the product, business
model, and engine of growth. Here’s 10.

Zoom-in pivot.
5.Business
1.Zoom-out pivot. architecture pivot.
2.Customer segment 6.Value capture pivot.
pivot.
7.Engine of growth
3.Customer need pivot.
pivot.
8.Channel pivot.
4.Platform pivot.
9.Technology pivot.

Eric Ries - 10 Ways Entrepreneurs Pivot a Lean Startup.

I recommend that every
startup have a regular
pivot or persevere
meeting.
Eric Ries, The Lean Startup 2011

Record interviews, notes, progress.

Marry customer and agile development.

Business co-founder. Tech co-founder.

9 Milestones to Growth
• Where’s the love - focus on passionate 1st users.
• Expose the core gratifying experience.
• Metrics.
• Start charging.
• Extreme customer support.
• Brand experience over awareness.
• Driving growth. (Dave McClure, AAARR)
• Business / process building.
• Patience / persistence / durability.

“Milestones to Startup Success”, Sean Ellis - Startup-Marketing.com 2009

AAARR Metrics

• Acquisition: users come from various channels.
• Activation: users enjoy 1st visit “Experience”
• Retention: users come back multiple times.
• Referall: users like product enough to refer.
• Revenue: users conduct monetization.
Dave McClure, Startup Metrics for Pirates

Dave McClure, Startup Metrics for Pirates

But AAARR is skewed to
B2C Products. I sell B2B!

But remember, the most
important marketing and
sales weapon. Psychology.

6 Key Principles of Persuasion

• Reciprocity
• Commitment and consistency
• Social proof
• Authority
• Liking
• Scarcity
Robert Cialdini, Inﬂuence, The Pyshcology of Persuasion.

Team Deliverables
- Sketch out your business model canvas.
- Read pages 38 - 149 of Running Lean, Ash Mayura
- Read Marc Andreeseen’s post on Product Market Fit (Hint: Google it).
- Identify your most critical / riskiest assumption.
- Develop a way to MVP (test) that assumption (slide deck, screenshots, diagram, brochure, landing
page, demo etc).
- Write your interview process including key insights.
- Conduct 10-20 real customer (or user) F2F interviews.
- Start a blog, journal, wiki or LeanLaunchLab to describe the key customer insights you’ve gained
during these interviews (more detail on Friday).
- Use agile tool like PivotalTracker to list, prioritise or icebox any product improvements based on
customer feedback and lessons learned from real customers.
- Follow Startup L. Jackson.

Present key insight from interviews back to the group in 12 minutes - Monday
You’ll be doing this each week. Mentors may attend some sessions.

Other stuff. Don’t ask for permission, ask for assistance.
Keep on building momentum and work harder than you ever have ;)

Housekeeping
Over the next two weeks.

Develop a loose 13 week plan that you and your co-founder will work toward.
- Delegate. We’ve given you a LOT to do. Who does what in your company? Work out the best way
to share & own responsibilities.
- Sketch a product plan, that can factor in customer insights.
- Spreadsheet a rough13 week budget and book a time with Adrian and Andrew for budget approval
and funds transfer.
- Start thinking about your “survival plan” based on slide 15.
- Ensure the company is formed (or process started).
- Book a time with Adrian to sign all legal documentation.
- Please join the AngelCube Yammer and introduce yourself.
- Set-up your AngelList proﬁle with existing brand and logo.

Networks we use.

Work / Q&A Social, Photo’s, LOLs Capital Raising

The week ahead.
• 10am tomorrow - Diesel Law’s UI/UX for Startups.

• 1pm tomorrow - Meet, greet & welcome to Inspire 9.

• 4-6pm Thursday - Scott Handsaker, Lean Canvas (detail).

• 9-10am Friday - Blogging the boardroom (AB)

• 7pm - Midnight - Friday welcome party (guests welcome)

• Ofﬁce hours - Legal (AS) Assumptions (AB) Product (NS)

Cust Dev Manifesto
A Startup Is a Temporary Organisation Designed to Search
for A Repeatable and Scalable Business Model

Pair Customer Development with Agile 9. Agree on Market Type – It Changes
Development Everything
1. Failure is an Integral Part of the Search for 10.Fast, Fearless Decision-Making, Cycle Time,
the Business Model Speed and Tempo
2. If You’re Afraid to Fail You’re Destined to 11.If it’s not About Passion,You’re Dead the
Do So Day You Opened your Doors
3. Iterations and Pivots are Driven by Insight 12.Startup Titles and Functions Are Very
4. Validate Your Hypotheses Different from a Company’s
with Experiments 13.Preserve Cash While Searching. After It’s
5. Success Begins with Buy-In from Investors Found, Spend
and Co-Founders 14.Communicate and Share Learning
6. No Business Plan Survives First Contact 15.Startups Demand Comfort with Chaos and
with Customers Uncertainty
7. Not All Startups Are Alike 16.There are no facts in the building, so get
8. Startup Metrics are Different from Existing out of the building.
Companies

AngelCube Week 1

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