Lean Startup Masterclass
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This document provides an overview of lean startup concepts and methods. It discusses the lean startup movement which aims to minimize wasted resources through validated learning. The key aspects covered include the lean canvas for outlining a business model, conducting problem and solution interviews to validate hypotheses, and building minimum viable products to quickly iterate through the build-measure-learn loop to achieve product-market fit. The overall goal is to apply a scientific, experimental approach to developing startups through continuous learning and pivoting if needed based on customer feedback.
Lean Startup Masterclass
- 1. LEAN STARTUP The whys, hows and whats of lean startup
- 2. Present Founder @ peerex.co Evernote Certified Consultant Product Strategist Past Product Manager @ Eunoia Entrepreneur-in-Residence @ JFDI Chief Operating Officer @ T.Ware 2 failed businesses Huang Chi-Kai (just call me Kai) huang.chikai@gmail.com @huangchikai linkedin.com/in/huangchikai
- 3. Getting to know you... 1. Who is running a startup? 2. Who is thinking about running a startup? 3. Who is thinking about working for a startup? 4. Who is thinking about working for a big company? 5. How do you evaluate if a startup idea is worth pursuing?
- 4. Agenda 1. Innovation Patterns & Theories 2. Lean Startup Concept 3. Lean Canvas 4. Lean Startup Roadmap
- 10. BILL GROSS: THE SINGLE BIGGEST REASON WHY STARTUPS SUCCEED Video Link
- 12. Early adopters who live in the future Technology Insight Market Insight
- 14. THE LEAN STARTUP MOVEMENT
- 16. In Lean Manufacturing, a stack of car doors that never get placed onto an automobile is waste. In Lean Software, a stack of requirement documents or .PSD files that never make it into a product is waste. In Lean Startup, a stack of features you’ve built that never get used by a customer is waste. Link
- 17. A startup is a temporary organization used to search for a repeatable and scalable business model Steve Blank
- 18. LEAN STARTUP Figure out what’s working before running out of resources
- 19. LEAN STARTUP = VALIDATED LEARNING RESOURCE
- 20. THINK LIKE A “BUSINESS SCIENTIST” MINIMISE LOOP TIME EXPERIMENT HYPOTHESIS
- 21. LEARN LIKE A CHILD
- 22. There’s no failure. Only feedback.
- 26. INNOVATION RISKSMarketRisk-Shoulditbedone? Technology Risk - Could it be done?LOW HIGH HIGH HIGH
- 27. MarketRisk-Shoulditbedone? Technology Risk - Could it be done?LOW HIGH HIGH VISION DRIVEN INNOVATION
- 28. MarketRisk-Shoulditbedone? Technology Risk - Could it be done?LOW HIGH HIGH DISCOVERY DRIVEN INNOVATION
- 29. LEAN CANVAS
- 31. LEAN CANVAS = LEAN STARTUP + BIZ MODEL CANVAS
- 32. WHY LEAN CANVAS? 1. Writing and updating biz plans takes too much time 2. Hard to get feedback because nobody wants to read biz plans 3. Key points for pitch deck or biz plans 4. Provides focus
- 34. CUSTOMER SEGMENTS ● Whose problem are we solving for? ● Customers pay for the product and users just use
- 35. EARLY ADOPTERS ● A specific subset of a targeted customer segment that can be monopolised quickly ● Develop a persona
- 38. PROBLEM ● What’s preventing the customer from fulfilling their needs? ● Be specific to this customer segment ● Include context/situation ● Ask why a few times
- 39. EXISTING ALTERNATIVES ● How do customer solve these problems today? ● Existing behaviours ● Incumbents and competitors
- 42. UNIQUE VALUE PROPOSITION (UVP) ● Why is it important to solve these problems? ● What’s the end goal benefit for the customers? ● Marketing headline
- 43. HIGH-LEVEL CONCEPT ● How your product feels like? ● The big vision ● Easy for people to talk about
- 45. SOLUTION ● Corresponds to problem hypothesis ● How is the problem solved in order to deliver the UVP?
- 47. CHANNELS ● Which distribution channel to reach customers? ● Online? Offline? Outbound? Inbound?
- 48. Poor distribution, not product, is the number one cause of failure Peter Thiel
- 50. DISTRIBUTION CONTINUUM CLV: $3 $300 $3,000 $30,000 $30 million $1,000
- 51. FINDING THE RIGHT CHANNEL ● 19 channels ● Channel bias ● Channel saturation ● 50% resource on product dev. 50% resource on channel dev.
- 53. REVENUE STREAMS ● Start with one simple pricing model ● Explain customer lifetime value (CLV)
- 54. Link
- 56. COST STRUCTURE ● Focus on customer acquisition cost (CAC) ● Fixed costs and other variable costs
- 58. KEY METRICS ● Growth rate ○ 5 to 10% week on week growth ● CLV/CAC ratio ○ 2 to 3 ● Payback period ○ 6 to 9 months UNIT ECONOMICS
- 59. Management accounting for corporates Unit economics for startups
- 61. UNFAIR ADVANTAGE ● Domain expertise? ● Product defensibility? ○ Core tech, network effects, stickiness… ● Why incumbents can’t do the same? ● Branding?
- 62. DEVELOPING UNFAIR ADVANTAGE ● Book: Zero to One ● Video: What type of company makes a VC excited?
- 65. 3 STAGES OF A STARTUP STAGE 1 PROBLEM/SOLUTION FIT STAGE 2 PRODUCT/MARKET FIT STAGE 3 SCALE
- 66. STAGE 1 Do I have a problem worth solving? STAGE 1 PROBLEM/SOLUTION FIT STAGE 2 PRODUCT/MARKET FIT STAGE 3 SCALE
- 67. STAGE 2 Have I built something people want? STAGE 1 PROBLEM/SOLUTION FIT STAGE 2 PRODUCT/MARKET FIT STAGE 3 SCALE
- 68. STAGE 3 How do I accelerate growth? STAGE 1 PROBLEM/SOLUTION FIT STAGE 2 PRODUCT/MARKET FIT STAGE 3 SCALE
- 69. 3 STAGES OF A STARTUP STAGE 1 PROBLEM/SOLUTION FIT STAGE 2 PRODUCT/MARKET FIT STAGE 3 SCALE FOCUS VALIDATED LEARNING & PIVOTS GROWTH & OPTIMIZATIONS
- 70. 3 STAGES OF A STARTUP STAGE 1 PROBLEM/SOLUTION FIT STAGE 2 PRODUCT/MARKET FIT STAGE 3 SCALE SEED FUNDING SERIES A FUNDING
- 71. ACHIEVING PRODUCT/MARKET FIT STAGE 1 PROBLEM/SOLUTION FIT STAGE 2 PRODUCT/MARKET FIT UNDERSTAND PROBLEM DEFINE SOLUTION VALIDATE QUALITATIVELY VERIFY QUANTITATIVELY
- 72. UNDERSTAND PROBLEM DEFINE SOLUTION VALIDATE QUALITATIVELY VERIFY QUANTITATIVELY Lean canvas sections to be validated ● Problem - Do we have a problem worth solving? ● Customer Segment - Who has the pain? ● Existing Alternatives - How is the problem being solved now? Experiments ● Problem interviews
- 73. UNDERSTAND PROBLEM DEFINE SOLUTION VALIDATE QUALITATIVELY VERIFY QUANTITATIVELY Lean canvas sections to be validated ● Solution - What’s the smallest possible solution? ● Early Adopter - Who really want your product now? ● Revenue Stream - How do customer react to pricing? Experiments ● Solution interviews
- 74. UNDERSTAND PROBLEM DEFINE SOLUTION VALIDATE QUALITATIVELY VERIFY QUANTITATIVELY Lean canvas sections to be validated ● UVP - Is this what customer want? ● Channel - What are the outbound channels? ● Revenue Stream - Do customers pay? Experiments ● Minimum viable product (MVP) testing
- 75. UNDERSTAND PROBLEM DEFINE SOLUTION VALIDATE QUALITATIVELY VERIFY QUANTITATIVELY Lean canvas sections to be validated ● Key Metrics - Can we meet our targets? ● Channels - What are the inbound channels? ● Cost Structure - Is our business model sustainable? Experiments ● Full product launch ● Split testing (UI/UX, features, pricing…) ● Channel testing
- 77. LINK
- 79. UNDERSTAND PROBLEM DEFINE SOLUTION VALIDATE QUALITATIVELY VERIFY QUANTITATIVELY Lean canvas sections to be validated ● Problem - Do we have a problem worth solving? ● Customer Segment - Who has the pain? ● Existing Alternatives - How is the problem being solved now? Experiments ● Problem interviews
- 80. PROBLEM INTERVIEW STRUCTURE 1. Profile Demographics and psychographics for developing persona of early adopter 2. Validate Lean Canvas: Problem, Existing Alternatives, Customer Segment 3. Ask Test commitment level (follow up, referrals)
- 81. GROUND RULES & TIPS Video Link
- 82. DEFINE SOLUTION
- 83. UNDERSTAND PROBLEM DEFINE SOLUTION VALIDATE QUALITATIVELY VERIFY QUANTITATIVELY Lean canvas sections to be validated ● Solution - What’s the smallest possible solution? ● Early Adopter - Who really want your product now? ● Revenue Stream - How do customer react to pricing? Experiments ● Solution interviews
- 84. SOLUTION INTERVIEW STRUCTURE 1. Profile Skip this for old prospects from earlier problem interview. 2. Qualify Confirm if problem is true for the prospect. If untrue, switch to problem interview. 3. Demo Show how your solution can deliver the UVP by solving the prospects problem. Ask for feedback at the end of the demo. 4. Test Pricing State pricing and observe reaction. 5. Ask Test commitment (follow up, pre-order, letter of intent, referrals)
- 85. DEMO TYPES ● Verbal ● Hand drawn ● Screenshots ● Video ● Clickable mockups
- 86. DEMO TOOLS ● Printable/Sketchable Templates ● POP - Quick prototyping for mobile apps ● Keynotopia - Templates for Keynote/Powerpoint ● FluidUI - Clickable mockups
- 88. UNDERSTAND PROBLEM DEFINE SOLUTION VALIDATE QUALITATIVELY VERIFY QUANTITATIVELY Lean canvas sections to be validated ● UVP - Is this what customer want? ● Channel - What are the outbound channels? ● Revenue Stream - Do customers pay? Experiments ● Minimum viable product (MVP) testing
- 89. START NOW. NO FUNDING NEEDED. Video Link
- 90. MVP The smallest thing you can build that lets you quickly make it around the build/measure/learn loop
- 93. Link
Editor's Notes
- #7: Do you agree? If yes, where is the future?
- #8: Is it here?
- #9: The answer lies in this joke. If people laugh, it’s the probably the truth.
- #10: Distribution of the “future” E-signature vs fax machine
- #11: Anybody wants to make a guess?
- #12: Would this be possible 5 years ago?
- #13: Existence of early adopter is the evidence of good timing
- #16: Time, money, engineering hours. Misconception to think that lean means fast and cheap.
- #21: Treat all ideas as hypotheses to be validated
- #22: Learn by doing, Learn through concrete experience. As a startup founder you need to learn about your business as fast as a child learning about the world.
- #25: Use pilot as example
- #26: Approach depends on your current situation
- #29: Lean startup is discovery driven innovation
- #31: A way to organize hypotheses in one page
- #32: Biz model canvas by Alex Osterwalder is more suitable for big companies. I try to be a bit more specific than the running lean book.
- #33: Serves as the backbone for pitch deck and business plans
- #37: A way to organize hypotheses in one page
- #39: Good problem statements comes from asking the right questions
- #41: Very often existing behaviour is the biggest competitor
- #44: Uber for laundry, airbnb for pets, dropbox for physical items
- #47: This is very often overlooked!
- #50: For a product priced around $1,000, there might be no good distribution channel to reach the small businesses that might buy it. Even if you have a clear value proposition, how do you get people to hear it? The product needs a personal sales effort, but at that price point, you simply don’t have the resources to send an actual person to talk to every prospective customer. This is why so many small and medium- sized businesses don’t use tools that bigger firms take for granted. It’s not that small business proprietors are unusually backward or that good tools don’t exist: distribution is the hidden bottleneck.
- #51: For a product priced around $1,000, there might be no good distribution channel to reach the small businesses that might buy it. Even if you have a clear value proposition, how do you get people to hear it? The product needs a personal sales effort, but at that price point, you simply don’t have the resources to send an actual person to talk to every prospective customer. This is why so many small and medium- sized businesses don’t use tools that bigger firms take for granted. It’s not that small business proprietors are unusually backward or that good tools don’t exist: distribution is the hidden bottleneck.
- #57: CAC determines the sustainability of the business. CAC is the most uncertain cost.
- #71: Timeframe in not to scale!
- #72: P/M fit is the 1st significant milestone Full product launch usually happens after “validate qualitatively”
- #77: Processes for customer engagement and product delivery Lean startup is about having the discipline to know where you are on the roadmap and when to move to the next stage You can start this process even if you are non-tech.
- #82: http://customerdevlabs.com/2013/11/05/how-i-interview-customers/
- #88: It’s hard to be prescriptive from here onwards. It all depends on what you are trying build.