The Basics of Lean Startup
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1 Learn Build Measure The Basics of Lean Startup Todd Strother, PhD UW-Extension: Business and Entrepreneurship The Center for Technology Commercialization
2 Introductions Developer and Program manager of SBIR Advance, and teaching team member for Ideadvance Assisted over 40 companies through Lean Startup learning Two grants: $25K & $50K grants Faculty, staff, student treps (excludes UW-Madison) Licensed tech from WiSys or UWMRF Up to $75K in grants Match current Stage 1 and/or Stage 2 SBIR/STTR funding
3 Goals and Objectves Learn what Lean Startup is, and isn t Show where Lean Startup is being used Compare Lean Startup to conventional practices Become familiar with Business Model Canvas tool Recognize Minimal Viable Products and their value
4 What is Lean Startup? (have you heard these?) Well, there s only two of us, A method primarily for software startups. so we are running pretty Lean Lean Startup is the business model canvas. Lean Startup focuses on getting companies to fail fast. You can learn Lean Startup by reading Steve Blank and Eric Ries books or watching videos Yes, I ve worked in Lean manufacturing and have Lean Six Sigma Certification
5 What is Lean Startup? Process to identify, prioritize and test your most critical business model assumptions to reduce risk.
6 What is Lean Startup? Process to identify, prioritize and test your most critical business model assumptions to reduce risk. Process ideal for innovative concepts where the market opportunity (product/market fit) are unknown or uncertain
7 Why Lean Startup Data-driven approach to entrepreneurship Way to visualize and organize activities To easily learn Make changes quickly Scalable and effective Customizable
8 The heart of Lean Startup-- Application of the Scientific Method to Business Set up and RECOGNIZE your hypotheses Test them By collecting Data INTERVIEWS!! Revisit/change/pivot to new hypothesis
9 Goals and Objectves Learn what Lean Startup is, and isn t Show where Lean Startup is being used Compare Lean Startup to conventional practices Become familiar with Business Model Canvas tool Recognize Minimal Viable Products and their value
10 Lean Startup is Taking Hold Innovative Companies Colleges and Universities Established Companies
11 Lean Startup is Taking Hold Federal Government NSF NIH NASA Dept of Energy
12 Lean Startup is Taking Hold
13 Goals and Objectves Learn what Lean Startup is, and isn t Show where Lean Startup is being used Compare Lean Startup to conventional practices Become familiar with Business Model Canvas tool Recognize Minimal Viable Products and their value
14 What people want their business to do Idea Research Prototype Product
15 What really happens IDEA This is a not a startup path BUSINESS This is a startup path IDEA BUSINESS Failure
16 Forget about Market Track Parallel Market Track Idea Research Prototype Product Customer Research PM Fit Validation
17 What we hope becomes reality
18 The Many Things to Learn What is my target market? How big is my target market? Do I know how this market works? Do I understand the market barriers? Do I truly understand what my customer needs? How much better than my competition do I have to be to attract customers? What are the customer acquisition costs? What are the channels? What are my get, keep, grow customer strategies? Do I know all the costs? Do I know that customers want to buy what I have to offer? Do I know how much they will really pay? Will that pricing model work for my business model? What key resources do I need to have? Who are my key partners? Do I know my key activities? Who do I need to have on my team?
19 No Business Plan survives first contact with customers You were so preoccupied with whether you could, that you didn t stop to think if you should
20 The Wrong Process & Theory Mature Business Scalable Startup *high growth potential
21 Wrong way to think of a Start-Up Why?: Because that s what a real Business has Patent Agent Chief Scientific Officer CFO We had: No product No Sales No Customers And No Idea scientist Production engineer CEO Sales Manager
22 More startups fail from a lack of customers than from a failure of product development
23 Lean Startup Tests Business Hypotheses Insight Hypothesis Design Experiment Hypotheses are not just ideas requiring a plan are educated guesses Require experimentation data validate or invalidate Test
24 Goals and Objectves Learn what Lean Startup is, and isn t Show where Lean Startup is being used Compare Lean Startup to conventional practices Become familiar with Business Model Canvas tool Recognize Minimal Viable Products and their value
25 Business Model Canvas- Identify Assumptions Guess Guess Guess Guess Guess Business Model Canvas as the ScorecardGuess Guess Guess Guess
26 Where to Focus- Customer Discovery Does the customer have REAL pain? Who really is your customer? Requires shift from thinking about your idea to focusing on value customers will pay for
27
28 First Customers To Identify You want to identify the Day One people who are ready to buy or use your product. Steve Blank s Earlyvangelist Definition
29 Who Should You Know? Customers have many roles User Influencer Recommender Decision Maker Economic Buyer Saboteur Need to understand archetypes for each. This means understanding how they interact to buy. Can you make an organizational chart, influence map or sales road map?
30 BMC 3 VALIDATION Grypmat
31 Lean Startup is a Contact Sport Learn: Ask about the customer s life What are their pain points? Don t talk about the product or the business idea Start The process by listening- not Pitching! Confirm: Get commitments, not opinions (i.e. commit time, reputation, money)
32 Lean Startup is a Contact Sport
33 Goals and Objectves Learn what Lean Startup is, and isn t Show where Lean Startup is being used Compare Lean Startup to conventional practices Become familiar with Business Model Canvas tool Recognize Minimal Viable Products and their value
34 Minimum Viable Product (MVP) Testing Key Assumptions Laura Klein, VP of Product at Hint Health, puts it bluntly (and effectively). An MVP is not an excuse for a crappy product. MVPs are all about learning, and you don t learn anything from a crappy product except that people don t like crappy products.
35 Website to gauge interest in products neuron cardio blood hepatic MVP tracks where the customers click. Do they click on Neurons, Cardio, Blood, Hepatic? This will provide quantitative information on what cell type is of interest. This will lead us to see what product line is potentially most important. Text about products and services: We provide kits to directly convert progenitor cells into your target cells, and partially differentiated cell lines that you can take to completion. Click on the cell products of interest MVP also tracks if customers are interested in Kits or Cells. Which button they click on is a data point. This will lead us to see what they want more: the Kit products to do the entire work, or the cell line. neuron Technical data References and published work: Marketing blather Bulleted list of products and uses. Progenitor cells do your own thing Partially diff cell Takes a load of work off of you Kits and supplies Do the entire work directly Kits Cells 4
36 MVP examples 1. Explainer Video (Dropbox) 2. Campaigns 3. Landing Page(s) 4. Sell it before you build it (crowdfunding validation) 5. Wizard of Oz (Zappos)
37 Questions? Cheating on customer discovery interviews is like cheating in your parachute packing class- Steve Blank
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