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Dynamis My Failed Startup Lessons Lean Startup Introduction
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Lean StartupRyan D. Hatch
February 2014
rdkhatch
#LeanStartup
About Ryan Co-Founder, Dynamis
Lean & Agile Coach
Recovering Developer
Helping teams accelerate business growth
How Not to Waste Your LifeProvide Value to Others
Higher Rates of Startup Success.
Story Time
Gold Ore Mining
Meet Jim
Story Time
Company A
JimCompany
B
Gold is invisible.
only1 oz gold
63 tons of rock. Long, expensive process.
Challenge: Must find rocks with highest value.
Jim Burnellholding his X-ray gun
Fast Feedback. Before Investing.
Small teams can beat big teams
Use Fast-feedback Innovation – To play by a new set of rules.
My Startup - Dynamis
My Startup Experience After several startup failures, 4 co-founders
Started in 2009 - Help Employers Optimize Health Insurance Benefits
Early Success & Struggles. Had 5 early adopter customers.
Funded by Golden Angels, Spring 2012. CEO, CTO duo.
Product Owner – v2 Replatform – MVP for new customers
Customer Problem & Solution Interviews. Lost Sales Interviews.
Small, High-Impact Team
Focused on Return on Investment
Cash Burn Rate & Sales Transparency
Customer Success kicking into gear
“This will double my business in 1 year.”
Customer success being featured at tradeshows
Mockups
Customer HackActual Application
How well would thissolve your problem?
Customer Types in Product Lifecycle
Crossing the Chasm, Geoffrey Moore
CustomerGoal
Why Lean Startup?Rockets, Risks, and Hockeysticks
1.) Team builds an awesome product idea
2.) Launch like Rockets & Hockeysticks
3.) Dominate
Reality check. 90% of New Concepts Fail.
Don’t Make TheseSame MistakesStartup Failures to Learn From
Myth: Build it. And they will come.
TruthNo business survives first contact with customers.
You build it, and no one cares.
Customers are often biggest risk. Not Technology.
Product development is a discovery process.
Sell before you Build.
No Proxies for Paying Customers Successful people who believe in &
mentor you Networking with other Entrepreneurs Board of Director at National Realtor
Association Board of Advisors at Wyndham Hotels Partnering with 2x PhD’s Building Talented Teams & Working
Together Creating New Products Free Trials Beautiful marketing & UI
College Interns Exceptional New Technology Multiple Patent Applications Business Plan Multiple Pilot Programs Busiest booth at trade shows Featured Articles in National
magazines Friends with top industry leaders Awards in National publications
False Shadow Beliefs - Unspoken
Reality Distortion Field
“We know what customers want”
“We can accurately predict the future”
“Executing the plan is progress”
Approaches toNew Product Development
Uncertainty grows into Future
Long-term planning is… let’s just call it Guessing
Solution: KnownBusiness Model: Known
Traditional New Products - Waterfall
Business PlanRaise Capital
RequirementsDesignDevelopmentTesting
Sales
Solution: UnknownBusiness Model: Unknown
?Agile Product Development
Solution: UnknownBusiness Model: Unknown
Customer Development Agile Product Development
Lean Startup
What is a Startup? Temporary organization
Searching for a Repeatable, Scalable Business Model
Environment of uncertainty
Not a small version of a large company
No VP of xyz
No Sales Department
You’re not building a Product
You’re building a Business.
Key Benefits of Lean Startup Process for startups to follow
Learn very fast what people will buy & use.
Start selling as soon as possible.
Eliminates Risk Early.
Uses data to seek truth & avoid opinions / politics
Get more Swings at bat.
Minimizes cash burn rate.
Scales at the right time.
Much higher rates of success.
Customer Development
Customer Sales
& Usage
CustomerInput
Get to Customer Sales as fast as possible
Living Document
No Facts are inside your buildingThe Answers are outside.
Run Science Experiments - To Learn as Fast as possible
ramlijohn.com
Don’t Delay Failure.Test your Assumptions.
Get to Business Failure Fast.And Learn what to Fix.
Ok, I get it. I want some.Most people just want to sound cool.
Tired of Buzz words & Fluffy pictures?
Stop using the Buzz words.
Start applying Lean Startup.
Race to Learning
$
Time (Runway)
Cash
Burn Rate
Breakeven Burndown Running out of Cash & Time
Death
Profit
Sales
* plus variable costs
$
Time (Runway)
Cash
Burn Rate
Race to Scalable Business Model
Death
Scalable Business ModelValidated Learning
$
Time (Runway)
CashBurn Rate
Multiple Funding Rounds
Death
Profit
* plus variable costs
Cash
Sales
ScalableBusiness
Model
Have I found customers with a problem worth solving?
Are customers committed to my proposed solution?
Have I developed a Scalable Business Model?
Let’s throw money at this puppy
Roadmap
custdevframework.com
High Value Problem
Have I found customers
with a problem worth solving?
This is not about You. Get to know your Customers.
Discover Problems: Voice of the Customer What are your goals for the next year?
What could make the biggest impact on accomplishing those goals?
What are the barriers you are encountering?
How are you solving today?
Customer GoalsBarriers / Problems
Ecosystem of Target Customer
Understanding the customerAllowed 3X the Price!
Problem Interviews Everyone is Lying to you - including your Mom!
The Mom Test = Would your mom tell you the truth?
Never talk about your solution ideas.
Ask specifics about the past.
Prioritize: Rank this problem more important / less important
What would a solution allow you to achieve? What impact value to business?
Have you tried to solve in the past? If so, How?
Was there a budget set?
Creative Problem Interviews
Fake Ad
Gated Outcomes 12 Customers confirmed Problem
Ranked Problem as MUST HAVE
Market is large & accessible enough.
Solution Commitment
What is the minimum proposed solution customers will commit to?
Solution Interviews1. Problem Confirmation
2. Usage Scenarios = Feature Validation
3. Demo - Low Fidelity MVP
4. How well would your problem be solved with this solution?
5. Pricing Never ask what people will pay!
6. Ask for Commitment!
Event:Question:Player:Action:
When asleep at nightWould you & your family feel more safeIf a deviceMonitored your home for carbon monoxide gas and woke you up in case of an emergency?
Low-Fidelity MVP Ad words + Landing Page MVP
Video MVP
Clickable Mockups MVP
App demo MVP
Wizard of Oz MVP
Concierge MVP
No code MVP
Pre-orders, Capture Commitments!
Start Removing Features!
Gated Outcomes Quantified Problem Value to Buyer
Minimum Solution will solve Problem
Validated Pricing
5 Early Adopters committing to pay for it
Letters of Intent…. Pre-sales are even better!
Am I ready to COMMIT to making this go?
Scalable Solution
Can I mold this into
a Scalable Business Model?
Metrics that Matter
Continuous Delivery
source: CollabNet
Development Production
High-Fidelity MVP Silent Launch
Split A/B Tests
Fake Door / Mock Features
Sales & Marketing Positioning
All aspects of Business Model
Innovation Accounting Flow Metrics
# of Customer Interviews
# of Hypotheses Tested
Pivot, Persevere, or Reboot?
The Point
Instant Messaging Plug-in
Gated Outcomes Paying customers (100+)
Sales Roadmap
Scalable Business Model
Revenue per customerexceedsCustomer acquisition cost
Do This Tomorrow
Do this Tomorrow
1. Lean Canvas
2. Rank Highest-Risk Assumptions
3. Identify fastest test possible.
Launch Weekend
Scalable Business
Test for Value. Then Execute.
Lean StartupRyan D. Hatch
February 2014
rdkhatch
#LeanStartup
Myths ofProduct Development
Myth: We just need to hit Scale
TruthTraffic & Hits are not a business.
Premature scaling is the #1 cause of startup failure.
Spending money faster cannot fix a business model.
Product must be fit to Customer before scaling.
Myth: It’s all about Execution
TruthAchieving Failure =
Successfully executing a flawed plan.
Startups don’t know enough to just execute.
Myth: I must be the Hero
TruthShare your struggles.
Transparency sets you free from the hero burden
Builds Trust
Team effort – Let’s solve this together.
Be fair to employees & their families.
Lean StartupRyan D. Hatch
February 2014
rdkhatch
#LeanStartup
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