A lean investor tells you why to love the problem and not the solution - Fredi Schmidli @ Lean Startup Bern

Fredi SchmidliBern, 12. Januar, 2017

A Lean Investor tells you, why to love the Problem and not the Solution

Lean Startup BernMeetup

fredi@pragmatic-‐solutions.ch

http://www.slideshare.net/pragmaticsolutions

Find this presentation tomorrow on slideshare

2fredi@pragmatic-‐solutions.ch12.01.2017

Fredi Schmidli

• Economist and BA• Management Teams in various functions• Entrepreneur• Business Angel and Boardmember: www.startangels.ch• Partner at pragmatic solutions• Community Builder: meetup.com/Lean-‐startup-‐Zurich/


THE LEAN INVESTOR:MAKE LOTS OF LITTLE BETS. EXPECT MOST TOFAIL.

Dave Mc Clure @http://500.co


Goal: To improve the success rate

Source: Ash Maurya «Running Lean»

• Develop product in half the time and at half the cost (GE)

• Reduce failure: “wrong” product and “premature” scaling


Lean Innovation Framework


Problem Solution Fit => ValueProblem Solution FitYou validated with MVP and prospects that a specific solution will solve a known problem to such a degree that customer will buy it.

Brant Cooper

Value assumption – test whether a product or service really delivers value to specific customers once using it.

ScaleProduct Market

fit

Problem Solution

fit

Customer Discovery

Customer Validation

Customer Creation

Is the identified problem real? Will the target customer pay? Can the problem be solved?


From Idea to Problem/Solution Fit

8Source: Ash Maurya «Running Lean»

fredi@pragmatic-‐solutions.ch12.01.2017

Key Principle

Get out of the building and 1 2 3 4 5 6 7 8 9


Lean Canvas (by Ash Maurya / adapted from Osterwalder)


Why Lean Innovation?

See: http://practicetrumpstheory.com/2012/02/why-‐lean-‐canvas/


The 3 Phases of Customer Development

12Source: Ash Maurya, Scaling Lean

What happens here?


Source: Ash Maurya «Running Lean» Workshop, 2015




Persona Development & Segmentation

understand the “whys” by looking at the customers behaviors

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FactsFactual information about your target customer

PainState the problem you believe your target customers have, that your solutions solves

BehaviorExisting behavior they exhibit now, because they don’t have your solution

GoalsWhat goals are they trying to accomplish with their behavior, that your solution will do better

See also: http://de.slideshare.net/LeanStartupMachinefredi@pragmatic-‐solutions.ch12.01.2017

What and why Early Adopters?

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2.5% 13.5% 34% 34% 16%




How to uncover problems

5 Why root cause analysisà “Why is this a problem?”

“Job to be done” concept, Clayton Christensen (JTBD)• main job & related Job• Functional & emotional aspects• Personal & social dimension


19fredi@pragmatic-‐solutions.ch12.01.2017Source: Ash Maurya «Running Lean» Workshop, 2015

BML Feedback loop

Design experiment

Proposal, Pretotype,, MVP …Results

Analyse results:persevere, pivotor quit?

weeks not years

Assumption/Hypothesis

Run experiment

20Source: Eric Ries «The Lean Startup»


Types of experiments

4) Early version with minimal feature set that can be “sold” to early adopters

1) Proposal: a document describing the solution

3) Fake demo of any kind

2) Smoke Test: Landing Page to test interest

MVP

Pretotype


• Welcome: Set the scene (2min)• Interviewees demographics-‐target customer? (2min)• Describe problem (your hypothesis) (2min)• Customers must rank top three problems (4min)• Listen to their world view (15min)• Wrap up. Sum up feedback to confirm understanding (2min)• Get permission to follow up. Get referrals (2min)

Problem Interview

Ash Maurya

• Document results

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Goal: Have I identified a problem worth solving?










Types of experiments

4) Early version with minimal feature set that can be “sold” to early adopters

1) Proposal: a document describing the solution

3) Fake demo of any kind

2) Smoke Test: Landing Page to test interest

MVP

Pretotype


Pretotype Example (Explainer Video)

Test vision ofcloud serviceoffering –Dropbox

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https://www.youtube.com/watch?v=7QmCUDHpNzE


Solution Interview

Ash Maurya

• Tell a story -‐ frame the product (2min)• Show Concept/UVP, Demo/Pretotype/MVP (15min)

• Wrap up. Sum up feedback to confirm understanding (2min)• Get permission to follow up. Get referrals (2min) • Document results

• Welcome: Set the scene (2min)• Collect demographics – right customer segment? (2min)

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• Test the pricing (15min)

Goal: Will I build sth. people want at the price they will pay?


LEARN: Persevere

I am convinced that half of what separates the successful entrepreneurs from the non-successful ones is pure perseverance 30fredi@pragmatic-‐solutions.ch12.01.2017


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Four sequential experiments

Experiment 1; 10% success

Refine target segment


Refine target segment


Experiment 4; 33% successqual. quant.

Positive Negative

From Sébastien Sacard

# interviews

10% 20% 33%

37%


Experiment Report

Why is it relevant?

Quantify your goalsset scope/timebox

Plan how to executeexperiment

Results = Data

Document the learning (validated,invalidated or inconclusive)

Test value and growth hypothesis first

Move to next experiment


LEARN: … or pivot

Pivot: A change in strategy without a change in vision



Lean Dash Board (Lean Stack)

Flow

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Problem Solution Fit => ValueProblem Solution FitYou validated with MVP and prospects that a specific solution will solve a know problem to such a degree that customer will buy it.

Brant Cooper

Value assumption – test whether a product or service really delivers value to specific customers once using it.

ScaleProduct Market

fit

Problem Solution

fit

Customer Discovery

Customer Validation

Customer Creation

Is the identified problem real? Will the target customer pay? Can the problem be solved?


The growth assumption – test how new customers will discover a product or service. Through what engine will you acquire new customers at affordable cost.

Product Market Fit => GrowthProduct Market FitCustomer is willing to pay. Cost of acquiring new customers is smaller than profit. Evidence that market is large enough

Brant Cooper

ScaleProduct Market

fit

Problem Solution

fit

Customer Discovery

Customer Validation

Customer Creation


Summary: Saving Potential byapplying Lean Innovation• Lean Canvas instead of Business Plan• Identification & priorisation of risks instead oftesting the whole Business Model• Problem&Solution interviews instead of Market Research• Pretotype & MVP instead of perfect Product• Speed has biggest impact on profit
