Lean Startup Essentials - SeedHack Edition

Lean Startup Essentials

@lfittl @nikgraf

SeedHack23rd September 2011


Whats the Lean Startup?

• How to create order in the (unavoidable) chaos of a startup

• First learn, then execute

• Quick Iterations on your business model

#1: IntroductionLean Startup Essentials

Most startups failfrom a lack of (paying) customers.

#1: Lean StartupLean Startup Essentials

Why?Startups are not just a small

version of a big company.


Startup: Temporary organization used to

search for a repeatable and scalable business model.

As defined by Steve Blank.


We needstructured learning

before we execute.

#1: The Lean CanvasLean Startup Essentials

The Lean Canvas



Problem

Top 3 problems

Solution

Top 3 features

Unique Value Proposition

Single, clear, compelling message that states why you are different and worth buying



Unfair Advantage

Can’t be easily copied or bought

Customer Segments

Target customers

Problem

Top 3 problems

Key Metrics

Key activities you measure




Single, clear, compelling message that states why you are different and worth buying Channels

Path to customers

Customer Segments

Target customers

Cost Structure

Customer Acquisition CostsDistribution CostsHostingPeople, etc.

Cost Structure


Cost Structure


Revenue Streams

Revenue ModelLife Time ValueRevenue Gross Margin

Revenue Streams


Revenue Streams


Problem

• The top 3 problems the customer is facing today

• These might be things they’ve already started building in house, because there is an active need


Problem Key Activities Value PropositionValue Proposition

CustomerRelationships

Customer Segments

Problem

Key Resources

Value PropositionValue Proposition

Channels

Customer Segments

Cost StructureCost StructureCost Structure Revenue StreamsRevenue StreamsRevenue Streams

Customer Segments

• Narrow group of people that buy/use your product

• Marketplace biz models =2 cust segmens (or more)


Key Partners Key Activities Value PropositionValue Proposition


Customer Segments

Key Partners

Key Resources


Channels

Customer Segments


Value Proposition

• Single, clear, compelling message that turns an unaware visitor into an interested prospect

• What you put on yourlanding page




Customer Segments

Key Partners

Key Resources


Channels

Customer Segments


Solution

• Whats the Minimum viable product (MVP) ?

• Minimal set of functionality to solve each problem of the customer




Customer Segments

Key Partners

Key Resources


Channels

Customer Segments


Channels

• How does the customer learn about your product?

• B2B and B2C vastly different!

• SEM, SEO, Friend Invites, Social Media, Direct Sales, Tradeshows, PR, Content Marketing, etc.




Customer Segments

Key Partners

Key Resources


Channels

Customer Segments


Revenue Streams

• How much is the problem worth to the customer?

• Not how much it costs you to implement the solution

• Avoid Free and Freemium! (marketing tactic, not rev model)




Customer Segments

Key Partners

Key Resources


Channels

Customer Segments


Cost Structure

• What are your HR costs?(rough estimate)

• Marketing channel costs

• Infrastructure costs

• It’s about Unit Economics, not your made-up 5 year plan




Customer Segments

Key Partners

Key Resources


Channels

Customer Segments


Live Example

Someone from the audience:Pitch us an idea

4 other people:What’s the problem?

What’s the customer segment?What’s the value proposition?What’s the revenue model?

Lean Startup Essentials #1: The Lean Canvas

Test Your Hypothesis

#2: Customer Discovery

Customer Interviews

30 min in-person withyour prototypical customer

People like talking about their field - explore their worldview.

Lean Startup Essentials #2: Customer Discovery

How to conduct an interview

1. Set context & tell your story2. Tell your problem hypothesis 3. Listen to their worldview

4. Ask for follow up / references


DO NOT sell them your solution

Online Market Tests:

Google AdwordsFake Landing Page with

“Signup to be notified when we launch”“Can we call you to ask a couple of Qs?”


Amy Hoy’sSales Safari:

Lurk in online forums of your customer segment, learn how they

talk about products & benefits


Q&A


Literature

Lean Startup Essentials Literature

Steve Blank - The Four Steps to the Epiphany

steveblank.com



Alex Osterwalder - Business Model Generation

businessmodelgeneration.com


Eric Ries - The Lean Startup

lean.st


Ash Maurya - Running Lean

book.runningleanhq.com

Neil Davidson - Don’t Just Roll the Dice


Thanks!


@lfittl @nikgraf