Lean Startups - a Method to successfully build your business 1 Why Lean Startup Businesses tend to fail

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  • Lean Startups - a Method to successfully build your business 1

  • MY TWO MANTRA’S IN BUILDING A COMPANY

    Da Vinci Code Building a Business is like sailing a Sail boat

    2

  • LEAN STARTUP METHODOLOGY

    Why Lean Startup

    Businesses tend to fail because you either run out of time or money.

    With unlimited time and unlimited money, all business have 100% ability to exceed

    Success is achieved as long as you can figure out the model before you run out of time or money

    Key Steps in Building your Business

    Document your Plan A

    Identify the Riskiest Parts of Your Plan

    Systematically Test Your Plan

    3

  • DOCUMENT YOUR PLAN A

    Step 1 to start you business:

    A strong initial vision

    a ‘Plan A’ for executing against the vision

    BUT....... Most Plan A’s don’t work!

    The Lean StartUp

    Uphold the strong vision with facts, not faith

    It’s built on untested assumptions

    Critical Success Factor - Test and refine the vision

    4

  • STEP 1: WRITE IT DOWN ON 1 PAGE

    5

    Top 3 Problems

    Top 3 features

    Key activities you measure

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

    Path to Customers

    Can’t be easily copied or bought

    Target Customers

    Customer Acquisition Costs Distributing Costs Hosting, People, etc.

    Revenue Model Lifetime Value Revenue Gross Margin

    PRODUCT MARKET

  • PRODUCT VS. WHOLE PRODUCT

    6

    Top 3 Problems

    Top 3 features

    Key activities you measure

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

    Path to Customers

    Can’t be easily copied or bought

    Target Customers

    Customer Acquisition Costs Distributing Costs Hosting, People, etc.

    Revenue Model Lifetime Value Revenue Gross Margin

    PRODUCT MARKET

    W H O L E

    P R O D U C T

  • THE PROBLEM - CUSTOMER SEGMENT

    7

    Top 3 Problems

    Top 3 features

    Key activities you measure

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

    Path to Customers

    Can’t be easily copied or bought

    Target Customers

    Customer Acquisition Costs Distributing Costs Hosting, People, etc.

    Revenue Model Lifetime Value Revenue Gross Margin

    PRODUCT MARKET

    W H O L E

    P R O D U C T

    1 2

  • THE PROBLEM - CUSTOMER SEGMENT

    8

    Top 3 Problems

    Top 3 features

    Key activities you measure

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

    Path to Customers

    Can’t be easily copied or bought

    Target Customers

    Customer Acquisition Costs Distributing Costs Hosting, People, etc.

    Revenue Model Lifetime Value Revenue Gross Margin

    PRODUCT MARKET

    W H O L E

    P R O D U C T

    3 One of Most Important Hardest to Get right Why you are different and worth getting attention

    Be different, but make sure your difference matters Target early adopters Focus on “finished story” benefits

  • THE PROBLEM - CUSTOMER SEGMENT

    9

    Top 3 Problems

    Top 3 features

    Key activities you measure

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

    Path to Customers

    Can’t be easily copied or bought

    Target Customers

    Customer Acquisition Costs Distributing Costs Hosting, People, etc.

    Revenue Model Lifetime Value Revenue Gross Margin

    PRODUCT MARKET

    W H O L E

    P R O D U C T

    4 5

  • THE PROBLEM - CUSTOMER SEGMENT

    10

    Top 3 Problems

    Top 3 features

    Key activities you measure

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

    Path to Customers

    Can’t be easily copied or bought

    Target Customers

    Customer Acquisition Costs Distributing Costs Hosting, People, etc.

    Revenue Model Lifetime Value Revenue Gross Margin

    PRODUCT MARKET

    W H O L E

    P R O D U C T

    67 8 9

  • Now What? Step 2: Identify Risks

    With Plan A, you are now at the start line of the marathon 11

  • WHAT ARE RISKS?

    Uncertainty = Risk

    12

    Uncertainty: The lack of complete certainty. i.e. the existence of more than one possibility.

    An unknown

    / Risk: A state of uncertainty where some of the possibilities involve a loss, catastrophe, or other undesirable outcome.

    The list of possible reasons your company won’t exist in 5 years.

    Three Kinds of Risk

    Product Risk - Getting the Product Right

    Customer Risk - Building a Path to Customers

    Market Risk - Building a Viable Business

  • PRIORITIZE THE RISKS & GO THRU THEM SYSTEMATICALLY

    Customer Pain Level (Problem)

    Key Customer segments that need product most (highest pain)

    Ease of Reach (Channels)

    Sales Go To Market is one of hardest parts of the “Whole Product”

    Price/Gross Margin (Revenue Streams/Cost Structure)

    The math has to work!

    Market Size (Customer Segments)

    The Customer Segment needs to be big enough (example: The $1 Billion Rule)

    Technical feasibility (Solution)

    Is our solution feasible?

    AND OF COURSE, Team

    13

  • Step 3: Get Ready to Experiment

    14Startup = Experiment

  • BUILD MEASURE LEARN

    15

    Implement

  • BUILD MEASURE LEARN WITH SPEED LEARNING FOCUS

    Speed: Cycle Time - how quickly you can complete a loop of “Build, Measure & Learn”

    Learning - Learning about customers thru measurement

    Focus - what is your specific idea

    Not enough of any one can cause failure:

    Lack of Speed - run out of $ or competitor beats you

    Lack of Learning - you’re a dog chasing your tail

    Lack of Focus - premature optimization trap (example: scaling servers with no customers or optimizing web page with no product)

    16

    Implement

  • NUMBER 1 SKILL: INTERVIEW CUSTOMERS

    17

    The PROBLEM Interview

    Understand your customer’s world before you build a solution

    Product Risk - What are we solving (Problem): How do they rank the top three problems?

    Market Risk - Who is the competition: How do they solve these problems today

    Customer Risk - Who has the pain: Is this a viable customer segment

    The SOLUTION Interview

    Test the solution with a ‘demo’ before building the actual product

    Customer Risk - Who has the pain: Who are my early adopters?

    Product Risk - How will you solve these problems: What are the minimum features needed to launch?

    Market Risk - Pricing Model: Will customers pay for a solution and what price will they bear?

  • Get to Release 1.0 of your Company

    18 Our objective is maximizing learning (about customers) per unit time.

  • MVP - MINIMUM VIABLE PRODUCT

    Once you define what the problem worth solving is:

    Something customers want, they will pay for, and it can be solved

    Define the MINIMUM feature set to address these problems. This is your MINIMUM FEATURE SET and is the initial product you will build.

    The MVP is not half-baked or a buggy product. It addresses not only the TOP PROBLEMS but also the problems worth solving.

    It should deliver enough value to justify charging a customer.

    Reduce your MVP

    Once you define your product, go thru a detailed analytical exercise to reduce it. Take each Unique Value Prop, eliminate nice-to-haves and don’t needs for each.

    Focus on learning, not optimization

    Little mice in the background is absolutely key!

    19

  • Next Step Marketing

    Attend the Lean Marketing Session on Saturday, October 27, 2012 20

    Presented by: Nathan Monk (‘Digital Cowboy’)

    Bio:

    •Mars ICE advisory team member with focus on consumer ent. & ecommerce companies •Have a strong passion for entrepreneurship •‘Lean Startup’ practitioner •Digital marketer, sales and BD professional •Experience: CBC, CanWest, OgilvyOne and Yahoo!

    Follow Nathan:

    @Cowboytweets

    Linkedin.com/in/nathanmonk

    marsdd.com/blog/author/nmonk/feed/

  • Questions?

    21