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Fredi SchmidliZürich, 15 August, 2016
Hear from Fredi Schmidli - lean investor - how to get to
problem/solution fit
Lean Startup ZürichMeetup
1fredi@pragmatic-‐solutions.ch15.08.2016
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/
2fredi@pragmatic-‐solutions.ch15.08.2016
THE LEAN INVESTOR:MAKE LOTS OF LITTLE BETS. EXPECT MOST TOFAIL.
Dave Mc Clure @http://500.co
3fredi@pragmatic-‐solutions.ch15.08.2016
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
4fredi@pragmatic-‐solutions.ch15.08.2016
Lean Innovation Framework
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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?
6fredi@pragmatic-‐solutions.ch15.08.2016
From Idea to Problem/Solution Fit
7Source: Ash Maurya «Running Lean»
fredi@pragmatic-‐solutions.ch15.08.2016
Key Principle
Get out of the building and 1 2 3 4 5 6 7 8 9
8fredi@pragmatic-‐solutions.ch15.08.2016
Lean Canvas (by Ash Maurya / adapted from Osterwalder)
9fredi@pragmatic-‐solutions.ch15.08.2016
Why Lean Innovation?
See: http://practicetrumpstheory.com/2012/02/why-‐lean-‐canvas/
10fredi@pragmatic-‐solutions.ch15.08.2016
The 3 Phases of Customer Development
11Source: Ash Maurya, Scaling Lean
What happens here?
fredi@pragmatic-‐solutions.ch15.08.2016
Different Stages, 10x product launch
12Source: Asy Maurya, Scaling Lean
Ideation Validation Execution
fredi@pragmatic-‐solutions.ch15.08.2016
Source: Ash Maurya «Running Lean» Workshop, 2015
13fredi@pragmatic-‐solutions.ch15.08.2016
Lean Canvas (by Ash Maurya / adapted from Osterwalder)
14fredi@pragmatic-‐solutions.ch15.08.2016
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.ch15.08.2016
What and why Early Adopters?
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2.5% 13.5% 34% 34% 16%
fredi@pragmatic-‐solutions.ch15.08.2016
17fredi@pragmatic-‐solutions.ch15.08.2016 Source: Ash Maurya «Running Lean» Workshop, 2015
Lean Canvas (by Ash Maurya / adapted from Osterwalder)
18fredi@pragmatic-‐solutions.ch15.08.2016
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.ch15.08.2016
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»
fredi@pragmatic-‐solutions.ch15.08.2016
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
21fredi@pragmatic-‐solutions.ch15.08.2016
Validated Learning Experiment Template
Metric: We will know we have succeeded when [quantitative/measurable outcome] or [qualitative/observable outcome]
Janice Fraser
Hypothesis: We believe that [customer type] have a need for [need/action/behavior]
Experiment: The smallest thing we can do to prove that need is [experiment]
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• 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?
fredi@pragmatic-‐solutions.ch15.08.2016
24fredi@pragmatic-‐solutions.ch15.08.2016 Source: Ash Maurya «Running Lean» Workshop, 2015
Test your concept early
Don’t be afraid to be “embarrassed” when customers see your “product” for the first time, you will be embarrassed anyway. Eric Ries
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Learning is hard and often frustrating
fredi@pragmatic-‐solutions.ch15.08.2016 Source: Ash Maurya «Running Lean» Workshop, 2015
Lean Canvas (by Ash Maurya / adapted from Osterwalder)
27fredi@pragmatic-‐solutions.ch15.08.2016
Lean Canvas (by Ash Maurya / adapted from Osterwalder)
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29fredi@pragmatic-‐solutions.ch15.08.2016
Source: Ash Maurya «Running Lean» Workshop, 2015
30fredi@pragmatic-‐solutions.ch15.08.2016
Source: Ash Maurya «Running Lean» Workshop, 2015
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
31fredi@pragmatic-‐solutions.ch15.08.2016
Pretotype Example (Explainer Video)
Test vision ofcloud serviceoffering –Dropbox
32
https://www.youtube.com/watch?v=7QmCUDHpNzE
fredi@pragmatic-‐solutions.ch15.08.2016
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)
33
• Test the pricing (15min)
Goal: Will I build sth. people want at the price they will pay?
fredi@pragmatic-‐solutions.ch15.08.2016
LEARN: Persevere
I am convinced that half of what separates the successful entrepreneurs from the non-successful ones is pure perseverance 34fredi@pragmatic-‐solutions.ch15.08.2016
35
Four sequential experiments
Experiment 1; 10% success
Refine target segment
Experiment 2; 20% success
Refine target segment
Experiment 3; 33% success
Experiment 4; 33% successqual. quant.
Positive Negative
From Sébastien Sacard
# interviews
10% 20% 33%
33%
fredi@pragmatic-‐solutions.ch15.08.2016
LEARN: Persevere
I am convinced that half of what separates the successful entrepreneurs from the non-successful ones is pure perseverance 36fredi@pragmatic-‐solutions.ch15.08.2016
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
37fredi@pragmatic-‐solutions.ch15.08.2016
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Lean Dash Board (Lean Stack)
Flow
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Lean Dash Board: Example
Customer Example:Insurance Company
www.pragmatic-‐solutions.ch 4015.08.2016
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?
41fredi@pragmatic-‐solutions.ch15.08.2016
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
42fredi@pragmatic-‐solutions.ch15.08.2016
LEARN: … or pivot
Pivot: A change in strategy without a change in vision
43fredi@pragmatic-‐solutions.ch15.08.2016
Savings Potentials with Lean
• Lean Canvas instead of Business Plan• Identification & priorisation of risks instead oftesting the whole Business Model• Solution interviews instead of Market Research• Pretotype/MVP instead of perfect Product• Speed has biggest impact on profit
44fredi@pragmatic-‐solutions.ch15.08.2016
Hands on books
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agility accelerates ...
FEEDBACK DOOR
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Feedback Door1. How likely is it that you would recommend this Presentation to a friend or colleague?
Source: NetPromoter Score
2. What changes would we have to make for you to give us one point more?
……………………………………………………………………………………………………………
fredi@pragmatic-‐solutions.ch15.08.2016