Lean StartupDaniel Gergès – May 2013

A propos

• Past– Wokup (2000)– Weem (2008)– And dozens of other projects

• Now– Expert Cloud / Mobile @Sage– Startup Advisor

• Tags– #startup– #mobile– #cloud– #bigdata– #customer

Why ?

• Startups fail more often than they don’t

• Startups = problem not known, product not known

• Startups fail by lacking to find customers and a proven distribution model, not by lack of a product.

• Yet traditional methodologies focus on product development.

Traditional Attitudes

What’s wrong with traditional approach ?

BP Product Development Beta Launch

1st ship

• Sales & marketing start after an arbitrary ship date• Assumption = At Ship Date, Product / Market fit is found• Focus on execution / versus learning• This model assumes you know who your customers are• Environment is changing fast• You discover very late that you spent time on features that

your customers don’t want or won’t use.

If you build it they will (most of the time not) come

• You don’t solve a problem for customers

• Problem you solve is not important

• Distribution costs too high

• You’re not visible or don’t have access to market

• Remember customers have their own life or business to run

What’s Lean Startup ?

A Set of practices for helping entrepreneurs increase their odds of building a successful startup.

- Fast iteration,- Experimentation,- Constant Customer interaction,- Revenues centric,- Assumes Customer / Features

are unknown

Lean Startup Principles

• Experiment

• Customer Development

• Build / Measure / Learn feedback loop

• MVP

• Pivot

• Agile software development

Customer Development

• A set of clearly identified step to discover:

– Who the first customers will be,

– A repeatable sales process

• See the stops, go backward if necessary

• Can take 1-2 years

Technology adoption

Early Adopters

Build / Measure / Learn

Strategy

Pivot

Experiment

• Experimentation is at the heart of the method• Experimentation validate strategy / vision• Strategy is a set of hypothesis / assumptions• Value Hypothesis

– Who are the customers,– What problem do they have,– How the product will solve the problem– How much they’re willing to pay,

• Growth Hypothesis– How you’ll reach customers,– Sales cycle model– Revenues hypothesis– Conversion rates.

• Hypothesis need to be specific and provable• Chose the hypothesis on which your business rely

MVP

• No Rules• Minimum features to validate assumptions

– Concierge MVP– Mock Ups– Landing Page– Pre-orders,– Demo Video,– Blog– Product Beta– Prototypes– …

• Additional work to create measure points• Additional work for testing hypothesis

Measures

• Validated learning <> learning• Set-up metrics• Vanity / Actionable Metrics

– Vanity : cumulated,– Actionable : Funnel / Cohorts

• Metrics– Visits,– Registrations,– Activations,– Retention,– Referrals,

• Run experiments in small batch– Know which changes impacted the metrics

Pivot

• Build / Measure / Learn loop should lead to validated learning, metrics which validate the strategy assumption.

• When that’s not the case and all optimizations have been done, it’s time for a pivot.

• Pivot = modification of the strategy (value hypothesis, growth hypothesis)

• Lean advantage allows to take the pivot (or persevere) decision sooner, faster (cash burn)

Type of pivots

• Zoom-in pivot• Zoom-out pivot • Customer Segment pivot • Customer Need Pivot • Platform Pivot• Business Architecture Pivot• Value Capture Pivot• Channel Pivot• Technology Pivot

Barriers to adoption

• I’m convinced it will work

• I’m afraid to see that it won’t work

• We can’t release so few features to customers

• I have Alternative Revenue Streams

• Analysis Paralysis (don’t test ideas)

• MVP is built, but never tested

• I’m in B2B sales this won’t work

• There’s no compelling metrics I can find

Key Take Aways

• Lean <> Set of tactics

• Lean = Systematic Approach

• Customer Development // Product Development

• Carefully choose metrics

• Constant customer interactions

• Fast iterations

• Courage

Recommended readings

Contacts

dgerges@gmail.com

@danielito

www.danielgerges.com