lean startup essentials - startup live graz

Lean Startup Essentials

Lukas [email protected]

STARTup Live Graz30th April 2011


mailto:[email protected]


Agenda

• 10 - 20min blocks, quick Q&A after each

• 1: Why? & The Canvas

• 2: Customer Discovery

• 3: Case Study


Today’s focus: The early stage

Part 1:Why? & Lean Canvas

Lean Startup Essentials #1

About Me• 2nd time entrepreneur

• 2007-2010: Soup.io (Co-founder)

• The Efficient Cloud“Heroku for Europe” to“PaaS technology for hosting providers”(Seedcamp 2011 company)

• Collaborated with Ash Mauryaon the Lean Canvas

#1: IntroductionLean Startup Essentials

Where this all comes from

• Steve Blank - Customer Development

• Alex Osterwalder - Business Model Canvas

• Eric Ries - The Lean Startup

• Ash Maurya - Lean Canvas

#1: IntroductionLean Startup Essentials

Most startups fail from a lack of (paying) customers.

#1: Lean StartupLean Startup Essentials

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.



Your initial Goal:Improve likely success rate of your venture,

and reduce risk of failure.

Enable yourself to actuallymake the jump into a full-time entrepreneur.


Your Process:Likely entirely chaotic.

No one implements the lean startupas a strict process.

Similar to agile adoption (e.g. Kan-ban)you need to make a slow transition

into more structured thinking.

So, we need a languagein order to talk about your

startup.

#1: The CanvasLean Startup Essentials

Product is only 1 of the 9 critical aspects that make your

company work.

#1: The CanvasLean Startup Essentials

The Business Model Canvas

#1: The BM CanvasLean Startup Essentials

Alex Osterwalder - Business Model Generation


What are the most important costs inherent in our business model? Which Key Resources are most expensive? Which Key Activities are most expensive?

Through which Channels do our Customer Segments want to be reached? How are we reaching them now?How are our Channels integrated? Which ones work best?Which ones are most cost-efficient? How are we integrating them with customer routines?

For what value are our customers really willing to pay?For what do they currently pay? How are they currently paying? How would they prefer to pay? How much does each Revenue Stream contribute to overall revenues?

For whom are we creating value?Who are our most important customers?

What type of relationship does each of our CustomerSegments expect us to establish and maintain with them?Which ones have we established? How are they integrated with the rest of our business model?How costly are they?

What value do we deliver to the customer?Which one of our customer’s problems are we helping to solve? What bundles of products and services are we offering to each Customer Segment?Which customer needs are we satisfying?

What Key Activities do our Value Propositions require?Our Distribution Channels? Customer Relationships?Revenue streams?

Who are our Key Partners? Who are our key suppliers?Which Key Resources are we acquiring from partners?Which Key Activities do partners perform?

What Key Resources do our Value Propositions require?Our Distribution Channels? Customer Relationships?Revenue Streams?

Day Month Year

No.

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The Lean Canvas

#1: The Lean CanvasLean Startup Essentials

Ash Maurya - Running Lean


Focused on Early-Stageintegrates Problem/Solution

fields


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


Lean Canvas is adapted from The Business Model Canvas (http://www.businessmodelgeneration.com) and is licensed under the Creative Commons Attribution-Share Alike 3.0 Un-ported License.


http://www.businessmodelgeneration.com

http://www.businessmodelgeneration.com

• Customer Segments

• Problem

• Revenue Streams (Pricing)


Market

• Solution

• Cost Structure

• Unfair Advantage


Product

• Unique Value Proposition

• Distribution & Marketing Channels

• Key Metrics


Market <=> Product

Example: TupaloProblem

#1 Finding information, quality & location of a business

#2 Promoting a business, providing correct information to customers

Solution

Business DB

#1 Search function, Sitemap#2 Business CP


Yellowpages online.

Find the best restaurant/etc. near you.


Yellowpages online.


Unfair Advantage

Herold / EDPartnership

SEO Know-How

Customer Segments

#1 9-to-5 folks looking for lunch options, etc.

#1 Long-tail mainstream

#2 Business owners (restaurants, etc.)

Problem

#1 Finding information, quality & location of a business

#2 Promoting a business, providing correct information to customers

Key Metrics

#1 Avg. Reviews per user

#2 Avg. Revenue per business


Yellowpages online.



Yellowpages online.

Find the best restaurant/etc. near you. Channels

#1 Long-tail SEO

#2 European Directories (B2B Sales)

Customer Segments

#1 9-to-5 folks looking for lunch options, etc.

#1 Long-tail mainstream

#2 Business owners (restaurants, etc.)

Cost Structure

Software DevelopmentSEOPartnership Deals

Cost Structure


Cost Structure


Revenue Streams

#1 Free

#2 Hundreds/Thousands of EUR (recurring)

Revenue Streams

#1 Free


Revenue Streams

#1 Free



Example: FreckleProblem

Tracking time precisely without effort

Easily invoice clients with good report on performed work

Solution

Time tracking with superb UX, no unnecessary fuss


Time tracking software that you’ll actually use.



Unfair Advantage

Existing audience: Mailinglists, Twitter, etc.

Customer Segments

Freelancers

Agencies

Problem

Tracking time precisely without effort

Easily invoice clients with good report on performed work

Key Metrics

Hours tracked

Rev. per user





Channels

- Word of mouth- Cross-sales- Freebies - Existing audience

Customer Segments

Freelancers

Agencies

Cost Structure

Software DevelopmentMarketing/CopywritingCC feesHosting

Cost Structure


Cost Structure


Revenue Streams

12-50 USD / month (dep. on company size)

Revenue Streams


Revenue Streams



Example: GarmzProblem

#1 Mass-producing a fashion garment

#1 Marketing & sales

#2 Buy trendy clothes

Solution

No-barriers fashion production, chosen by the community


#1 Make your design talent visible

#2 Find the latest fashion trend & be unique




Unfair Advantage

Team with industry experience

Customer Segments

#1 Fashion designers

#2 Trend-chasing hipsters

Problem

#1 Mass-producing a fashion garment

#1 Marketing & sales

#2 Buy trendy clothes

Key Metrics

#1 New designs uploaded

#2 Conv. rate to actual sale







Channels

Fashion blogsPartnerships#1 Fashion schools#1 Fashion events#2 Word of mouth / strong brand

Customer Segments

#1 Fashion designers

#2 Trend-chasing hipsters

Cost Structure

Production! (super expensive)PrototypingPayout to designerMarketing, Biz Dev, Software Dev

Cost Structure


Cost Structure


Revenue Streams

#2 100 EUR / piece

Revenue Streams

#2 100 EUR / piece

Revenue Streams

#2 100 EUR / piece


Live Example:Rails on Fire


Q&A

#1Lean Startup Essentials

[break]


Part 2:Customer Discovery

Lean Startup Essentials #2: Customer Discovery

You probably already have a product idea

And an implict assumption about your

market


Focus on qualitative feedback from the

market


Listen to what customers have to say - don’t execute a fabricated value proposition


Customer DiscoveryMethods


Customer Interviews

30 min in-person withyour prototypical customer

People like talking about their field - explore their worldview.


How to conduct an interview

1. Set context & tell your story2. Tell your problem hypothesis

3. Listen to their worldview4. Ask for follow up / references


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?”


User Groups & Conferences:

Hand out cards with invite codes - landing page with “join our soon-to-

launch beta programme”


Your private beta access code: OEWO8C

SolidRailsEuropean VPS cloud. Fully-integrated Rails hosting.

Amy Hoy’sSales Safari:

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

talk about products & benefits


Q&A


[break]


Part 3:Case Study

Lean Startup Essentials #3: Case Study

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!


Lukas [email protected]



lean startup essentials - startup live graz

Documents

design talent

lukas fittllukasfittl

software developmentseopartnership

software developmentmarketingcopywritingcc

easily invoice

1lean startup

introductionlean

2lean startup