note - alberto savoia€¦ · pinocchio pretotypes. the fake door pretotypes pretotype it the...

Copyright (c) 2013 Alberto Savoia - [email protected]

NOTE:

These slides are intended exclusively as reference for the attendees of the October 14, 2013 pretotyping workshop

at the Mountain View Hacker Dojo.

Please do not post, republish or distribute.

Instead, please refer potentially interested entrepreneursdirectly to me ([email protected]).

Thank you ... and may you always find The Right It in life and work!

Alberto Savoia

www.AlbertoSavoia.com


Pretotyping WorkshopMake sure you are building The Right It before you build It right.

Mountain View Hacker DojoOctober 14, 2013

Alberto [email protected]

PretotypeLabs

mailto:[email protected]



Welcomeand

Thank you!


Agenda

FAILURE!

The pretotyping solution

! Your turn: Pretotyping exercise

Success Metrics

Complete example

Discussion and Q&A


My Recent Experiencesand the birth of

Pretotyping


• 1999-2001

Founded Startup 1

• $3M Series A

• +18mos: $100M acquisition

Hey, this is easy!


• 2001-2002

Joined Google as Eng Director

• ..., launched AdWords, ...

Hey, I’m good!


• 2002-2008

Founded Startup 2

• $25M Series A, B, C

• +5 years: ~$0

WTF?Wh

y The

Failure?


2008-2012Back to

Innovation AgitatorEngineering Director

Student of New Product Failure


PretotypeLabs

2012-????

www.PretotypeLabs.com

http://www.PretotypeLabs.com

http://www.PretotypeLabs.com

The Law of Failure

Most new ideas fails...

>95% of all mobile apps don’t make money

4 out of 5 startups lose investor money

Most innovative technologies fail in the market

...

One year: 24,543 new products*

Failed 27%

Disappointed 16%

Cancelled 37%

Success 14%

Star 6%

Total 100%

* Nielsen

80%

New Product Breakdown

Category # of products % of products

Breakthrough 334 1.4%

Line or categoryextension

1,705 6.9%

“Me too” 18,814 76.7%

Others(seasonal, etc.)

3,690 15.0%

Total 24,543 100%

* Nielsen

Brutal odds,but BIG payoff

WHY?

The Law of Failure

Most new ideas failseven if they are very well executed


Some Notable Failures• New Coke or Crystal Pepsi (est. $50M) -------------->

• The movie “John Carter” ($275M + $100M in marketing)

• Iridium satellite phone system (66 satellites, $6B)

• Google Wave (~$20-30M)

• Segway transporter (~$180M in funding)

• Pontiac Aztek ($200M+) ------------------->

• Apple Newton (est. $50M)

• Microsoft Bob or “Clippy” (est. $50M)

• CueCat USB barcode scanner ($180M) ------>

• ...


It happens to the best


It happens to the biggest


It happens to the world’s best marketers


It happens to brilliantinventors and VCs


It even happened to


How about startup

failures?

Any guesses?


About 75% of startup fail ... and “[venture capitalists] bury their dead very quietly.”

Shikhar Ghosh, Harvard Business Schoolbased on study of 2,000 funded startups


Scott ShaneCase Western University


HITorFLOP

F.L.O.P.Failure inLaunchOperations orPremise

Make sure youare building The Right Itbefore you build Itright.

Pretotyping

it

innovative technologystartup idea to try

Youcan’tescape

The Law of Failure...

...but you

can use itto your

advantage.

The Pretotyping Effect

Without Pretotyping

IdeasTried

SlowFailures

FastFailures

Successes

WithPretotyping

IdeasTried

SlowFailures

FastFailures

Successes


the pretotyping manifesto

innovators beat ideaspretotypes beat productypes

data beats opinionsdoing beats talkingsimple beats complex

now beats latercommitment beats committees




doing beats talkingsimple beats complex


data beats opinions

Ideas, ideas, ideas ..

“We need some innovative ideas!”

“Where’s the next billion dollar idea?”

“I have an idea that will change the world!”

$ value of ideas?

Alberto Savoia

I am no Steve Jobsbut ...

$B idea from Alberto

Bidding starts at $1,000

Price is for idea only. There is no explicit or implicit offer of help to implement the idea. The idea may not be implemented in a cost-effective way – possibly not at all. The seller of the idea believes that the idea is a good one, but cannot guarantee its success. Since we don’t know all the ideas that have been thought, the originality of this idea cannot be guaranteed; it’s very possible that other people have had this idea. This idea is non-returnable and the sale is final. No credit or refunds will be issued.

Alberto’s$B idea

But there’s a bigproblem with ideas ...

Idea

Opinion

Opinion

Opinion

Welcome to

ThoughtlandPop.

8

Copyright (c) 2013 Alberto Savoia, [email protected] Alberto Savoia



ThoughtlandWhere every idea can be a winner!

False Po

sitive

ThoughtlandWhere every idea can be a loser!

False Ne

gative

??????

If you want innovation,don’t look for ideaslook for innovators


How Do You FindInnovators?


Spot the Innovator




doing beats talkingsimple beats complex


data beats opinions

Productypes?

The Entrepreneur’s Nightmare

Spending years and millions, to build and perfect a product or service

that people don’t need or want.

$41M

$340M

$43M

$33M

$135M

$48M

Can youavoid the

entrepreneur’snightmare?

Yes!

With Pretotyping

Pretotyping [pree-tuh-tahy-ping], verb: Validating the market appeal and actual usage of a potential new product by simulating its core experience with the smallest possible investment of time and money.

IBM & Speech-to-Text Technology

Dear Mr. Jones,

In reply to your letter dated ...

$$$$$$$

Dear Mr. Jones,

In reply to your letter dated ...

Pretendotype

Pretotype

X


“We love the idea of speech-to-textand we’ll pay big $ for itif you can built it right.”

Beforepretotype

tests

Afterpretotype

tests


Fail Fast

Compulsion tokeep going

at all costs

minutes hours days weeks

Time Invested

months years


The Original Palm “Pre”


PretotypingFake it before you make it

Prototyping• Investment: days, weeks

• Main Q: Can we build it?

• Deliverable: Working prototype

Pretotyping• Investment: hours, days

• Main Q: Would we use it?

• Deliverable: [Working] pretotype


Google GlassFrom Pretotype to Productype

Pretotype Prototype Productype


My FavoriteGlass Pretotype


Pretotypingin

Action

Mobile Apps

The Birth of Android Pretotyping

Next Thursday:

Android Pretotyping Workshopat Google

All participants will receivea free Android pretotyping kit!!

Send

ParkJerk

AndrogenPretotyping Tool for Android

+ + =A

AndrogenPretotype working Android

apps in minutes

A

179.2

Send

Enter your weight:


Pretotypingin

Action

Retail Service

PretoStorming

Brainstorming : Ideas -> Opinions

Pretostorming : Pretotypes -> Data

A Sampling ofPretotypingTechniques

Mechanical TurkPretotypes

PinocchioPretotypes

The Fake DoorPretotypes

Pretotype Itwww.pretotypeitbook.comThe official book on pretotypingby Alberto Savoia. Only $20.00

http://www.pretotypeitbook.com

http://www.pretotypeitbook.com

MVPPretotypes

MinimumViableProduct

One-Night StandPretotypes

ImpersonatorPretotypes

ExistingProduct orPackaging

New “skin”

PretoStormingPractice

Exercise 1

Your turn topretotype

Pretotype It!

• Pawsbook: Social network for pets (B2C)

• GhostBus: Self-driving city buses (B2B, B2Gov)

• UNuke: Small nuclear power stations for rural communities (B2Gov)

• Vanity Fare: Food/drinks enriched with ingredients for great skin and hair (B2B)

• HappyGlass: Windows that convert/create light spectrum to fight SAD (Seasonal Affective Disorders) (B2B or B2C)

• GoldHound: A luxury version of GreyHound with first-class seating and treatment (B2B)

• InstaNap: The opposite of energy drinks like RedBull or 5hr Energy (B2B)

• 2nd-day Sushi: Less-fresh but lower-cost sushi (B2C)

• Rent-a-mechanic: Rent an expert for used car shopping and negotiating (B2C)

• EatSlow plates: Food plates that open and close to slow down your eating (B2C)

• Fake-a-Mate: Rent a pretend great boy/girlfriend for social events (B2C)

• ReviewsNow: a mobile app for on-the-spot/real-time employee micro-reviews and feedback (Internal)

• ... or offer up your idea!


PretostormingChallenge

1. Groups of 4-6

2. Pick an idea from the bag

3. Pretostorm (design a pretotype)

4. Debrief


Exercise 1Debrief




data beats opinionsdoing beats talkingsimple beats complex



An Intro toPretotyping Metrics

RPI: Return on Pretotyping Investment

ILI/OLI: Initial/Ongoing Level of Interest

PretoBayesian Metrics: How to factor in the impact of pretotyping data in decision making


RPIReturn on

PretotypingInvestment


Learning (Pre) Cost (Pro)RPI = ______________ _____________

Learning (Pro) Cost (Pre)X

RPI

How much (%) can you learn from a given pretotype compared to the full product.

How much (%) can you learn from a prototype or final product. Set to 100% for the final product.

How much would it cost (time or $) to develop and test/market a prototype or the final product.

How much would it cost (time or $) to create and test a given pretotype.


RPI for a WebvanPretotype


What should we learn?(before we blow $100M)

Will people use the web to order groceries?

What % of people would use it?

How often would they use it?

Will people in cities use it more than people in suburbs?

What kind of products will they buy?

What’s the $ value of average transaction?

How many will continue to use it after the novelty has worn off?

...


Pretotype for

Pretotype 1: MVP

Create a high-quality website.

Advertise locally in a major city (e.g., San Francisco) and a suburb (e.g., Palo Alto.)

If/when orders come in, purchase food at existing stores.

Rent delivery trucks and hire temporary personnel to deliver food.

Run experiment for, say, 4 weeks.




$ RPI for

.75 $100M

1.00 $1M

RPI = .75 x 100 = 75 = 7500% cheaper


RPI vs RIP

We shouldapretotyped it!

Yup.


Time RPI for

.50 60 mos

.80 1 mos

RPI = .62 x 60 = 37.5x “faster learning”




~?% $?

~?% $?

(Learning proportion) x (Cost proportion) = RPI%

RPI = ______________ _____________


Learning (Pre) Cost (Pro)


ILI/OLILevel of Interest

(If we build, will they come?)


ILI

Initial Level of Interest:

What % of a target group is interested in ‘it’ to give it a try?


ILI

ILI = ________________________________# invited to try ‘it’

# who’ve actually tried ‘it’


Small representative

sample (~100-1,000)

I (1000)

Time

T (741)

ILI in Action

Target market

ILI = 741/1,000 = .741


OLI

Ongoing Level of Interest:

What % of a target group continues to use/buy ‘it’ after they’ve tried it.


OLI(t)

OLI(t) = __________________________________________

# who tried ‘it’

# still using ‘it’ after time t


Time

I (people invited to try innovation)

T (people who actually try it)

R4 (...4 weeks)R2 (...2 weeks)

R1 (return/retained users after 1 week)

ILI: Initial Level of Interest

OLI: Ongoing Level of Interest

OLI in Action


One example to bring it all

together

McSpaghetti!

This is just a fun example for practice.

I’ve chosen it because, as an Italian, I know something about spaghetti andeveryone is already familiar with and has probably been at a McDonalds.

What should we learn?

Will people going to McDonald want to order pasta?

What % of people would order McSpaghetti?

Will they order McSpaghetti again?

Will they order it regularly?

In what geographies would people order McSpaghetti?

Will they order fries with?

...


Pretotype 1 for

Pretotype 1: Fake door.

Add McSpaghetti to store menu (above the counter) and display an in-store poster/ad.

Run experiment in 5 stores in different geographies.

Is this pretotype worth doing?



Learning(Pre): .25Learning(Pro): 1.00Cost(Pre): $20K (~est)Cost(Pro): $10M (~est)

RPI Worksheet forMcSpaghetti pretotype 1


RPI for Pretotype 1(Fake Door)



.25 $10M

1.00 $10K

RPI = .25 x 1,000 = 250 = 25,000 %

Possible Outcomes FromPretotype Experiment

1: Nobody, or too few people order McSpaghetti (<4%): No interest, probably not the right it.

2: Enough people (=>4%) order McSpaghetti so it’s worthwhile to explore this ‘it’ further.

3: McSpaghetti is popular in some geographies and not in others.

Case 1: Probably want to move to another ‘it’.

Case 2 & 3: Need another pretotype.

I (people visiting restaurant with McSpaghetti during 2 weeks)

T (people who try to order McSpaghetti)

I = 5,500T = 856ILI = 856/5,500 = 15% (!!!)

Pretotype 1 (fake door)

“McSpaghettiis the right

‘it’!”

Not so fast ...

Good ILI but what about OLI?


Dead Cat Bounce?


Dead Cat Kick*

* No cats were harmed in the making of this example.

Users

Time


Stimulus->Response

Time

OLI(t)

OLI(t) = ________________________________# invited to try ‘it’

# still using ‘it’ after time t

E.g. OLI(4wks)= % of people using ‘it’ after 4 weeks.

What we’ve learnedfrom pretotype 1 (fake door)

Will people going to McDonald want to order pasta?

What % of people would try McSpaghetti?

Will they order McSpaghetti again?

Will they order it regularly?

In what geographies would people order McSpaghetti?

Will they order fries with?

...


Pretotype 2 for

Pretotype 2: MVP + Provincial + One-night Stand

Add McSpaghetti to store menu (above the counter) and display poster.

Cook and serve McSpaghetti when ordered. Hopefully al-dente.

Ask people if it’s the first time they’ve ordered it and keep track of repeat McSpaghetti customers.

Run experiment in 5 stores in different geographies.

Is this pretotype worth doing?



Learning(Pre): .50Learning(Pro): 1.00Cost(Pre): $100K (~est)Cost(Pro): $10M (~est)

RPI Worksheet forMcSpaghetti pretotype 2


RPI for Pretotype 2(MVP + Provincial + One-night stand)



.50 $10M

1.00 $100K

RPI = .50 x 100 = 50 = 5000 %

Time

I (avg people visiting store with McSpaghetti during 2 months)

R4R2R1

Pretotype 2 (MVP+...)

R6 R8

return purchases after 1, 2, 4, 6 & 8 weeks

I = 5,783R1 = 483 (8.3%)R2 = 398 (6.8%)...R8 = 415 (7.1%)

The right spaghettit!

Time

I (avg people visiting store with McSpaghetti during 2 months)

R4R2R1

Pretotype 2 (MVP+...)

R6 R8

return purchases after 1, 2, 4, 6 & 8 weeks

I = 5,783R1 = 211 (3.6%)R2 = 188 (3.2%)...R8 = 69 (1.2%)

The wrong spaghettit!

VisionIdeasOpinionsPassion

RealityPrototypes

DataRationality

The RightIt!

Vision vs. Hallucination

Want to learn more?

[email protected]

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