ryan's lean startup 3-hour workshop

Lean StartupRyan D. Hatch

October 2014

rdkhatch

#LeanStartup


October 2014

rdkhatch

#LeanStartup

1. Crash Course in Lean Startup2. Team Collaboration Workshop

About RyanFamily & Background

About Ryan Co-Founder, Dynamis

Recovering Developer

Lean Product Strategy & Agile Coach

Focused on Innovation, Software Startups

Helping teams accelerate new product growth

How Not to Waste Your LifeProvide Value to Others

Higher Rates of Startup Success.

Story Time

Gold Ore Mining

Meet Jim

Story Time

Jim’sCompany

Gold Ore Mining

Built Mine Price Drop

Gold is invisible.

only1 oz gold

63 tons of rock. Long, expensive process.

Challenge: Must find rocks with highest value.

Jim Burnellholding his X-ray gun

Fast Feedback. Before Investing.

Jim Burnellholding his X-ray gun

Fast Feedback. Before Investing.

Fast-Feedback InnovationCreate Value

Playing by a new set of rules.

Small teams can beat big teams

Use Fast-feedback Innovation – To play by a new set of rules.

My Startup - Dynamis

My Startup Experience After several startup failures, 4 co-founders

Started in 2009 - Help Employers Optimize Health Insurance Benefits

Early Success & Struggles. Had 5 early adopter customers.

Funded by Golden Angels, Spring 2012. CEO, CTO duo.

Product Owner – v2 Replatform – MVP for new customers

Customer Problem & Solution Interviews. Lost Sales Interviews.

Small, High-Impact Team

Focused on Return on Investment

Cash Burn Rate & Sales Transparency

Customer Success kicking into gear

“This will double my business in 1 year.”“Closed 9/10 Deals”“Please don’t tell my competitors”

Customer success being featured at tradeshows

Mockups

Customer HackActual Application

How well would thissolve your problem?

Customer Types in Product Lifecycle

Crossing the Chasm, Geoffrey Moore

CustomerGoal

Why Lean Startup?Rockets, Risks, and Hockeysticks

1.) Idea to Team building an awesome product

2.) Launch like Rockets & Hockeysticks

3.) Dominate

Reality check. 90% of New Concepts Fail.

Don’t Make TheseSame MistakesStartup Failures to Learn From

Myth: Build it. And they will come.

TruthNo business survives first contact with customers.

You build it, and no one cares.

Customers are often biggest risk. Not Technology.

Product development is a discovery process.

Sell before you Build.

Myth: It’s all about Execution

TruthAchieving Failure =

Successfully executing a flawed plan.

Startups don’t know enough to just execute.

No Proxies for Paying Customers Successful people who believe in & mentor you Networking with other Entrepreneurs Board of Director at National Realtor Association Board of Advisors at Wyndham Hotels Partnering with 2x PhD’s Building Talented Teams & Working Together Creating New Products Free Trials Beautiful marketing & UI

College Interns Exceptional New Technology Multiple Patent Applications Business Plan Contest Multiple Pilot Programs Busiest booth at trade shows Featured Articles in National magazines Friends with top industry leaders Awards in National publications

False Shadow Beliefs - Unspoken

Reality Distortion Field

“We know what customers want”

“We can accurately predict the future”

“Executing the plan is progress”

Approaches toNew Product Development

Uncertainty grows into Future

Long-term planning is… Guessing

Solution: KnownBusiness Model: Known

Traditional New Products - Waterfall

Business PlanRaise Capital

RequirementsDesignDevelopmentTesting

Sales

Solution: UnknownBusiness Model: Unknown

?Agile Product Development

Solution: UnknownBusiness Model: Unknown

Customer Development Agile Product Development

Sales

Lean Startup

What is a Startup? Temporary organization

Searching for a Repeatable, Scalable Business Model

Environment of uncertainty

Not a small version of a large company

No VP of xyz

No Sales Department

You’re not building a Product

You’re building a Business.

Key Benefits of Lean Startup Process for startups to follow

Learn very fast what people will buy & use.

Start selling as soon as possible.

Eliminates Risk Early.

Uses data to seek truth & avoid opinions / politics

Get more Swings at bat.

Minimizes cash burn rate.

Scales at the right time.

Much higher rates of success.

Customer Development

Customer Sales

& Usage

CustomerInput

Get to Customer Sales as fast as possible

Living Document

No Facts are inside your buildingThe Answers are outside.

Homeology – 2014 Chicago Lean Startup Challenge

Homeology – 2014 Chicago Lean Startup Challenge

Concept to Revenue in 90 days$10,000 revenue + $17,000 sales pipeline

Run Science Experiments - To Learn as Fast as possible

ramlijohn.com

Highest Paid Person’s Opinion

Don’t Delay Failure.Test your Assumptions.

Get to Business Failure Fast.And Learn what to Fix.

Ok, I get it. I want some.Most people just want to sound cool.

Tired of Buzz words & Fluffy pictures?

Stop using the Buzz words.

Start applying Lean Startup.

Myths of Lean Startup

Race to Learning

$

Time (Runway)

Cash

Burn Rate

Breakeven Burndown Running out of Cash & Time

Death

Profit

Sales

* plus variable costs

$

Time (Runway)

Cash

Burn Rate

Race to Scalable Business Model

Death

Scalable Business ModelValidated Learning

$

Time (Runway)

CashBurn Rate

Multiple Funding Rounds

Death

Profit

* plus variable costs

Cash

Sales

ScalableBusiness

Model

Scale

Scalable Solution10 Customers 100 Customers

Solution Commitment

High Value Problem Have I found customers with a problem worth solving?

Are customers committed to my proposed solution?

Have I developed a Scalable Business Model?

Let’s throw money at this puppy

Roadmap

custdevframework.com

Investment Portfolio

High Value Problem

Have I found customers

with a problem worth solving?

Scale


Solution Commitment

High Value Problem

This is not about You. Get to know your Customers.

Discover Problems: Customer Discovery Interviews

What are your goals for the next year?

What could make the biggest impact on accomplishing those goals?

What are the barriers you are encountering?

How are you solving today?

CustomerGoals /

Job to be done

Barriers / Problems /Unsatisfied Outcomes

Jobs to be Done.

Job > Technology

Job: Portable Music

Jobs to be Done.

Job > Customer Profile

Ecosystem of Target Customer

B2B B2C

Raw Materials

Cash

Product

Ecosystem of Target Customer

Understanding the customerAllowed 3X the Price!

Problem Interviews Everyone is Lying to you - including your Mom!

The Mom Test = Would your mom tell you the truth?

Never talk about your solution ideas.

Ask specifics about the past.

Prioritize: Rank this problem more important / less important

What would a solution allow you to achieve? What impact value to business?

Have you tried to solve in the past? If so, How?

Was there a budget set?

Creative Problem Interviews

Fake Ad

Gated Outcomes 12 Customers confirmed Problem

Ranked Problem as MUST HAVE

Ranked Outcomes

Market is large & accessible enough.

Scale


Solution Commitment

High Value Problem

Solution Commitment

What is the minimum proposed solution customers will commit to?

Scale


Solution Commitment

High Value Problem

Solution Interviews1. Problem Confirmation

2. Usage Scenarios = Feature Validation

3. Demo - Low Fidelity MVP (Minimum Features necessary)

4. How well would your problem be solved with this solution?

5. Pricing Never ask what people will pay!

6. Ask for Commitment!

Event:Question:Player:Action:

When asleep at nightWould you & your family feel more safeIf we provided a device toMonitor your home for carbon monoxide gas and woke you up in case of an emergency?

Non-Scalable MVP

Non-Scalable MVP Ad words + Landing Pages

Video MVP

Clickable Mockups MVP

App demo MVP

Wizard of Oz MVP

Concierge MVP

No code MVP

Pre-orders, Capture Commitments!

Non-Scalable Sales!

Start Removing Features!

Gated Outcomes Quantified Problem Value to Buyer

Minimum Solution will solve Problem

Validated Pricing

Customer Success

5 Early Adopters paying for Non-Scalable MVP

Am I ready to COMMIT to making this go?

Scale

Scalable Solution10 Customers 100

Customers

Solution Commitment

High Value Problem

Scalable Solution

Can I mold this into

a Scalable Business Model?

Scale


Solution Commitment

High Value Problem

Scalable MVP

Source: @smarty

Scalable MVP

MVP = ?

Scalable MVP

MVP

Metrics that Matter

Customer Success – Value Hypothesis

Net Promoter Score

Achieving the Value Proposition?

Growth Hypothesis

Continuous Delivery

source: CollabNet

Development Production

Scalable MVP High-Fidelity

Silent Launch

Split A/B Tests

Fake Door / Mock Features

Sales & Marketing Positioning

All aspects of Business Model

Business Learning Sprints

franciscopalao.com

Innovation Accounting Growth Hacking Experiments

Flow Metrics

# of Customer Interviews

# of Hypotheses Tested

Pivot, Persevere, or Reboot?The Point

Instant Messaging Plug-in

Social community Fundraising

Gated Outcomes Paying customers (100+)

Repeatable Sales Roadmap

Scalable Business Model

Scale


Solution Commitment

High Value Problem

Customer

acquisition cost

Revenue per

customer

exceeds

Myth: I must be the Hero

TruthShare your struggles.

Transparency sets you free from the hero burden

Builds Trust

Team effort – Let’s solve this together.

Be fair to employees & their families.

Do This Next

Do this Next

1. Persona & Lean Canvas

2. Rank Highest-Risk Assumptions

3. Identify fastest test possible.

Launch Weekend

Scalable Business

Test for Value. Then Execute.


October 2014

rdkhatch

#LeanStartup

Biobreak

source podiohelp.com

Activate Lean Startup Collaboration


Persona CanvasFeel – EmpthyThink about the Job trying to be Done

Why?

Lean Canvas

Core Assumptions Experiment Design Test In-Progress

Validated Learning

LeanStartup Kanban

Break into Teams

5-second introductionsName, From, I’m in session Because…Max 5 per Team

Select Problem

clipartist.info

Problem #1 source: skai.gr

Education / Employment Gap

Truck Driver Turnover @ 93%Minimize Freight Cost

Problem #2 source: ata

Irrigation Circles cause land lossMaximize Fertile Soil

Problem #3 source: markzackpaints

Wife says I’m Clueless. I am.Maximize Ease of Cooking

Problem #4 source: nexxtlevelup.com

Select Problem

Post-it Guidelines

Use the Post-its!1 Primary thought per Post-itDon’t waste


Identify Potential CustomerWho has the Pain?

Feel – EmpthyThink about the Job trying to be Done

Why?

Persona CanvasFeel – EmpthyThink about the Job trying to be Done

Why?

Proposed Solution


Intended to be FunCan be Funny, RidiculousNot restricted in any wayNo Technology constraintsNo Resource or Financial constraints

Lean Canvas

1.) Move Persona Facts onto Customer Segments2.) Move Persona Goals & Pains onto Problem3.) Early Adopters4.) Existing Alternatives

Dude, Congrats on your Business Model!

Hypothesis BacklogCore Assumptions & Highest Risks


Customer, Market, Revenue,Distribution, Cost, Technology, etc.


Validated Learning

LeanStartup Kanban

Prioritize the 3 Highest Risks



Validated Learning

LeanStartup Kanban

Determine How to Test 3 Highest Risksas Fast as possible



Validated Learning

LeanStartup Kanban


October 2014

rdkhatch

#LeanStartup

ryan's lean startup 3-hour workshop

Small Business & Entrepreneurship

myths of lean startup

startup dynamis

lean startupryan

startup experience

new product growth

business failure

lean startup2

product lifecyclecrossing