a lean investor tells you why to love the problem and not the solution - fredi schmidli @ lean...
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Fredi SchmidliBern, 12. Januar, 2017
A Lean Investor tells you, why to love the Problem and not the Solution
Lean Startup BernMeetup
fredi@pragmatic-‐solutions.ch
http://www.slideshare.net/pragmaticsolutions
Find this presentation tomorrow on slideshare
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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/
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THE LEAN INVESTOR:MAKE LOTS OF LITTLE BETS. EXPECT MOST TOFAIL.
Dave Mc Clure @http://500.co
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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
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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 known 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?
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From Idea to Problem/Solution Fit
8Source: Ash Maurya «Running Lean»
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Key Principle
Get out of the building and 1 2 3 4 5 6 7 8 9
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Lean Canvas (by Ash Maurya / adapted from Osterwalder)
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Why Lean Innovation?
See: http://practicetrumpstheory.com/2012/02/why-‐lean-‐canvas/
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The 3 Phases of Customer Development
12Source: Ash Maurya, Scaling Lean
What happens here?
fredi@pragmatic-‐solutions.ch12.01.2017
Source: Ash Maurya «Running Lean» Workshop, 2015
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Lean Canvas (by Ash Maurya / adapted from Osterwalder)
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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.ch12.01.2017
What and why Early Adopters?
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2.5% 13.5% 34% 34% 16%
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Lean Canvas (by Ash Maurya / adapted from Osterwalder)
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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
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19fredi@pragmatic-‐solutions.ch12.01.2017Source: Ash Maurya «Running Lean» Workshop, 2015
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.ch12.01.2017
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
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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.ch12.01.2017
Lean Canvas (by Ash Maurya / adapted from Osterwalder)
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Lean Canvas (by Ash Maurya / adapted from Osterwalder)
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Source: Ash Maurya «Running Lean» Workshop, 2015
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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
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Pretotype Example (Explainer Video)
Test vision ofcloud serviceoffering –Dropbox
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https://www.youtube.com/watch?v=7QmCUDHpNzE
fredi@pragmatic-‐solutions.ch12.01.2017
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)
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• Test the pricing (15min)
Goal: Will I build sth. people want at the price they will pay?
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LEARN: Persevere
I am convinced that half of what separates the successful entrepreneurs from the non-successful ones is pure perseverance 30fredi@pragmatic-‐solutions.ch12.01.2017
31fredi@pragmatic-‐solutions.ch12.01.2017Source: Ash Maurya «Running Lean» Workshop, 2015
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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%
37%
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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
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LEARN: … or pivot
Pivot: A change in strategy without a change in vision
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35fredi@pragmatic-‐solutions.ch12.01.2017Source: Ash Maurya «Running Lean» Workshop, 2015
Lean Dash Board (Lean Stack)
Flow
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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?
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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
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Summary: Saving Potential byapplying Lean Innovation• Lean Canvas instead of Business Plan• Identification & priorisation of risks instead oftesting the whole Business Model• Problem&Solution interviews instead of Market Research• Pretotype & MVP instead of perfect Product• Speed has biggest impact on profit
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