day2 short
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Bora Özkent
NEW VENTURE DEVELOPMENT DAY-2
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WHAT IS A STARTUP?
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Why?
Since WW2 startups have made %50 of all innovation and 95% of radical innovation in US.
24 times more innovation per R&D dollars.
4New Venture Development, Bora Özkent 2014
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Startups Are Not Smaller Versions of Big Companies
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WHAT IS A STARTUP?
a human institution designed to deliver a product or serviceunder extreme uncertaintyexperiment
Companies vs Startups
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A startup is a hypothesis (or a set of hypotheses)
Every hypothesis needs testing
hypothesis testing methods
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New Venture Development, Bora Özkent 2014
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LEAN STARTUP
70%10 % make money
fail
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Most startups
fail from a lack of
(paying) customers.
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We need structured
learning before we execute.
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Startups are special creatures
• There Are No Facts Inside Your Building, So Get Outside
• Failure is an Integral Part of the Search for the Business Model
• If You’re Afraid to Fail You’re Destined to Do So
• Validate Your Hypotheses with Experiments
• No Business Plan Survives First Contact with Customers
• Startup Metrics are Different from Existing Companies
• Fast, Fearless Decision-Making, Cycle Time, Speed and Tempo
• If it’s not About Passion, You’re Dead the Day You Opened your Doors
• Startup Titles and Functions Are Very Different from a Company’s
• Preserve Cash While Searching. After It’s Found, Spend
• Communicate and Share Learning
• Startups Demand Comfort with Chaos and Uncertainty
New Venture Development, Bora Özkent 2014
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RUNNING WITH LEAN CANVAS
Validate Problem/Solution Fit
Problem/Solution Fit
Product/Market Fit
Scale
Do I have a problem worth solving?
Thursday, November 4, 2010
Achieve Product/Market Fit
Have I bui l t something people want?
Problem/Solution Fit
Product/Market Fit
Scale
Thursday, November 4, 2010
Requirements
Release
Development
QA
Some learning
Very l i t t le learning
Most learning happens here
Thursday, November 4, 2010
Requirements
Release
Customer Discovery
Customer Validation
Continuous Deployment
Thursday, November 4, 2010
Before Product/Market Fit
Validated Learning
Pivots
Problem/Solution Fit
Product/Market Fit
Scale
Thursday, November 4, 2010
After Product/Market Fit
Growth
Optimizations
Validated Learning
Pivots
Problem/Solution Fit
Product/Market Fit
Scale
Thursday, November 4, 2010
New Venture Development, Bora Özkent 2014
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Business Model vs Business Plan
A document investors make you write that they don’t read
Thursday, November 4, 2010
Business Model vs Business Plan
A single diagram of your business
Thursday, November 4, 2010
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Homework for Tomorrow
• Read Running Lean– Part-2 Create Your Lean Canvas – Part-3 Identify the Riskiest Parts of Your Plan
• Optional: Visit Ash Maurya’s You Tube Channel and Watch an extra video and prepare comments:https://www.youtube.com/channel/UCimRGeoiwUPmIddym-HdaCg
• Prepare the first version of your Lean Canvas (Use LeanStack.Com for documentation) and determine the riskiest parts of your canvas
• Prepare Case Study “Dropbox” with your group and write a report (Maximum 2 Pages, 12 Font-Arial)
Dropbox Case Questions
1. Dropbox is a late mover in a crowded space. What opportunity did Houston see? Specifically, what are the key elements of Dropbox’s current business model?
2. Is Dropbox profitable as of June 2010? Are you optimistic about its prospects? How does your estimate of Dropbox’s current profitability influence your evaluation of the venture’s prospects?
3. When he applied to Y Combinator (see case Exhibit 2), what hypotheses did Houston hold about key elements of Dropbox’s business model? As of June 2010, which of these hypotheses have been confirmed, and which have been discarded? What is your assessment of the approach Houston used to test hypotheses? Did he waste time/resources or make notable mistakes? Can you imagine better ways to test key hypotheses?
4. Imagine that at the same time Dropbox was founded, Google decided to target the opportunity that Houston had identified. How would Google’s approach to pursuing “G-Drive” have differed from the approach that Dropbox’s team followed?
5. What should Houston do about the decision posed at the end of the case, i.e., creating a separate version for small and medium-sized business (SMB) customers? What process should he use to make this decision? 38
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