day2 short

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.

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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

New Venture Development, Bora Özkent 2014 12

A startup is a hypothesis (or a set of hypotheses)

Every hypothesis needs testing

hypothesis testing methods


New Venture Development, Bora Özkent 2014

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LEAN STARTUP

70%10 % make money

fail


Most startups

fail from a lack of

(paying) customers.


We need structured

learning before we execute.


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


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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?


Product/Market Fit

Scale


Requirements

Release

Development

QA

Some learning

Very l i t t le learning

Most learning happens here


Requirements

Release

Customer Discovery

Customer Validation

Continuous Deployment


Before Product/Market Fit

Validated Learning

Pivots


Product/Market Fit

Scale


After Product/Market Fit

Growth

Optimizations

Validated Learning

Pivots


Product/Market Fit

Scale



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Business Model vs Business Plan

A document investors make you write that they don’t read


Business Model vs Business Plan

A single diagram of your business



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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)

https://www.youtube.com/channel/UCimRGeoiwUPmIddym-HdaCg



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