lean launchpad nyu itp 2.3.2014

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Class 2 / 12 February 3, 2013 Jen van der Meer | jd1159 at nyu dot edu Josh Knowles | chasing at spaceship dot com LEAN LAUNCHPAD AT NYU ITP Rockets Sketches borrowed from Harry Allen Design

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Lean LaunchPad NYU ITP - Value Proposition, with additional design and enthrography tools for how to talk to customers, observe, and get underneath the obvious pain points.

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Page 1: Lean LaunchPad NYU ITP 2.3.2014

Class 2 / 12

February 3, 2013

Jen van der Meer | jd1159 at nyu dot edu

Josh Knowles | chasing at spaceship dot com

LEAN LAUNCHPAD AT NYU ITP

Rockets Sketches borrowed from Harry Allen Design

Page 2: Lean LaunchPad NYU ITP 2.3.2014

6:00 – 6:40:

Customer Development + Value Proposition

Guests: Ajay Revels and Anthony Viviano

6:40 – 7:25 :

3 Teams present (5 minutes present, 10 minutes feedback)

7:25 – 7:35:

break

7:35 – 8:00:

2 Teams present (5/10)

8:00 – 8:55:

Tarikh Korula, Founder, Seen.co

TODAY:

Page 3: Lean LaunchPad NYU ITP 2.3.2014

.

WE ARE HERE

1/27Business ModelsCustomer DevelopmentUX Tools Intro

2/3Value PropositionUX Tools, Frameworks

2/10Customer SegmentsResearch Tools

2/17President’s Day

2/24Revenue StreamsDistributionProduct Definition

3/3Customer RelationshipsPartners,Product Development

3/10 Resources, Activities, Costs,Product Development

3/17Spring Break

3/24Customer DevelopmentProduct Development

3/31Customer DevelopmentProduct Development

4/7Customer DevelopmentProduct Development

4/14Customer DevelopmentProduct Development

4/21Product MVP

4/28Lessons Learned

Page 4: Lean LaunchPad NYU ITP 2.3.2014

What is your product or service?

How does it differ from an idea?

Why will people want it?

Who is the competition and how does your customer view these competitive offerings?

Where’s the market?

What’s the minimum feature set?

What’s the market type?

What was your inspiration?

What assumptions drove you to this?

What unique insight do you have into the market dynamics or into a technological that makes this a fresh opportunity?

CUSTOMER DEVELOPMENT

Page 5: Lean LaunchPad NYU ITP 2.3.2014

Eric Ries: A startup is a human institution designed to deliver a new product or service under conditions of extreme uncertainty.

A startup is a temporary organization designed formed to search for a scalable repeatable business model. – Steve Blank. *Most startups change their business model multiple times.

A scalable startup is a special class of startup – world class team, large vision, large target market, passionate belief and a reality distortion field.

A startup is a company designed to grow fast. –Paul Graham. Y Combinator.

-For a company to grow big, it has to make something a lot of people want.

-Reach and serve all of those people.

WHAT IS A STARTUP?

Page 6: Lean LaunchPad NYU ITP 2.3.2014

TYPES OF BUSINESSES STARTED 2012

Consulting 29%

Services: Other17%

Technology: Internet 14%

Real Estate14%

Service: Business Service

13%

Retail Store13%

Source: Kauffman Foundation Legal Zoom Startup Environment Index 2012

Page 7: Lean LaunchPad NYU ITP 2.3.2014

Small business or Main street: barber shop, gluten free bakery, grass fed butcher, farm-to-table pizza, deli, grocery, dry cleaner

Lifestyle business: strategy consultancy, PR film, jewelry-making, film production, digital media studios, and advertising agencies

Social enterprise: social or environmental purpose, may be willing to limit scale opportunities to meet more local goals, or directly serve the need. B-corp is a type of social enterprise

Social business (Yunnus): a for profit business that re-invests to meet a social need

Not-for-profit: an organization designed to solve a social/environmental need, that does not retain profits, nor distributes ownership

Intra-preneur startups: building a business inside of an incumbent company to prevent a Kodak moment

Buyable startups: designed for acqui-hire, or value to acquiree

Scalable startups: designed to scale, repeat

What are we doing HERE: experimenting to see what is possible with the teams we have in the room, figuring out the opportunity space, and most importantly your motivation

KINDS OF BUSINESSES

Page 8: Lean LaunchPad NYU ITP 2.3.2014

CUSTOMER DEVELOPMENT

Customer Discovery

Customer Creation

Customer Validation

CompanyBuilding

Iteration Execution

Turn hypothesesInto facts

Identify scalable And repeatableSales model

Page 9: Lean LaunchPad NYU ITP 2.3.2014

CUSTOMER DEVELOPMENT

Customer Discovery

Customer Creation

Customer Validation

CompanyBuilding

The first part of class: develop a hypothesis about each component of the business model.Customer discover = a set of experiments to test each hypothesis.Our goal: find a market to fit your vision, with a large enough addressable market to fit your aspirations.

Iteration Execution

Page 10: Lean LaunchPad NYU ITP 2.3.2014

CUSTOMER VALIDATION

Customer Discovery

Customer Creation

Customer Validation

CompanyBuilding

What happens after customer discovery: The business is tested and iterated to find a scalable, repeatable business model The goal: deliver the volume to build a profitable company Test the ability to scale: Product, acquisition, pricing, channel, sales plan

Iteration Execution

Page 11: Lean LaunchPad NYU ITP 2.3.2014

CUSTOMER VALIDATION

Customer Discovery

Customer Creation

Customer Validation

CompanyBuilding

Verify core features Verify market’s existence Locate customers Tests the product’s perceived value

and demand Idenfity the economic buyer Establish pricing and channel

strategies Check out proposed sales cycle

and process

ESCAPE VELOCITY

Iteration Execution

Page 12: Lean LaunchPad NYU ITP 2.3.2014

ESCAPE VELOCITY(IT’S NOT JUST FOR THE BAY AREA)

Page 13: Lean LaunchPad NYU ITP 2.3.2014

CUSTOMER CREATION

Customer Discovery

Customer Creation

Customer Validation

CompanyBuilding

Step on the gasSpend to create demand

Iteration Execution

Page 14: Lean LaunchPad NYU ITP 2.3.2014

COMPANY BUILDING

Customer Discovery

Customer Creation

Customer Validation

CompanyBuilding

Scalable repeatable business model is

found – startup becomes a company

Iteration Execution

Page 15: Lean LaunchPad NYU ITP 2.3.2014

VALUE PROPOSITION

Page 16: Lean LaunchPad NYU ITP 2.3.2014

16

Page 17: Lean LaunchPad NYU ITP 2.3.2014

WHAT IS IT

Product?

Service?

Ecosystem?

All?

Page 18: Lean LaunchPad NYU ITP 2.3.2014

WHAT IS YOUR INTENTION?

Your team values

Your vision

Why do you want to do this?

Then find a segment, a market, and a value proposition that fulfills this vision.

Page 19: Lean LaunchPad NYU ITP 2.3.2014

VALUE PROPOSITION

Value Proposition Canvas – Osterwalder

Page 20: Lean LaunchPad NYU ITP 2.3.2014

VALUE PROPOSITION CANVAS

Page 21: Lean LaunchPad NYU ITP 2.3.2014

PAIN DRIVEN DESIGN

“Design is not art. Design should solve a problem for humans. We can find the problems that we’re causing for humans by looking for pain points. Usability testing helps us understand the very obvious pain that we’re causing for users, which is fantastic. But beyond discovering user pain in our products, we should be doing user research on various demographics and understanding what in their lives is causing them pain.”

Laura Klein, UX for Lean Startups

Page 22: Lean LaunchPad NYU ITP 2.3.2014

As a customer, it has to hurt enough that you would go out of your way to pay for it.

It has to feel way better than staying the course, stasis, or inertia (which make people sometimes feel warm, and comfortable, and your thing scary, and risky).

WHY PAIN????

Page 23: Lean LaunchPad NYU ITP 2.3.2014

THE PAIN IN PAIN-DRIVEN DESIGN

How do you move beyond superficial needs?

How do you know when someone is telling the truth?

How do you get to unspoken, deeper needs?

Page 24: Lean LaunchPad NYU ITP 2.3.2014

PAIN DRIVEN DESIGNArtifacts

Behavior

Expressed Needs

VISIBLE: IN AWARENESSIN CONSCIOUSNESS

HIDDEN, INVISIBLE: OUT OF CONSCIOUSNESS

Norms

Beliefs Assumptions

Values

Plans

TraditionsAttitudes

Page 25: Lean LaunchPad NYU ITP 2.3.2014

PAIN DRIVEN DESIGN What just happened?EVENTS

WAYS OF EXPLAINING REALITY: SYSTEMS THINKING

PATTERNS What’s been happening?

TRENDS What are the common forces at play?

STRUCTURES How do processes and organization impact?

MENTAL MODELSHow does our thinking allow this to persist

Page 26: Lean LaunchPad NYU ITP 2.3.2014

HOW TO CONSTRUCT A VALUE PROPOSITIONLEAN LAUNCHPAD @ NYU ITP

DEVELOP EMPATHETIC MUSCLE MEMORY

PRACTICE THROUGH CUSTOMER DEVELOPMENT

ARTICULTATE PAIN POINTS + NEEDSSTATED, VISIBLE, AND HIDDEN, TACIT

Page 27: Lean LaunchPad NYU ITP 2.3.2014

HOW TO CONSTRUCT A VALUE PROPOSITIONLEAN LAUNCHPAD @ NYU ITP

DEVELOP EMPATHETIC MUSCLE MEMORY

PRACTICE THROUGH CUSTOMER DEVELOPMENT

ARTICULTATE PAINPOINTS + NEEDSSTATED, VISIBLE, AND HIDDEN, TACIT

Diverge Converge

Page 28: Lean LaunchPad NYU ITP 2.3.2014

DEVELOPING EMPATHY

From: D-School Bootcamp Bootleg:

Observe: View users and their behavior in the context of their lives.

Engage: interact and interview users through scheduled and short “intercept” encounters.

Immerse: Experience what your user experiences.

The problems you are trying to solve are rarely your own – and you won’t find a market until you can understand the needs that other have.

Page 29: Lean LaunchPad NYU ITP 2.3.2014

INTERVIEW FOR EMPATHY: STORIES ARE WHERE THE RICHEST INSIGHTS LIE

Intentionally setting the context to get deeper into the truth.

All of you are working on businesses designed to make human life better- start their. Describe your intentions.

Work to get into the emotional reasons when testing your key hypotheses. When does someone light up? When do they resist?

From: D-School Bootcamp Bootleg

Page 30: Lean LaunchPad NYU ITP 2.3.2014

A – E – I – O – U FRAMEWORK

AEIOU is an organizational framework when you get into the natural habitat of the person you are interviewing, and gives you a construct to look, listen, and observe (rather than talk, and hear):

Activities: goal directed sets of actions. What are the pathways that people take toward the things they want to accomplish, including specific actions and processes?

Environments: include the entire arena in which activities take place.

Interactions: between a person and someone, or something else, and are the building blocks of activities.

Objects: Building blocks of the environments, key elements put to complex or even unintended uses, possibly changing their function, meaning, and context.

Users: people whose behaviors, preferences, and needs are bing observed. Who is present? What are their roles and relationships? What are their values and biases.

From: Universal Methods of Design. Bella Harrington, Bruce Hanington.

Page 31: Lean LaunchPad NYU ITP 2.3.2014

GET OUT OF THE BUILDING, AND

OBSERVE

Page 32: Lean LaunchPad NYU ITP 2.3.2014

GO HERE

Page 33: Lean LaunchPad NYU ITP 2.3.2014

GO HERE

AND HERE

Page 34: Lean LaunchPad NYU ITP 2.3.2014

GO HEREAND HERE

AND HERE

Page 35: Lean LaunchPad NYU ITP 2.3.2014

GETTING READY FOR CUSTOMER DISCOVERY

Page 36: Lean LaunchPad NYU ITP 2.3.2014

AND, GO OUT AND TALK TO PEOPLE:PREPARING FOR AN INTERVIEW

Customer development IS different than ethnography or design research inquiry –

You are NOT a neutral observer. While you can practice the art of neutral observation, you, as a founder, are making contact with your first potential customers.

We’re going to start wide, and expansive, and go deep, getting to deeply unmet needs.

But we will be quickly moving to understand the business model that will feed your vision.

Page 37: Lean LaunchPad NYU ITP 2.3.2014

THE BRAIN DUMP

Convene a brain dump.

Get what’s in everyone’s heads out on the table.

Assumptions, expectations, closely held beliefs, perspectives, hypotheses.

Contradictions are inevitable, and become great fodder for hypotheses to test on your business model canvas.

“Think about it as a transitional ritual of unburdening, like men emptying their pockets of keys, change, and wallet as soon as they return home.”

– Adapted from Steve Portigal, Interviewing Users.

Page 38: Lean LaunchPad NYU ITP 2.3.2014

INTRODUCE, BE HONEST, ORIENT, GIVE CONTEXT

Introduce yourself and any associates (note takers, equipment operators, unseen observers)

Obtain consent / agreement to be interviewed, recorded, photographed

Discuss: use a note taker or an audio recorder. Be sure to tell participants about it. (Don’t conceal a recording devices). And know when to go off the record to get the backstory.

1. Why we're here: Introduce the purpose of the conversation

2. Explain freedoms (let’s stop at this time, ask questions, take a break, etc)

3. Explain time constraints (we have only 30 mins, 45 mins, an hour, today)

4. Provide an overview of what will happen (I will walk beside you, I will watch you do XYZ)

5. Explain briefly what you'd like to hear about (Tell me what you're thinking, doing, looking for, etc)

-Ajay Revels, Polite Machines

Page 39: Lean LaunchPad NYU ITP 2.3.2014

SHOW ME AROUND: OPEN ENDED TOUR

Who (who are we observing)

What (what are they doing)

How (how are they doing it)

Why (are they doing it)

When (are they doing it)From: Ajay Revels

Page 40: Lean LaunchPad NYU ITP 2.3.2014

HOW TO AVOID LEADING QUESTIONS

Agree with me: Leading questions

• Interviewer wants a specific agreement

• Question narrows the focus of the conversation

• Typically Yes / No or Agree/ Disagree or Choice #1 vs Choice #2

• Examples/ leading question:

– The city is doing a great job of managing the subway aren't they?

– Given that you're a stay-at-home-mom, you agree that women shouldn't work?

– This app has a high rating so you'd expect it to work well, correct?

-Ajay Revels, Polite Machines

Page 41: Lean LaunchPad NYU ITP 2.3.2014

CUSTOMER DISCOVERY IS NOT JOURNALISM

There is no value in leading questions – you are trying to get underneath the cover story people tell themselves.

(open) Charlie Rose:

You’re doing well at it too. So what’s the mission? Where is this thing going?

(closed / yes-no)

Charlie Rose:

Has the Groupon experience and has other things changed your sense of the timing of an IPO?

(closed / agreement)

Charlie Rose:

But you’re already getting in each other’s businesses. You know that. They have something called Google+.

Page 42: Lean LaunchPad NYU ITP 2.3.2014

42

WHAT CAME BEFORE STEVE AND ERIC

Page 43: Lean LaunchPad NYU ITP 2.3.2014

FOR NEXT WEEK2/10

Page 44: Lean LaunchPad NYU ITP 2.3.2014

.

NEXT WEEK PREP:

• Watch Customer Segments lecture.

• Business Model Generation, 126-145.

• The Founder’s Dilemma (HBR) and optional – The Founder’s Dilemma Noam Wasserman (Stanford Entrepreneurial Thought Leaders Podcast)

• The Lean UX Manifesto by Anthony Viviano

• Talk to at least 5 potential customers. Post discovery narratives on your team blog.

Page 45: Lean LaunchPad NYU ITP 2.3.2014

.

NEXT WEEK PRESENTATION:

• Cover slide WITH YOUR NAMES and your quick description.

• What hypotheses related to your value proposition and segments did you test last week. What did you validate. What did you invalidate. Who did you talk to in order to validate these hypotheses.

• Share the Latest version Business Model Canvas with changes marked

• Share any updates to your Market size (TAM, SAM, Target Market)

• Propose experiments to test your customer segments. What constitutes a pass/fail signal for each test?

Page 46: Lean LaunchPad NYU ITP 2.3.2014

APPENDIX

Page 47: Lean LaunchPad NYU ITP 2.3.2014

Value Proposition Canvas: Business Model Generation

Legal Zoom Kauffman Foundation Startup Environment Index 2012

Interviewing Users: How to Uncover Compelling Insights: Steve Portigal

Universal Methods of Design: Bella Harrington, Bruce Hanington.

DSchool Bootcamp Bootleg

And this just in from Ash Maurya: How to Interview Your Users and Get Useful Feedback

RESOURCES FOR FURTHER UNDERSTANDING

Page 48: Lean LaunchPad NYU ITP 2.3.2014

Ask about sequence: “Describe a typical day.”

Ask about quantity: “How many diapers do you change.”

Ask for specific examples: “What is the last movie you downloaded.”

Ask about exceptions: “Tell me when you had to solve that problem without using our software.”

Ask for a complete list: “What are all of the different toddler learning toys have you tried.”

Ask about relationships: “How do you work with vendors?”

Ask about organizational structure: “How do you work with the Board of Education?

A PALETTE OF CUSTOMER DISCOVERY TYPES: GATHER CONTEXT, COLLECT DETAILS:

Adapted from Interviewing Users, by Steve Portigal

Page 49: Lean LaunchPad NYU ITP 2.3.2014

Ask for clarification: “When you said everything changed after September, what happened then.”

Ask about code words: “What does that acronym stand for.”

Ask about emotional cues: “Why do you laugh when you mention Seven Eleven.”

Probe delicately: “You mentioned that changes in your organization led to a different decision – can you tell me what that situation was.” Probe without presuming: “Some people have strong opinions about teaching children to read before they enter first grade, while other’s don’t. What is your take.”

PROBE WHAT HAS BEEN UNSAID:

Adapted from Interviewing Users, by Steve Portigal

Page 50: Lean LaunchPad NYU ITP 2.3.2014

Compare processes: “How is applying for preschool different than applying for pre-k.”

Compare to others: “Do you learning habits differ from your fellow grad students in your program”

Compare across time: “How have your shopping habits changed from the time you lived with roommate, to living alone, to living with a partner.”

QUESTIONS THAT CREATE CONTRASTS TO UNCOVER FRAMEWORKS AND MENTAL MODELS:

Adapted from Interviewing Users, by Steve Portigal

Page 51: Lean LaunchPad NYU ITP 2.3.2014

Jen van der Meer, Adjunct Professor at ITP since 2008 ITP courses + workshops: Bodies and Buildings, Products Tell Their Stories, ITP VC Pitchfest, . Currently: Luminary Labs, Angel Investor, Health Data Challenges, Judge for startup competitions, + SVA PoD

Josh Knowles, ITP ’0715+ years as an independent developer/consultant, working with numerous brands and start-up clients (currently under the aegis of Frescher-Southern, Ltd.)

ITP TEACHING TEAM