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DESCRIPTIONIntroduction to lean startup and customer development, as presented during the mini XPdays 2012.
Lean Startups: what happens before iteration 0
Lean Startup: a Learning Organization
Agile Development is good for developing solutions that cannot be specified entirely upfront delivering customer value involving a customer in software development
(iterative) product delivery - you build good products!
Will agile help them build better products?Welcome to the world of startups3Build it, and they will come(good products = big bucks)
Google WaveWebvan: IPO? VC investment?Not profitable
Order: Wave was confusing, and ended up with no customers; Geo Cities had many users, but no business model; Webvan had a business model, but it wasnt a profitable
I think GeoCities was the first proof that you could have something really popular and still not make any money on the internetWebvan: Poster child of premature scaling Grocery business has razor-thin margins to begin with, it was never able to attract enough customers to justify its spending spree4Startup is more than product alone
What do you need for a successful business?What do you need for a successful business?5Tool #1: Business Model Canvas
Who are your customers?
What do you offer?Value?Uniqueness?
How to communicate & deliver?
How will you make money?
What do you need to build up?
What will you need to master?
What can you outsource to whom?
What are my costs?Remarks: key partners is more than just outsourcing Can be more strategic (e.g. a channel partner, co-marketing, combined product offering)6Exercise #1: fill in a canvas
Groupon: deal of the day in your inbox.
Get 50%-90% off the best stuff your city has to offer.
Your own idea?
MerchantsConsumersDiscountsNew, local customers (guarantee #)Automated/E-mailSocial mediaPersonal/Call CentersDirect salesMerchant AcquisitionDeal selectionEmail DB50% commissionPersonalization engine20% unfulfilled grouponsCust. acquisition (30% of revenue)Google adsMerchant Acquisition (sales = employees)Copy-writingChurnWebsiteOn Lean Kanban we can ask the audience, and show filed by field. On XP Day we will do the workshop, and then ask each group and also show what we got. 8Part IIEntrepreneurship as a sciencebegan with PDA payment toolbegan as a MMO game
What happenedhere?10Conditions of extreme uncertainty
Who is the customer?
What do they value?
What is our product anyway?Remark: link back to the examples11The guessing game
guessguessguessguessguessguessguessguessguess12Startup is a temporary organization with purpose to search for a repeatable and scalable business model.
Startup ~ researchEntrepreneurship as a scienceState your HypothesesSketch your Business
Drivers in citiesHelp find parkingMonetize unused parkingSMSMobile appMicro commission App storeViralBootstrapping: parking scoutsCommunityUser credit cards parkrGPS producersNear-location notifier + UICommunity (parking spotter)PlatformWhat are the major risks?16Identify Major Risks
Drivers in citiesHelp find parkingMonetize unused parkingSMSMobile appMicro commission App storeViralBootstrapping: parking scoutsCommunityUser credit cards parkrGPS producersNear-location notifier + UICommunity (scouts)PlatformNot sure about this slide17Good start: problem-solution fitCustomers do I know who they are & how to reach them?
Segment? Early adopter?Roles: user, economic buyer, influencer, saboteur?How do they search for products?
Problemtop 3 customer problems?
Pain level: must have vs nice to haveAwareness: active vs. latentAlternatives : how do they deal with these problems today?Solutiontop 3 product features?
Do they solve the top 3 problems?Barriers to adoption (e.g. fit/integration with existing workflow)?Is my price accepted?cheatsheetExplain what it is on the high level Spend less time on details 18ExperimentExample 1: Problem-Solution Interview
A 1st problem is Does this resonate with you? How do you deal with it today? Is it a must-have?... This is how our solution looks today (screen per problem). Which of the screens resonated the most? Which could you live without? Are there any additional features you think are missing?Would you pay $20 a month to use a tool like this?Use Mocks
Perhaps we should rub it in it sounds too logical as it is 20
Example 2: Landing Page ExperimentCall to actionTrouble Parking in Brussels?www.parkr.comFind parking when you need it. Park easily in busy streets of BrusselsPaying too much for parking?www.parkr.comMonetize your unused parking time and help others find free parking!
Good for very early feedback, or choosing between alternativesMention measuring already 21Example 3: Fake your Product
Wizard of OzThere is no difference between concierge and wiz of oz 22Pivot or persevereWhat is a pivot?Change of an aspect of a business modelSuccessful startups change direction quicklyBased on learning
Grounded in the vision They keep one foot in the past and place one foot in a new possible future
Vision: search spaceCHEATSHEET
Customer problem pivot: same product, same segment, different problem Starbucks : started selling coffee beans & espresso makersSegment pivot: same product , similar problem, different set of customerse.g. consumers arent buying, enterprises have a similar problemSometimes a pure marketing changeTechnology pivot:repurpose the technology to solve a more pressing or marketable problemProduct feature pivot: remove features for focus, or to add features for a more holistic solution pay close attention to what real customers are doingRevenue model pivote.g. from a premium customized, to a low price commoditized solutione.g. from a one-time sale to monthly subscription or license feese.g. razor versus blade strategySales channel pivot: use lessons learned from customers to switch from direct sales E.g. distribution channel, ecommerce, white-labeling Product versus services pivot:if products are too different or too complex to be sold effectively to the customer with the problembundle support services with the product, education offerings...Major competitor pivot: react when a major new player or competitor jumps into your spaceone of the above pivots to build your differentiation and stay aliveGather data, draw conclusions
Drivers in citiesHelp find parkingMonetize unused parkingSMSMobile appMicro commission App storeViralBootstrapping: parking scoutsCommunityUser credit cards Parkr foursquare for parking spotsGPS producersNear-location notifier + UIBuilding Community (critical mass)PlatformCity budgetCommunityApp feeCitiesPromoting public transport 25Closing wordsOnto the Product DevelopmentLean startup build-measure-learn loop by Eric RiesContinuous deploymentPivot Root-cause MetricsFeedbackSPEED!This experimentation approach does not stop when the product is finally deployed to users.
You treat your feature/improvement ideas as hypotheses. You build them (or a minimal version that will allow you to learn) and deply as fast as possible.
Agile practices are essential. You have to be able to iterate quickly and respond rapidly to customer feedback.
Then you measure. You measure behaviour your feature was supposed to promote (e.g. whether email notifications bring customers back to the product), and monitor metrics that are relevant for your business. You also solicit feedback from your customers: both online, and face to face (e.g. usability tests).
Pivoting at this later stage may mean simply rolling back the change (if it proves to have adverse or even zero effect).
If you encountered a problem, you want to make sure you are dealing with it systemically, therefore root-causing (e.g. using 5Y). This practice can be also integrated with retrospects. 27#tips from the trenchesCounter-intuitive and beyond comfort zone
Learn from the data You dont get a gold star for following the process
Its okay to be opportunistic but stay grounded in your vision
Speed If youre really on to something, there are other 4-5 companies pursuing a similar vision
Techniques helpful, but you need to be very creative
It is very confronting (you open yourself up to not being right) you stare death in the eyesOpportunistic: try to land the customer (e.g. in customer interviews)28ReferencesLean Startup by Eric Riesstartuplessonslearned.com theleanstartup.com/booksllconf.comSteve Blank steveblank.comsteveblank.com/books.htmlAsh Mauryaashmaurya.comrunningleanhq.com (book)Dave McClureAARRR: Startup metrics for pirates
Tools leancanvas.com leanlaunchlab.com usertesting.com KissMetrics, Piwik uservoice.com
More references businessmodelgeneration.comventurehacks.com500hats.typepad.compaulgraham.comnews.ycombinator.com/Even more: steveblank.com/tools-and-blogs-for-entrepreneursLocalLean Startup Circle Brussels ICAB, Beta Group Co-Working spacewww.meetup.com/lean-brussels/Startup Weekend Brussels /EindhovenLean Startup Machine Rotterdambetagroup.beFounder Institute & MICwestartup .eutechbrew.be
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