the startup lifecycle (presented by cei and friends)
TRANSCRIPT
the startup lifecycle presented by the center for entrepreneurial innovation & friends
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we help companies through all stages of the startup lifecycle
validation product development
commercialization scale
ceo & founder | theraspecs lean startup & innovation coach | adobe lead mentor | adobe kickbox selection committee | cei
stage one: validation
SEARCHING FOR PRODUCT/MARKET FIT Customer discovery and product validation
© 2013-2015 J. Hart Shafer
What they wanted: “Tire swing”
What we heard: “Tier swing”
FIRST, A QUESTION
Edward Hicks. "Noahs Ark”
TWO THINKING SYSTEMS
System 1 runs the show by default
Kahneman. Thinking, Fast and Slow
System 1: Fast, effortless, pattern
matching to norms
System 2 Slow, effortful, logical
We need to consciously activate our system 2
YOU ARE NOT RATIONAL
¤ Anchoring ¤ Availability ¤ Bandwagon ¤ Belief ¤ Cheerleader ¤ Clustering ¤ Confirmation ¤ Congruence ¤ Contrast
¤ Consistency ¤ Expectation ¤ Framing effect ¤ Gambler’s ¤ Heuristic ¤ Information ¤ Observation ¤ Priming ¤ Status Quo
http://en.wikipedia.org/wiki/List_of_cognitive_biases
Availability
Confirmation Priming
NEW PRODUCTS TODAY
$
!!!!
NEW PRODUCTS TODAY
$
!!!!
¤ Steve Blank: 4 Steps to the Epiphany, Startup Owners Manual
¤ Eric Reis: Lean Startup
THE LEARNING LOOP
Ideas
Build
Product
Measure
Data
Learn
Experiment
Hypotheses
Pivot?
THE MANTRA
THERE ARE NO FACTS INSIDE THE BUILDING
(SO GET OUTSIDE THE BUILDING)
THE MANTRA
OBJECTION!
“If I had asked people what they wanted,
they would have said, ‘faster horses.’”
–Henry Ford
OBJECTION!
“If I had asked people what they wanted,
they would have said, ‘faster horses.’”
–Henry Ford
Don’t ask. Find out.
DECLARE YOUR PLAN
¤ Step way back: examine all sides of business
¤ Business model canvas or lean canvas ¤ BMC: Alexander Osterwalder, Business Model Generation
¤ LC: Ash Maurya, Running Lean
LEAN CANVAS
Customer Segments
Target Customers
Early adopters?
Problem Top 3 Problems
Existing Alternatives
Solution Top 3 Features
Unique Value Proposition
Clear, compelling message. What
makes you different?
Key Metrics e.g. AARRR
Channel Path to
Customers
Revenue Streams Revenue Model, life time value, revenue,
gross margin
Cost Structure Customer acquisition, distribution,
people, etc.
Unfair Advantage
Not easily copied or
bought
Pivot?
Pivot? Pivot? Pivot?
Pivot?
Pivot? Pivot?
Pivot? Pivot?
Skinned knee
Broken leg
22
IDENTIFY & RANK ASSUMPTIONS
1. Problem/solution fit
2. Product/market fit
3. Scale
Ash Maurya, Running Lean
Risk
Un
ce
rta
inty
Risk
Un
ce
rta
inty
Risk
Un
ce
rta
inty
CREATE HYPOTHESES
“If you torture the data long enough, it will confess.”
–Ronald Coase
Economist, University of Chicago
FALSIFIABLE HYPOTHESES
Specific, repeatable action will result in
Expected, measurable customer action
Making our headline more engaging will result in
More customers signing up
FALSIFIABLE HYPOTHESES
Specific, repeatable action will result in
Expected, measurable customer action
Making our headline more engaging will result in
More customers signing up
FALSIFIABLE HYPOTHESES
Changing our headline to focus on in-studio music recording
will result in A 10% increase in customer conversions
Specific, repeatable action will result in
Expected, measurable customer action
RUN EXPERIMENTS
investment
28
Alternate Background, Dark, Bullet, full screen graphic
Picture: “what’s the cheapest thing I could do” (search: piggy bank)
Appropriately sized investment
29
Alternate Background, Dark, Bullet, full screen graphic
Picture: “no single big bets”
No big bets
30
Alternate Background, Dark, Bullet, full screen graphic
Picture: “good experiments are additive, not monolithic”
Ekaterina Minaeva Shuttersto
ck
Additive, not monolithic
WHAT YOU ARE LOOKING FOR
A/B TESTING
INTERVIEWS
Problem Solution
INTERVIEWS
Problem Solution
Hypothesis: Asking target customers to describe their workflow
will result in Spontaneous description of file-level collaboration as a major pain point
FOCUS GROUPS
DON’T USE FOCUS
GROUPS
GAMES - SAIL BOAT
© Innovationgames.com
GAMES - BUY A FEATURE
© Innovationgames.com
SURVEYS
DON’T USE SURVEYS
BEST USE FOR SURVEYS
Qualitative
Quantitative
PAPER PROTOTYPES
Maximum resolution: thick Sharpie on 8½x11” paper
BEHAVIOR TESTS & MVPs
Measured behavior
over
Predicted behavior
WRAP UP
The “right thing” is not a yes-or-no problem
80% right is more than 20% waste
42
SO…
GET OUT OF THE BUILDING!
principal and co-owner | padt former engineer | honeywell project lead | padt startuplabs at cei bachelor of science | mechanical engineering
stage two: product development
PRODUCT DEVELOPMENT Lean Manufacturing Principals and Minimum Viable Product Development Eric Miller, Principal PADT, Inc.
Goal 1: Get Your Product Developed
• A significant effort • Requires lots of people, Gme, and money • If you think you are starGng with a developed product that needs to be perfected – You are Wrong
• Product Develop is hard work that requires focus and structure
Goal 2: Make Your Product
• Get your product in producGon at your price goal
• Do it yourself or find partners • Everything from materials to distribuGon • If you can’t make it, you can’t sell it.
Minimum Viable Product Development
Minimum Viable Product Development
• Key part of Lean • DefiniGon of a MVP:
“…that product which has just those features and no more that allows you to ship a product that early adopters see and, at least some of whom resonate with, pay you money for, and start to give you feedback on”
Why a MVP?
• Time and Money • Developing a full product takes Gme and effort you probably don’t have
• Get interest, get money, buy yourself Gme with an MVP
• Get feedback from your customers early
• A way to bootstrap your company
Types of MVP’s • Not a Product
– Video • Sell your design and features • Get interest and funding
– Futures • AdverGse and sell the product before you actually create it – risky, you need to deliver
– Fundraiser • Kickstarter, etc… May contain Video and is sort of like Futures.
– Service • Do what your product will do as a service
• The best of the opGons: money, experience, reputaGon
Types of MVP’s
• SoWware – Give it away as beta, alpha, or open source
• Gives you experience and brand building plus great feedback – Single feature
• Find that one thing that people want and deliver that • Google, Dropbox, etc…
– A true MVP • IdenGfy the key feature you must have and develop for those
Types of MVP’s
• Hardware – Only opGon is to limit your first release to the absolute minimum of features
– Focus on building early success
Success with a Minimum Viable Product Development
• Do the step before right – Get the true requirements of your customers – Rank them accurately – Pick the absolute minimum of features
• Don’t go off on tangents – SGck to the plan
• Apply lean product development principles
Use the Lean Product Development Process
• Lean Product Development (Eric’s Top 10) 1. Clearly define requirements and design to them 2. Requirement should be focused on customer value 3. Frontload the process with exploraGon and iteraGons 4. Create a level PD process 5. Balance experGse and cross-‐funcGon integraGon 6. Design quality in to the product 7. Involve suppliers in the process 8. Develop experGse in your technical staff 9. Build in a culture of excellence and relentless pursuit of conGnuous
improvement 10. Use standardizaGon when possible, without blocking flexibility
Use a Process
• Design a process
• Document it and teach it
• SGck to it • ConGnually improve on it
Lean Manufacturing
Lean Manufacturing • Toyota dominates in manufacturing because of these principles
• The long term cost of a physical product is driven by manufacturing costs
• The reputaGon of a company is controlled by the product quality and performance
• This stuff works, and works well
For Mass ProducGon
• As a startup, you need to be careful • These principles were developed for a large, established, mass producGon company
• They can be applied to a startup, lower volumes, and simpler parts
• Just ask “Does this add value?”
Basic Principal • Eliminate Waste
– Many types of waste, all bad – Review, idenGfy, reduce or eliminate
• ConGnuous Improvement – Should be throughout your organizaGon – Built in to your manufacturing planning and execuGon
• People – Honor and respect your workers – Train, communicate, praise
• Just in Time – Too detailed and complex to talk about here – Understand, plan, communicate
• Quality Built In
Lean Manufacturing and the Startup
• What part of the process will you do, what will you outsource – It is rare for a startup today to do their own manufacturing
• Find a vendor that applies the principles and work with them • Integrate with your vendor
– Be part of the process – Pay to have someone be your liaison and be there with them and you
• Bolom line: Throwing things over the wall is not lean manufacturing
• Bolom line 2: Find the right vendor and work with them, not against them.
Some General Advice
• First Gme: – Product Development and Manufacturing will take longer and cost more than you thought
• SGcking to lean principles will minimize Gme and cost and maximize value
• Listen to the experts • Develop key requirements and laser focus on delivering those
Why Things Go Bad
• Desire for features and lack of desire or ability to pay for them – Biggest cause of unhappy/fired customers at PADT
• “It didn’t work” – Find a problem and need to redesign – Or no way to meet requirement
• VariaGon from requirements • Loss avoidance
SuggesGons
• PrioriGze Product Development and Manufacturing – Market research, sales, markeGng, etc.. are a lot more glamorous
– Hire or outsource – then listen to them – Its about process
• Successful products all share one thing – Good design and successful manufacturing
entrepreneur-in-residence | cei former senior manager | godaddy black belt, six sigma | ge consumer finance 15+ years experience | fortune 100 companies
stage three: commercialization
commercialization (aka “start selling sh!t”)
textbook definition
nate’s definition
introducing a new product or product method into commerce
building a business around your product
if you are lucky
commercialization is ongoing!
the big difference between…
go-to-market strategy = business model
marketing strategy = engaging your customers
outbound
marketing strategy
active interruptive expensive
inbound passive holistic
inexpensive
telling your story
who = target persona
what = problem
why = solution benefits
how = solution features
when = call-to-action
where = engagement channel
pricing strategy
luxury
retail wholesale
value
based on types of markets
convenience
test, test, test become a student
of your business
chief executive officer | pinnacle transplant former president / ceo | nacet board chair | azbio, flinn foundation board of directors | nbia
stage four: scale
Scaling and Growth
Russ Yelton, CEO MBA, CTBS
1. Assessing Where Your Culture Is 2. Ensuring CommunicaGon 3. Leading and Embracing Failure 4. Invest, Invest and Invest in Your People (they are the only thing that malers)
“Good teams become great ones when they trust each other enough to surrender the “me” for “we”.
-‐Phil Jackson
Culture Reset Pinnacle Transplant Technologies is a regeneraGve medical company with a focus on providing safe, quality driven products to improve lives through innova@on, collabora@on and
teamwork.
CommunicaGon • Monthly e-‐newsleler • New Associates • Work Anniversaries • SuggesGons • Sharing awards • Safety SuggesGons • HR Reminders
Let Your People Lead • Created mid-‐level management
• Social Commilee • Associates alend external events
• Share the success and failures
Create Accountability but…..
Invest in Your Associates • 401K Match • Health Insurance • Career Paths • Pay Alignment • Annual Corporate Retreat
• Quarterly SaGsfacGon Surveys
Let them express themselves….
Results • 97% retenGon rate • 95% of suggesGons are
related to quality improvement
• Culture of accountability throughout organizaGon
• 80 associates, 110 EoY • Our people are happy
Closing Thoughts • Never to early • Culture will create itself if leW alone
• New people bring new ideas, thoughts, behaviors
• Must constantly reinforce
• Never lose vision
learn more
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