Lean Startups

Brief presentation on the Lean Startup methodology. Going into areas such as:

- Build-measure-learn feedback loop
- MVPs
- Split tests (A/B testing)
- Kanban (lean style)
- Pivots
- Growth

Transcript

1. Lean Startup Dominic Wroblewski
2. A startup is a human institution designed to create a new product or service under conditions of extreme uncertainty What is a startup?
3. It is not: • Wasted Time • Wasted Code • Wasted Money What is lean?
4. 1. Entrepreneurs are everywhere • It can work in any size company, any sector, any industry 2. Entrepreneurship is management • A startup is an institution not just a product, and requires a new kind of management specifically geared to its context of extreme uncertainty 3. Validated Learning • To build a sustainable business 4. Build-Measure-Learn • The accelerated feedback loop 5. Innovation Accounting • How to measure progress, set up milestones, and prioritise work Lean Startup Method
5. Which are of our efforts are value-creating and which are wasteful? Value vs Waste
6. • Good plan? • Solid Strategy? • Thorough market research? Why startups fail? This doesn’t work
7. • Startups operate with too much uncertainty. • Do not know who their customer is or what their product should be. • Hard to predict the future. Why startups fail?
8. If you can’t fail at something, then you are not learning
9. • Can be broken down into it’s component parts: • Value Hypothesis • Tests whether a product or service really delivers value to customers once they are using it • Growth Hypothesis • Tests how customers will discover a product or service. • How it will spread • From early adopters to mass adoption? Vision
10. • Customers who feel the need for the product. • Tend to be most forgiving of mistakes and often eager to give feedback • Use imagination to fill in what a product is missing Early Adopters
11. An experiment is more than just a theoretical inquiry, it is also a first product. If this or any other experiment is successful, it allows the manager to get start with his or her campaign: • Enlisting early adopters • Adding people to each further experiment or iteration • Starting to build the major product By the time that product is ready to be distributed widely, it will already have established customers Experiment
12. 1. Do customers recognise that they have the problem you are trying to solve? 2. If there was a solution, would they buy it? 3. Would they buy it from us? 4. Can we build a solution for that problem? New Idea
13. Success is not delivering a feature; success is learning how to solve a customers’ problem
14. Build-Measure-Learn Feedback Loop
15. Minimise the TOTAL time through the loop Build-Measure-Learn
16. Planning really works in reverse order: • Figure out what we need to learn • Figure out what we need to measure to know if we are gaining validated learning • Figure out what product we need to build to run that experiment and get that measurement Planning
17. Biggest challenge will be determining whether the product development efforts are leading to real progress. Customers don’t know what they really want. Measure
18. • Easy for entrepreneurs to delude themselves that they are on the right path • Others may get ‘analysis paralysis’ - endlessly refining their plans, whiteboard strategising. • Too much analysis is dangerous, but none can lead to failure. • How do entrepreneurs know when to stop analysis and start building? • The answer is the MVP Delusion
19. An MVP is that version of the product that enables a full turn of the Build-Measure-Learn loop with a minimum amount of effort and the least amount of development time. An MVP helps entrepreneurs start the process of learning as quickly as possible. Minimum Viable Product
20. The MVP lacks many features that may prove essential later on. A product needs to get in front of potential customers to gauge their reactions. You may even try to start selling them the prototype. Minimum Viable Product
21. • Wordpress blog • Everyday create a new post • Email for coupons • Homemade pizza discount coupons • Enough to prove the concept and show that it was something that people really liked Groupon
22. • Built an MVP • Tons of bugs and problems • Shipped to customers before it was ready • Charged money • Shipped new versions of the product dozens of times a day • Early adopters • Kept a strong relationship with those customers for feedback IMVU
23. • Feedback from customers was very consistent • Wanted ability to move their avatars • High costs and time to produce a high-quality solution similar to “The Sims”. • Another MVP: - Click where they wanted the avatar to go to - Avatar would then teleport • Positive customer feedback - “More advanced than The Sims” • Customers don’t care how much time something takes to build • Be willing to set aside traditional professional standards to start the process of validated learning as soon as possible IMVU
24. • Leap-of-faith question • If we can provide a superior customer experience will people give our product a try? • File synchronisation was a problem that most people didn’t know they had • Once you experience the solution, you can’t imagine how you ever lived without it • VC’s couldn’t imagine a world in line with Drew’s vision • Already existing products • Did they work seamlessly? No. Dropbox - Drew Houston
25. • Impossible to demonstrate the working software in prototype form • Product required significant technical hurdles • Online service component • Required high reliability and availability • Avoided risk of years of development by making a video • Simple 3 minute demonstration of the technology • Targeted to the community of early adopters • Beta waiting list went from 5,000 people to 75,000 people overnight • Validated Drew’s leap-of-faith assumption - people actually signed up Dropbox Video MVP
26. • Described the potential product to potential customers • People will reject; they aren’t early adopters • Eventually someone will and sign up for a new service with sight unseen • Concierge treatment • Personal Visits • Get feedback and make changes as necessary • Each week learn about how to make the product successful • After a few customers, a product can start to take form and invest time in product development • Invest in something that is working rather than invent something that might work in the future Other MVPs
27. Remove any feature, process or effort that does not contribute directly to the learning that you seek. MVP
28. • Experiment used to evaluate success in two ways. • Different versions of a product are offered to customers at the same time • Observe the changes in behaviour between the two groups • Changes in design, identical products • Keep track of sales figures for both groups of customers • A/B Testing • Refine understanding of what customers want and don’t want Split Tests
29. • No bucket can contain more than three projects at a time • Buckets: - Backlog - In-Progress - Built - Validated • Once a story has been validated it can be removed from the board • If the validations fails, the story is a bad idea and removed from the Kanban board • Only way to start work on new features is to investigate some of the stories that are done but haven’t been validated Kanban - Lean Style
30. • Productivity according to validated learning, not in terms of the production of new features • Include the validation exercise from the beginning, the whole team can be more productive Kanban - Lean Style
31. Upon completing the build-measure-learn feedback loop, we confront the most difficult question any entrepreneur faces: - Whether to pivot the original strategy or persevere. If we’ve discovered that one of our hypothesis is false, it is time to make a major change to a new strategic hypothesis. Pivot
32. • Zoom-in Pivot - What previously was considered a single feature in a product becomes the whole product • Zoom-out Pivot - What was considered the whole product becomes a single feature of a much larger product • Customer Segment Pivot - The product solves a problem for real customers but that they are not the type of customers it originally planned to serve • Customer Need Pivot - The problem we are trying to solve is not very important, we discover other related and important problems. Pivot Catalog
33. • Platform Pivot - Change from an application to a platform or vice versa • Business Architecture Pivot - Switch from B2B or enterprise sales to consumer products or vice versa. • Value Capture Pivot - Changes to the monetization or revenue models • Engine of Growth Pivot - Change growth strategy to seek faster or more profitable growth • Channel Pivot - Change in the delivery of a product to customers • Technology Pivot - Discover a new way to achieve the same solution by using a completely different technology Pivot Catalog
34. • Continuous deployment • Deploying dozens of times a day • Blocking future stories until a new related bug has been fixed • Continuous Integration • Testing on every build, notification of failures Accelerating
35. • New customers come from the actions of past customers • Word of mouth - Caused by satisfied customers’ enthusiasm for the product • Side effect of product usage - Drive awareness of themselves whenever they are used • Funded Advertising - Cost of acquiring a new customer is less than the revenue that the customer generates • Repeat purchase or use - Subscriptions, repurchases Sustainable Growth
36. 1. Be tolerant of all mistakes the first time 2. Never allow the same mistake to be made twice Getting started
37. Good Luck! A big thanks to Eric Ries for making the book “The Lean Startup” Dominic Wroblewski http://terracoding.com @domness Thanks