MVP: Why we should care. A very effective learning tool

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MVP: Why we should care A very effective learning tool 1 Manuel Vidaurre http://about.me/manuel.vidaurre [email protected]

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2 passions: {:people, :value, :roi} skills: {:agiledev, :patterns, :cc, :pm, :ddd, :lean_startup, :software_c raftsmanship,}, programming_lang uages: {:ruby, :js, :coffescript, :elix ir}, :web: {:rails, :sinatra, :word_press}, tools: {:cucumber, :rspec, :git, :jquer y, :sql, :emberjs}, segments: {:health, :real_state, :gis, :re tail}

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How many of you have had a business idea? 3

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@leangdl - Manuel Vidaurre - @mvidaurre What have you done with that idea? 4

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!MFBOHEM.BOVFM7JEBVSSF!NWJEBVSSF Blue Pill or Red Pill 5 http://youtu.be/RhlXqYiTz2Q

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@leangdl - Manuel Vidaurre - @mvidaurre What is the difference between successful ideas and failed ideas? 6

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@leangdl - Manuel Vidaurre - @mvidaurre How can I verify that my idea will be successful? 7

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@leangdl - Manuel Vidaurre - @mvidaurre Where do you want to go? 8

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@leangdl - Manuel Vidaurre - @mvidaurre How many of you are entrepreneurs? 10

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@leangdl - Manuel Vidaurre - @mvidaurre How many of you are developers? 11

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@leangdl - Manuel Vidaurre - @mvidaurre How many of you are designers? 12

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@leangdl - Manuel Vidaurre - @mvidaurre How many of you are devepreneurs? 13

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@leangdl - Manuel Vidaurre - @mvidaurre What is the customer’s problem that your idea solves? 16

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@leangdl - Manuel Vidaurre - @mvidaurre Customers don’t care about your solution. They care about solving their problems 17

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@leangdl - Manuel Vidaurre - @mvidaurre Customers don’t care about your solution. They care about solving their problems 18 -G[EQPEGRVCPFVJGETWFGTGCNKV[

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@leangdl - Manuel Vidaurre - @mvidaurre Think problems Not solutions 20

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@leangdl - Manuel Vidaurre - @mvidaurre Think learning Test your assumptions 21

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@leangdl - Manuel Vidaurre - @mvidaurre Think hypotheses Be deliberate about learning 22

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!MFBOHEM.BOVFM7JEBVSSF!NWJEBVSSF Work 10 minutes in groups • 3 minutes. Each team member will write in individual post-its as many problems worth to solve you can think (working in parallel)! • 5 minutes. Present the problems and organize them by groups (working together)! • 2 minutes. Select one group of the problems (achieve consensus) 24

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@leangdl - Manuel Vidaurre - @mvidaurre What is your selected group of problems worth solving? 26

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@leangdl - Manuel Vidaurre - @mvidaurre How do you feel about the process? 27

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28 http://goo.gl/jSE9Qc

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@leangdl - Manuel Vidaurre - @mvidaurre Think learning Test your assumptions 29

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@leangdl - Manuel Vidaurre - @mvidaurre To VALIDATE your idea or to PIVOT to a successful idea you really need: 30

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@leangdl - Manuel Vidaurre - @mvidaurre Maximum amount of validated learning 31

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@leangdl - Manuel Vidaurre - @mvidaurre Maximum amount of validated learning 32 VT[KPIQWVCPKPKVKCNKFGCCPFVJGP OGCUWTKPIKVVQXCNKFCVGVJGGHHGEV

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@leangdl - Manuel Vidaurre - @mvidaurre Be systematic about identifying riskiest assumptions 34

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@leangdl - Manuel Vidaurre - @mvidaurre Be systematic about identifying riskiest assumptions 35 KPEQTTGEVRTKQTKVK\CVKQPQHTKUMKUQPG QHVJGVQREQPVTKDWVQTUQHYCUVG

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@leangdl - Manuel Vidaurre - @mvidaurre Be systematic about identifying riskiest assumptions 37 KPEQTTGEVRTKQTKVK\CVKQPQHTKUMKUQPG QHVJGVQREQPVTKDWVQTUQHYCUVG CRRN[6JGQT[QH%QPUVTCKPVU9JGTGKUVJG DQVVNGPGEMQTEQPUVTCKPVKPVJKUU[UVGO!

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@leangdl - Manuel Vidaurre - @mvidaurre Formulate testable falsiﬁable hypotheses 38

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@leangdl - Manuel Vidaurre - @mvidaurre Formulate testable falsiﬁable hypotheses 40 #UVCVGOGPVKUECNNGFHCNUKHKCDNGKHKVKURQUUKDNG VQEQPEGKXGCPQDUGTXCVKQPQTCPCTIWOGPVYJKEJ RTQXGUVJGUVCVGOGPVKPSWGUVKQPVQDGHCNUG

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@leangdl - Manuel Vidaurre - @mvidaurre Formulate testable falsiﬁable hypotheses 41 #UVCVGOGPVKUECNNGFHCNUKHKCDNGKHKVKURQUUKDNG VQEQPEGKXGCPQDUGTXCVKQPQTCPCTIWOGPVYJKEJ RTQXGUVJGUVCVGOGPVKPSWGUVKQPVQDGHCNUG %JCPIKPIC RCTCFKIO KUFKHHKEWNV

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@leangdl - Manuel Vidaurre - @mvidaurre Use MVP to prove or disprove your hypotheses 43

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@leangdl - Manuel Vidaurre - @mvidaurre Use MVP to prove or disprove your hypotheses 44 9JCVKU/82!

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!MFBOHEM.BOVFM7JEBVSSF!NWJEBVSSF MVP - Silicon Valley SitCom 46 http://youtu.be/69V__a49xtw

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@leangdl - Manuel Vidaurre - @mvidaurre What is MVP? 47

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@leangdl - Manuel Vidaurre - @mvidaurre What is MVP? 48 PQV/QUV8CNWCDNG2NC[GT

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@leangdl - Manuel Vidaurre - @mvidaurre What is MVP? 49 PQV/QUV8CNWCDNG2NC[GT PQV/CZKOWO8KUKQP2QUUKDNG

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@leangdl - Manuel Vidaurre - @mvidaurre What is MVP? 50 PQV/QUV8CNWCDNG2NC[GT PQV/CZKOWO8KUKQP2QUUKDNG ;'5/KPKOWO8KCDNG2TQFWEV

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– Eric Ries. Creator of Lean Startup “The minimum amount of effort you have to do to complete exactly one turn of the Build- Measure-Learn feedback loop” 51

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!MFBOHEM.BOVFM7JEBVSSF!NWJEBVSSF Build-Measure-Learn feedback loop 53

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@leangdl - Manuel Vidaurre - @mvidaurre The fastest, cheapest thing you can build… and get into the hands of customers fast so that you can observe and measure the results... to make your product something customers want, need and love to buy. 54

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@leangdl - Manuel Vidaurre - @mvidaurre Minimum: The absolute necessary features that are needed from day 1 to solve customers’ top problems 56

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!MFBOHEM.BOVFM7JEBVSSF!NWJEBVSSF Brandon Schauer cupcake model 57

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!MFBOHEM.BOVFM7JEBVSSF!NWJEBVSSF Brandon Schauer cupcake model 58

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@leangdl - Manuel Vidaurre - @mvidaurre Viable: Solve real world problems. What will customers “pay” for? 59

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@leangdl - Manuel Vidaurre - @mvidaurre Product: Useful, Deliver Real Value, and Tangible 61

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@leangdl - Manuel Vidaurre - @mvidaurre MVP = Experiment! (Think: Minimum Viable Experiment) 62

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!MFBOHEM.BOVFM7JEBVSSF!NWJEBVSSF MVP = Experiment • Maximum validated learning with minimum effort. • Minimum opportunity cost. • Rapid testing and iteration. 63

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!MFBOHEM.BOVFM7JEBVSSF!NWJEBVSSF MVP = Experiment 64 MVP We have to manage to learn something from our ﬁrst product iteration. In a lot of cases, this requires a lot of energy invested in talking to customers or metrics or analytics.

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@leangdl - Manuel Vidaurre - @mvidaurre A MVP naturally comes in later stages of Customer Discovery 65

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!MFBOHEM.BOVFM7JEBVSSF!NWJEBVSSF Customer Development 66

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!MFBOHEM.BOVFM7JEBVSSF!NWJEBVSSF A MVP naturally comes in later stages of Customer Discovery • It’s a rudimentary solution to a problem worth solving • A MVP must still trump any alternative solution which your customers have used or considered • Basically, it’s the next step after building some landing page and running an AdWords campaign to validate some demand 67

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@leangdl - Manuel Vidaurre - @mvidaurre MVPs will attract early adopters 68

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@leangdl - Manuel Vidaurre - @mvidaurre MVPs will attract early adopters 69 Everett M. Rogers Bell Curve

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!MFBOHEM.BOVFM7JEBVSSF!NWJEBVSSF MVPs will attract early adopters • Customers who can live with its limitations • People who buy into the vision and the ‘why’ • Customers who buy NOW and are relevant for Validated Learning 70

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@leangdl - Manuel Vidaurre - @mvidaurre Focusing on Product/Market Fit 72

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!MFBOHEM.BOVFM7JEBVSSF!NWJEBVSSF Focusing on Product/ Market Fit 73 Dave McClure’s AARRR metrics

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!MFBOHEM.BOVFM7JEBVSSF!NWJEBVSSF Focusing on Product/ Market Fit 74 Customer validation attempts to “test sell” at every stage. It runs a continuing series of quantitative pass/fail tests to determine whether there’s strong enough product/market ﬁt to justify scaling sales and marketing spending

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!MFBOHEM.BOVFM7JEBVSSF!NWJEBVSSF Selecting a beachhead market (1) • Is the target customer well funded? • Is the target customer readily accessible? • Does the target customer have a compelling reason to buy? • Can you today, with the help of partners, deliver a whole product? 76 William Aulet, MIT

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!MFBOHEM.BOVFM7JEBVSSF!NWJEBVSSF Selecting a beachhead market (2) • Is there entrenched competition that could block you? • If you win this segment, can you leverage it to enter additional segments? • Is the market consistent with the values, passions and goals of the founding team? 77 William Aulet, MIT

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@leangdl - Manuel Vidaurre - @mvidaurre Types of MVPs 79

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!MFBOHEM.BOVFM7JEBVSSF!NWJEBVSSF Types of MVPs • Problem Exploration • Product Pitch • Concierge 80 Tests the Riskiest Assumption associated with your Solution Hypothesis (in order of increasing opportunity cost)

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!MFBOHEM.BOVFM7JEBVSSF!NWJEBVSSF Problem Exploration An interaction focused on customer’s problems to understand past behavior and urgency. (Learn, aka Customer Discovery) 82 Aim: Reproduce Problem Opportunity Cost: Very Low

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!MFBOHEM.BOVFM7JEBVSSF!NWJEBVSSF Problem Exploration 83 Interview Strangers that fulﬁll your customer proﬁle Face to face interviews Key: question about past behavior

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!MFBOHEM.BOVFM7JEBVSSF!NWJEBVSSF Product Pitch Exchange of product for some form of currency: time, money, or work. (Conﬁrm, aka Customer Validation) 85 Aim: Collect Currency Opportunity Cost: Very Low to Low

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!MFBOHEM.BOVFM7JEBVSSF!NWJEBVSSF Product Pitch 86 Landing pages Asking for cash at the end of an interview Video Demos Fake Ads Kickstarting

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!MFBOHEM.BOVFM7JEBVSSF!NWJEBVSSF Concierge Manually delivering on the solution, as a service to the customer, to see if the delivery matches the customer’s expectations and makes them happy. (Learn or Conﬁrm) 88 Aim: Deliver Customer Expectation Opportunity Cost: Medium

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!MFBOHEM.BOVFM7JEBVSSF!NWJEBVSSF Concierge 89 Wizard of Oz is when you put up a front that looks like a real working product, but you manually carry out product functions Pure Concierge. Instead of providing a product, you start with a manual service. The service should consist of exactly the same steps people would go through with your product Piecemeal a blend between approaches. Again, you emulate the steps people would go through using your product – as you envision it. But instead of delivering them manually, you emulate them using existing tools.

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!MFBOHEM.BOVFM7JEBVSSF!NWJEBVSSF Work 30 minutes in groups • 15 minutes. Based on your selected group of problems deﬁne a Customer/Problem Hypothesis and its assumptions! • 2 minutes. Identify your Riskiest Assumption! • 10 minutes. Determine how you will test it (including MVP Type)! • 3 minutes. Determine what success looks like 90

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@leangdl - Manuel Vidaurre - @mvidaurre Create an effective MVP 92

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@leangdl - Manuel Vidaurre - @mvidaurre Create an effective MVP for solving the problem of your customer 93

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@leangdl - Manuel Vidaurre - @mvidaurre Focus on testing your Riskiest Assumption 94

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!MFBOHEM.BOVFM7JEBVSSF!NWJEBVSSF Product = experiments • An experiment is a method of testing a hypothesis with the goal of explaining reality • An experiment fails when it doesn’t provide evidence that your hypothesis is correct • There’s a big difference between how humans will predict their own behavior and how they will actually behave 96

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!MFBOHEM.BOVFM7JEBVSSF!NWJEBVSSF Minimum Success Criteria • Don’t debate for hours… Go test it!! • You’re always going to be wrong. Get over it!! • What could you build today that you could put in the hands of customers tomorrow? 97

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@leangdl - Manuel Vidaurre - @mvidaurre Progress through validated learning 99

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!MFBOHEM.BOVFM7JEBVSSF!NWJEBVSSF Progress through validated learning • A falsiﬁable hypothesis is a statement that can be clearly proven wrong • Validate Qualitatively, Verify Quantitatively • Most customers are great at articulating problems but not at visualizing solutions. 100

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@leangdl - Manuel Vidaurre - @mvidaurre Your MVP should be like a great reduction sauce 102

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@leangdl - Manuel Vidaurre - @mvidaurre Your MVP should be like a great reduction sauce 103 EQPEGPVTCVGFKPVGPUGCPFHNCXQTHWN

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!MFBOHEM.BOVFM7JEBVSSF!NWJEBVSSF Great reduction sauce (1) • Clear your slate. • Start with your number-one problem • Eliminate nice-to-haves and don’t- needs • Repeat for your number-two and number-three problem 104

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!MFBOHEM.BOVFM7JEBVSSF!NWJEBVSSF Great reduction sauce (2) • Consider other customer feature requests. • Charge from day one, but collect on day 30 • Focus on learning, not optimization 105

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!MFBOHEM.BOVFM7JEBVSSF!NWJEBVSSF Charge from day one, but collect on day 30 • Price is part of the product! • Price deﬁnes your customers (segmentation) • Getting paid is the ﬁrst form of validation 106

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@leangdl - Manuel Vidaurre - @mvidaurre Upon completing the Build- Measure-Learn loop, we confront the most difﬁcult! question any entrepreneur faces: whether to pivot the original strategy or persevere 107

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@leangdl - Manuel Vidaurre - @mvidaurre If we’ve discovered that one of our hypotheses is false, it is time to make a major change to a new strategic hypothesis 109

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@leangdl - Manuel Vidaurre - @mvidaurre The pivot is essential to understanding entrepreneurship 110

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@leangdl - Manuel Vidaurre - @mvidaurre The vision always remains constant, it’s the STRATEGY that you pivot. The product is a manifestation of the strategy 111

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@leangdl - Manuel Vidaurre - @mvidaurre The worst thing for an entrepreneur is not failure but false positives, so be honest with yourself and pivot when necessary 112

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@leangdl - Manuel Vidaurre - @mvidaurre No matter how much you believe in your product, pivot when the cash ﬂow isn’t right 113

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@leangdl - Manuel Vidaurre - @mvidaurre Use evidence to show that your vision is worth scaling 114

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@leangdl - Manuel Vidaurre - @mvidaurre Lean startup is about Big Vision! ! Think Big! Start Small! Scale Fast! 115

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!MFBOHEM.BOVFM7JEBVSSF!NWJEBVSSF References (1) • Ries, Eric. The Lean Startup: How Today's Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses. New York: Crown Business, 2011. • Owens, Trevor, and Obie Fernandez. The Lean Enterprise: How Corporations Can Innovate like Startups. Wiley, 2014 • Blank, Steven G., and Bob Dorf. The Startup Owner's Manual the Step-by-step Guide for Building a Great Company. Pescadero, Calif.: K&S Ranch, 2012. • Maurya, Ash. Running Lean: Iterate from Plan A to a Plan That Works. 2nd ed. Sebastopol, CA: O'Reilly, 2012 117

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!MFBOHEM.BOVFM7JEBVSSF!NWJEBVSSF References (2) • Ramli John, A Landing Page is NOT an MVP http://goo.gl/ qG9a5Q • Trevor Owens.10 Awesome MVPs from Lean Startup Machine http://goo.gl/sK4e4B • Lean Startup Machine. Building a successful MVP http:// goo.gl/jUL2Qb • Lean Startup Machine. Identifying and Learning from Your Target Customers http://goo.gl/MwsOO2 • Shardul Mehta, An MVP Is Not The Smallest Collection Of Features You Can Deliver http://goo.gl/3P9de3 118

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!MFBOHEM.BOVFM7JEBVSSF!NWJEBVSSF References (3) • Kate Rutter. MVP: What it is and why we all (should) care http://goo.gl/ZKsoRK • Kate Rutter. From cold-sweat questions to hot validated learning http://goo.gl/QKoBvt • businessinbeta. I want my MVP! From idea to testable artefact http://goo.gl/TA4gqB • David Binetti. The Art of the Pivot http://goo.gl/biil8j • Hiten Shah. Creating Experiments to Test Hypotheses 119