introduction to running lean startups
TRANSCRIPT
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Introduction to
Running Lean Startups
Agile Egypt Meetup
Prepared by: Amr Medhat
Date: 21/2/2015
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Introduction
Engineering vs Business
Manager vs Entrepreneur
Project vs Product
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What's Lean?
Toyota Production System
Lean Principles1. Eliminate Waste
(waste = anything with no value to customer)
2. Amplify Learning / Create Knowledge
3. Decide as Late as Possible / Defer Commitment
4. Deliver as Fast as Possible / Deliver Fast
5. Empower the Team / Respect People
6. Build Integrity / Quality in
7. See / Optimize the Whole
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Lean Meets Agile
Agile Values
1. Individuals and interactions over processes and tools
2. Working software over comprehensive documentation
3. Customer collaboration over contract negotiation
4. Responding to change over following a plan
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What's a Startup?
Adventures of the Mini Entrepreneur
Institution designed to create new products under conditions of extreme uncertainty
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Why Lean Startups?
Toyota productivity with lean increased 4
times than it competitors
Toyota quality reached 12 times better
While ..
90% of startups fail to launch their products
50% of first-time CEOs get fired by their
investors
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Why Startups Fail?
You think your idea is brilliant?
=> Ideas are everywhere
Idea is nothing without implementation
=> You implemented the perfect solution, for whom?
A shiny business plan full of figures, speculations
& forecasting?
=> It's hard to predict the future without history
You love chaos &"just do it" hoping they'll come?
=> Agility and dynamism are still management
* Your excuse: a lesson leaned? but how?
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Entrepreneurship is a kind of Management
Vision
Steer
Tune Engines
Pivot
Accelerate
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Hypothesis not Faith
A Startup is an Experiment
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Back to Agile and Lean Principles:
Eliminate anything with no value to customer
Value customer collaboration over contract negotiation
But where is the customer?
How to Start Lean?
GET OUT OF THE BUILDING
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Product vs. Customer Development
Product Development
Customer Development
Concept Product A/B Test Launch
Customer
DiscoveryCustomer
Validation
Customer
Creation
Company
Building
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From Plan A to a Plan that Works
2/3 of startups drastically changed 1st plan
2 stages to reach the right plan
Problem /
Solution
Fit
Product /
Market
Fit
Scale
Iterate
Validated Learning Growth
Experiment Optimize
it finally works
time to raise fund
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Iterate: Build - Measure - Learn
Minimum Viable Product:anything that allows early adopters to give feedback and grasp product vision.
Idea
Build
MVP
Measure
Data
Learn
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Plan: Lean Canvas
Cost Structure
Customer Acquisition costs
Distribution costs
Hosting
People, etc.
Revenue Streams
Revenue Model
Life Time Value
Revenue
Gross Margin
Problem
Top 3 problems
Existing alternatives
Solution
Top 3 features
Key Metrics
Key activities you
measure
Unique Value
Proposition
Single, clear,
compelling message
that states why you are
different and worth
paying attention
High-concept pitch
Unfair
Advantage
Can’t be easily copied
or bought
Channels
Path to customers
Customer
Segments
Target customers
Early adopters
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Prioritize Where to Start
Split lean canvas per customer segments & rank
Identify riskiest part of your model Problem/Product, Customer/Channel, Market/Revenue
Uncertainty vs Risk
Falsifiable hypothesis
Maximize for: Speed, Learning, Focus
Validate Qualitatively 5 customer interviews (data to reduce uncertainty)
Verify Quantitatively (cohort analysis, split testing)
Iterate (identify, define, validate, verify)
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Customer Interview Guidelines
No surveys
No focus groups
No pitching
Measure what they do, not what they want
Stick to a script
Start with people you know then ask them to introduce you to others
Neutral place - coffee shop
20 - 30 minutes
Document immediately don't record
30-60 people (or till you're able to predict their answers)
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Problem Interview
Goal: Mitigate the following risks:
Product risk: What are you solving? (Problem)
How do customers rank the top three problems?
Customer risk: Who has the pain? (Customer Segments)
Is it a viable customer segment?
Market risk: Who is the competition? (Alternatives)
How do customers solve these problems today?
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Solution Interview
Goal: Mitigate the following risks: Product risk: How will you solve these
problems? (Solution)
What is the minimum feature set needed to launch?
Customer risk: Who has the pain? (Early Adopters)
How do you identify early adopters?
Market risk: What is the pricing model? (Revenue Streams)
Will customers pay for a solution?
What price will they bear?
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MVP Release 1.0
Justify the addition of each feature
Start with your number-one problem
Eliminate nice-to-haves and don’t-needs
Consider other customer feature requests
Charge from day one, but collect on day 30
Focus on learning, not optimization
Deploy continuously
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Design Activation Flow
Activation Flow
Customer Lifecycle
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MVP Interview
Goal: Mitigate the following risks:
Product risk: What is compelling about the product? (UVP)
Activation flow effectiveness
Customer risk: Do you have enough customers? (Channels)
Can you bring more customers?
Market risk: Is the price right? (Revenue Streams)
Do customers pay for your solution?
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Innovation Accounting
Measure & validate your MVP learning
Use Actionable Metrics
Tie specific and repeatable actions to observed
results
Metrics are people first
Use cohort analysis: measure a group sharing a
common characteristic within a defined period
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Adding Features to MVP
Features must be Pulled, not Pushed
Implement an 80/20 Rule
Minimize in-progress features
Process feature requests
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Accelerate
4 Sources (fuel) of Sustainable Growth
Word of mouth
Side effect of product usage (fashion, paypal)
Funded ads (consumer products / services)
Repeat use (subscription)
3 Engines of Growth
Sticky (long term customer)
Viral (hotmail)
Paid (sales power)
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Summary
MVP
Pivot
Grow
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Reference Map
Customer
Development
Methodology
Agile
& Lean
Principles
Lean
Startup
Principles
Lean
Startup
Practices
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Thank you!