How to Build a Startup Workshop - UCD IA Springboard - Nov 2015

RAOMAL PERERA
raomal@LeanDisruptor.com | @raomal @LeanDisruptor | www.facebook.com/LeanDisruptor
How to Build a Startup
#BMGEN

www.Facebook.com/LeanDisruptor
4

Learning Outcomes
7
Look for that Gap
Don’t stop Networking
Look for Insights – Join the Dots
Identify the Problem first before
defining the Solution.
Tools to get you started on the Lean
Startup journey

Find the Gap
How to find
opportunities that others
don’t see.
- Amy Wilkinson
8

 Lean Startup Dublin Meetup launched Jan 2012 – now over 1,000
members
 Workshops run by Ash Maurya, John Mullins, Brant Cooper, Mary
Cronin & Raomal Perera
 Talks on Lean Startup, Social Media, Agile, Fund Raising, How to Build
a Startup, Lego Serious Play, Lean in Corporates, Crowd Funding,
Cartier Women’s Initiative Award (CWIA)
 LeanCamp
Lean Startup Dublin Meetup
http://www.meetup.com/Lean-Startup-Dublin/
9

Lean Launchpad Programme
10
Entrepreneurs Create Jobs – Can We Help
Them Increase Their Chance Of Success?

Lean Launchpad programme – (elements)
11

Playing Lean – The Board Game
12

Often (first-time) entrepreneurs feel that
step 1 involves writing a business
plan/building a slide deck and getting
funded!
15
15

How breakthrough ideas emerge from
small discoveries
Creative thinkers practice a set of simple but
ingenious experimental methods
• failing quickly to learn fast
• tapping into the genius of play
• engaging in highly immersed
observation
Free their minds, opening them up to making
unexpected connections and perceiving
invaluable insights.
18

You have the awesome solution
“Your Solution Is Not My Problem”
Source: Dave McClure
…. to a problem that does not exist.
21

The Problem / Need Statement
22

What is a business model?
Discuss with your neighbour what
you think a business model is and
write down your definition [the key
elements] .....
24

What is a business model?
A business model describes the rationale
of how an organisation Creates, Delivers
and Captures value
25

Why we need a shared language for
business models?
26
https://strategyzer.com/academy/cours
e/business-models-that-work-and-
value-propositions-that-sell/1/1
Note: You may need to license the online learning tool on Strategyzer to
view this clip from Osterwalder

Use of BMC in Established Companies
IMPROVE ----------------------------------INVENT
Know Problem/Know Solution -Unknown Problem/Unknown
Solution
------EXECUTE -------------------------SEARCH------------
27

Pivot
SEARCH EXECUTE
Customer Development
28

Problem/
Solution Fit
Product/
Market Fit
Scale
The 3 Steps
29
29

30
Knowledge is having the right answer.
Intelligence is asking the right questions
The Art of Customer Interviewing

32
“It is not the strongest of the
species that survive, nor the
most intelligent, but the one
most responsive to change.”
- Charles Darwin

Getting from Business Idea to Business Model
33

Customer Development Process
Post it to the Wall
 Create the canvas
 Make it visible
 Use Yellow Post-It
notes with your
guesses
Get out of the building and test your hypotheses.
There are NO FACTS here. Talk to customers, partners,
vendors. Design experiments, run tests,
get data
36

Hypotheses or Guesses
The canvas is a set of hypotheses, i.e. guesses
It helps us to organize our thinking! It is not
about functional organisation, but about the
business
The real question is HOW do we change those
guesses into FACTS?
37

Identify the Problem
38
Key Question: Do I have a problem worth solving?
Who has the problem?
What is the top problem?
How is it solved today?
Where do they have the problem or in what context do they have a
problem? (milkshake example)
When do they have the problem?
Why is it a problem? (Root Cause Analysis. Why is the single best
word for creating value in a start-up and an established business)
It is not possible to know what the top problem is without knowing
where, when and why they have a problem. Also the questions may
not be answered in sequence e.g. will we find the problem and the
person with the problem at the same time?

Build an MVP
Soft launch to early adopters
Do they realise the unique value proposition
How will you find enough early adopters to support
learning?
Are you getting paid?
Analysis: There needs to be a bit of intuitive thinking
around the MVP. We need to ask and then guess how we
can create the most unique customer value in the shortest
amount of time with the least resources. With a bit of
thinking and an equal amount of action we have a chance
of appropriating real value in the short term
VALIDATE THE QUALITATIVELYValidate Qualitatively
39

MVP
A Minimum Viable Product (MVP) is “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”
40

MVP #1 Explainer video
An explainer video is a short video that explains what
your product does and why people should buy it.
A simple, 90 seconds animation is sufficient.
e.g. Dropbox
How to make an explainer video
41

MVP #2 A Landing Place
A landing page is a web page where visitors
“land” after clicking a link from an ad, e-mail
or another type of a campaign.
42

MVP #2 A Landing Page
• Craft your Landing Page
• Set up a Google AdWord campaign to drive traffic to your new
landing page. You can let the AdWord engine rotate different
messages and test what works best on your prospects
• Set up Google Analytics. The most important thing to measure
is conversions – percent of visitors that sign up (or perform
another desired action)
• Set up a chat so that visitors can easily raise questions
• Set up a service like Qualaroo to survey your visitors
43

MVP #3 Wizard of Oz
A “Wizard of Oz” MVP is when you put up a front that
looks like a real working product, but you manually carry
out product functions. It’s also known as “Flinstoning”
Zappos shoes is the biggest online shoe retailer, with
annual sales exceeding $1 billion. In his Lean Startup book,
Eric Ries describes how the founder started with a Wizard
of Oz product.
44

MVP #4 The Concierge MVP
Instead of providing a product, you start with a manual
service. But not just any service! The service should consist
of exactly the same steps people would go through with
your product.
45

MVP #5 Piecemeal MVP
This strategy is a blend between the “Wizard of
Oz” and “Concierge” approaches. Again, you
emulate the steps people would go through using
your product – as you envision it.
46

MVP #6 Crowd Funding
47
Sell it before you build it
The basic idea is simple: launch a crowd
funding campaign on platforms such as
Kickstarter or IndieGoGo. Not only will
you validate if customers want to buy
your product, but you will also raise
money

 Launch your refined product to a larger audience
 Have you built something people want?
 How will you reach customers at scale
 Do you have a viable business?
 Analysis: A refined product needs to test both
qualitatively and quantitatively in order to find out why
the refined product creates customers’ value and how
large is the market potential?
 Can this business produce (organically or through
investment) enough cash in the short term in order that
customers value - cost to produce = profit
Validate Quantitatively
48

Traction is a measure of your product’s engagement
with its market. Investors care about traction over
everything else
- Nivi and Nival, Venture Hacks
53
Ideal time to raise money

Finding the Problem is the Hard Part
Kevin Systrom & Mike Krieger (Instagram Co-
founders)
Instagram Co-founder Kevin Systrom believes building
solutions for most problems is the easy part; the hard part
is finding the right problem to solve. Here he opens up
about how he and fellow Co-founder Mike Krieger
identified the problems they wanted to solve around
sharing photos through mobile devices. He also reminds
entrepreneurs to embrace simple solutions, as they can
often delight users and customers. 54

Strategy and Business Models – DIT PM Module 1 55
BUSINESS MODEL INNOVATION

Today, a company’s long term
competitive success depends upon
its ability to create an
innovative business model.
56

Additional innovation
potential
through business model
innovation
Innovation
potential
Business model
innovation
Process innovation
Product innovation/
Technology
innovation
Time
New Business Models allow for additional
innovation potential on top of product and
process innovation
59

60
“It is not the strongest of the
species that survive, nor the
most intelligent, but the one
most responsive to change.”
- Charles Darwin

Nespresso’s Business Model
What is Nespresso’s Business Model? What
made them so successful?
62

“Studies comparing successful and
unsuccessful innovation have found that the
primary discriminator was the degree to
which the user needs were fully
understood.”
– David Garvin, Harvard Business School
63

#1 Target
customer
segment
#2
Customer
segment
Also
overseas
market new
set of
customers…
 Who are your
most important
customers?
 What are their
archetype?
 What jobs do
they want you
to get done for
them?
Customer Segments
64

Customer Personas/Archetypes
Profile
• Position/Title
• Age/Sex
• Role
• Discretionary budget
• Motivations
• Role models
65
Who are you?
Who influences you?

Customer Archetypes
Meet Paul, Sheetal and Barbara
Paul-RegularExerciser
• 20 – 45
• Aim to maintain and
track active lifestyle
• Looking for
inspiration on diet &
exercise regimes
• Gets a buzz from
exercising
Sheetal-SpiritualHealth
•
• 30 – 55
• Already follows a
healthy lifestyle
• Interested in
alternative
medicines/
treatments
• Believes eating well
is as important as
exercise
Barbara-On-OffDieter
•
• 30 +
• Yo-yo dieter, has
tried many of the fad
diets but never stuck
to one
• Needs tips and
motivation to keep
up a healthy lifestyle
• Irregular or
infrequent exerciser
66

Customer Types
 Saboteurs
 Intermediaries (OEM’s and resellers)
67

Q: Consider Selling Business Intelligence
Software into a large business. Which types
of customers are the following?
1. CFO
2. CIO
3. Report Users
4. Line of Business
Management
5. Business Intelligence
Group inside IT
a. Economic byer
b. Influencer
c. Recommender
d. Decision maker
e. Saboteur
68

Q: Consider Selling Business Intelligence
Software into a large business. Which types
of customers are the following?
1. CFO
2. CIO
3. Report Users
4. Line of Business
Management
5. Business Intelligence
Group inside IT
a. Economic byer
b. Influencer
c. Recommender
d. Decision maker
e. Saboteur
69

Multi-Sided Model
Buyer/Payer (e.g. Google)
Two sided markets – Buyers/Payees
1.Workers/Recruiters - LinkedIn
2.Banks/Merchants - Visa
3.Sellers/Buyers - eBay
4.Readers/Advertisers - New York Times
Each has its own value proposition
Each has its own revenue streams
One segment cannot exist without the other
70

Corporate? Consumer?
 Business to Business (B to B)
–Use or buy inside a company
 Business to Consumer (B to C)
–Use or buy for themselves
 Business to Business to Consumer (B to B
to C)
–Sell a business to get to a consumer
–Other Multi-sided Markets with multiple
customers
71

© 2004 Valista Ltd. confidential information.72
 top up
my phone
 subscribe to a
newspaper
 book a flight
download
a report
 book a hotel
pay a bill
 cancel a check
 top-up kid’s
phones
 vote online
 top-up my phone
 download a
new game
 buy an MP3
 download
a voucher
 change my ringtone
 play the lottery
 check my
phone credit
12
6
39
1
2
4
57
8
10
11
on the move at home
at play at work
premium services for subscribers
about Valista

“No one cares how much you know,
until they know how much you care”
– Theodore Roosevelt
EMPATHY MAPS
73

Value proposition
• Which of our
customer’s
problems are we
helping to solve?
• Which Customer
needs are we
satisfying?
• What are the key
features of our
product that match
customers
problem/need?
What jobs do
they want done
, what's a good
outcomes for
them
What are
competitive
options and
how do I
differentiate
over others
74

VALUE PROPOSITION CANVAS

Clayton Christensen
80
Jobs to be Done
“If you understand the job,
how to improve the product
becomes just obvious”

“People buy products and services to get jobs
done. As people complete these jobs, they
have certain measurable outcomes that they
are attempting to achieve. It links a company's
value creation activities to customer-defined
metrics.” - Ulwick
OUTCOME-DRIVEN
INNOVATION
81

BUSINESS MODEL ENVIRONMENT

Review
First identify the problem and then define the
solution- not the other way around
Find a Gap
If you understand the job, how to improve the
product becomes obvious
The BMC is a shared language for business
modelling. Use the template to change your
guesses to FACTS
Never underestimate the power of
networking
92

“There are no shortcuts to
any place worth going”
Beverly Sills
93

Strategy and Business Models – DIT PM Module 1
raomal@LeanDisruptor.com | @raomal @LeanDisruptor | www.facebook.com/LeanDisruptor
RAOMAL PERERA
THANK YOU!

Fund Raising for Entrepreneurs
97

Building Emotional Capital for Leadership
98

Additional Resources
102
Books:
What Customers Want – Using Outcome-
Driven Innovation to Create Breakthrough
Products and Services – Ulwick
Lean Analytics – Croll & Yoskowitz

103
BMC Online Tools:
Strategyzer
https://canvanizer.com/ (free tool)
BMC Tool for Educators:
Launchpad Central offers end-to-end
solutions to validate business
hypotheses, testing for value and
accelerating time to market

104
 Stattys Notes
(http://www.stattys.com/)
A new generation of adhesive
notes with a unique "Write
and Slide" function
 Mapping the business model
design space

Lean Launchpad #LeanStartup | @raomal 105
“Pattern in architecture is the idea of
capturing architectural design ideas as
archetypical and reusable descriptions”
– Christopher Alexander, Architect
PATTERNS

Patterns
• Unbundled
• Long Tail
• Multi-Sided
• Freemium
• Bait and Hook
• Open
106

BMC – ADDITIONAL SLIDES

“Studies comparing successful and
unsuccessful innovation have found that the
primary discriminator was the degree to
which the user needs were fully
understood.”
– David Garvin, Harvard Business School
108

“People buy products and services to get jobs
done. As people complete these jobs, they
have certain measurable outcomes that they
are attempting to achieve. It links a company's
value creation activities to customer-defined
metrics.” - Ulwick
OUTCOME-DRIVEN
INNOVATION
109

Key Value Proposition Questions
• Problem Statement: What is the problem?
• Ecosystem: For whom is this relevant?
• Competition: What do customers do
today?
• Technology / Market Insight: Why is the
problem so hard to solve?
• Market Size: How big is this problem?
• Product: How do you do it? 110

• Problem Statement: Net security without a CTO
• Ecosystem: Small banks under FDIC pressure
• Competition: Expensive, Custom or DIY
• Technology / Market Insight: Small Companies
without Big Resources…Fines getting bigger
• Market Size: 9000 little banks, 5000 + more
• Product: perimeterusa.net
Example
111

Through what
mechanism
will your service
(product) be
delivered to your
client?
How will we GET,
KEEP and GROW
Customers? How will I
get the Value
to my
Customers?
How best to
communicat
e to each
customer
segment
Channels & Customer Relationships
112

Two Critical Channel Questions
How do you want to sell your product?1
is subtle, but more important than the first:
How does your customer want to buy your
product?
2
113

How Many Will You Sell?
• How many can your channel sell?
• How much will the channel cost?
• How many customer activations?
• Revenue? Churn/Attrition rate?
customers/?
• How much will it cost to acquire a
customer?
• How many units will they buy from
each of these efforts?
122

Where Is The Money Coming From?
Revenue Model Choices
Bits
Physical
Product
Web Physical
Channel
 Direct Sales
 Products
 Subscription
 Upsell/Next Sell
 Ancillary Sales:
• Referral revenue
• Affiliate revenue
• E-mail list rentals
• Back-end offers
 Direct Sales
 Products
 Service
 Referrals
 Leasing
 Direct Sales
 Products
 Subscription
 Add-on services
 Referrals
123

“Direct” Revenue Models
 Sales: Product, app, or service sales
 Subscriptions: SAAS, games, monthly
subscription
 Freemium: use the product for free:
upsell/conversion
 Pay-per-use: revenue on a “per use” basis
 Virtual goods: selling virtual goods
 Advertising sales: unique and/or large
audience
124

“Ancillary” Revenue Models
 Referral revenue: pay for referring traffic/customers
to other web or mobile sites or products.
 Affiliate revenue: finder’s fees/commissions from
other sites for directing customers to make
purchases at the affiliated site
 E-mail list rentals: rent your customer email lists to
advertiser partners
 Back-end offers: add-on sales items from other
companies as part of their registration or purchase
confirmation processes, or “sell” their existing traffic
to a company that strives to monetize it and share
the resulting revenue
125

the tactics you use to set the
price in each customer
segment
Pricing Model
126

How Do We Price The Product?
Pricing Model Choices
127

 Product-based pricing
 Competitive pricing
 Volume pricing
 Value pricing
 Portfolio pricing
 The “razor/razor blade” model
 Subscription
 Time/Hourly Billing
 Leasing
Pricing Models - Physical
128

 Product-based pricing
 Subscriptions
 Freemium
 Pay-per-use
 Virtual goods
 Advertising sales
Pricing Models – Web/Mobile/Cloud
129

Other Words We Use In The Place Of Price
 Fee
 Commission
 Subscription
 Toll
 Interest
 Rent
 Tax
 Shipping
130

How to Build a Startup Workshop - UCD IA Springboard - Nov 2015

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