How to Build a Startup

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

4. www.Facebook.com/LeanDisruptor 4

7. Find the Gap How to find opportunities that others don’t see. - Amy Wilkinson 7

8.  Lean Startup Dublin Meetup launched Jan 2012 – now over 1,200 members  Workshops run by Ash Maurya, John Mullins, Brant Cooper & 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/ 8

9.  Lean Startup for Enterprise Meetup inaugural meeting Feb 17, 2016 opened by Alex Osterwalder on Value Proposition Design.  This is a group for enterprises wanting to learn about the latest concepts and frameworks in business to help them grow. Some of the topics we will discuss are: Lean Startup, Business Model Innovation, Design Thinking, Growth Hacking, Innovation Accounting, Lean Analytics, Purpose Driven Organisation and Social Media. NEW: Lean Startup for Enterprise Meetup http://www.meetup.com/Lean-Startup-for-Enterprise/ 9

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

11. Lean Launchpad programme – (elements) 11

12. Playing Lean – The Board Game 12

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15. 15 Google Trends 15

16. 16 OBSERVING & ASSOCIATING

17. 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. 17

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19. Often (first-time) entrepreneurs feel that step 1 involves writing a business plan/building a slide deck and getting funded! 19

20. What is a Startup? A TEMPORARY organisation DESIGNED to SEARCH ……. For REPEATABLE and SCALABLE Business Models Startups are NOT just SMALLER versions of a LARGE Company 20

21. 21 PITCHING YOUR IDEAS

22. You have the awesome solution “Your Solution Is Not My Problem” Source: Dave McClure …. to a problem that does not exist. 22

23. The Problem / Need Statement 23

24. 24 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.

25. Pivot SEARCH EXECUTE Customer Development 25

26. Problem/ Solution Fit Product/ Market Fit Scale The 3 Steps 26 26

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28. 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? Identify the Problem 28

29. Take a stab at defining the solution Build a demo (MVP) Test it with assumed customers Will the solution work? (can the proposed solution create customer value that exceeds the cost to produce and deliver the solution to the customer) Who it the early adopter? Does the pricing model work? Define the Solution 29

30. 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 QUALITATIVELY Validate Qualitatively 30

31. 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 Quantitavely 31

32. 32 MINIMUM VIABLE PRODUCT (MVP)

33. 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” 33

34. MVP #1 Explainer video 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 34

35. 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. 35

36. MVP #2 A Landing Page • Craft your Landing Page • Set up a Google AdWord campaign and drive traffic to your new landing page. Even here 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 to make it easy for the visitors to raise questions • Set up a service like Qualaroo to survey your visitors 36

37. 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. 37

38. 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. 38

39. 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. 39

40. MVP #5 Crowd Funding 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. 40

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44. Problem/Solution Fit Product Market Fit Scale Focus: Validated Learning Experiments: Pivots Focus: Growth Experiments: Optimisations 44

45. Traction is a measure of your product’s engagement with its market. Investors care about traction over everything else.- Nivi and Nival, Venture hacks Problem/Solution Fit Product/Market Fit Scale Ideal time to raise money 45

46. “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 46

47. 47 CUSTOMER INTERVIEWING

48. ABC ANN APPROACHED THE BANK 121314 48

49. You may have jumped to the “ABC” or “12 13 14” or “financial institution” Conclusions Without EVEN KNOWING or CONSIDERING alternatives! 49

50. I force you to use your rational brain only? 50

51. What is 17x24? 51

52. Our subjective judgements are biased: we are far too willing to believe research findings based on inadequate evidence and prone to collect too few observations in our own research 52

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54. 54 Knowledge is having the right answer. Intelligence is asking the right questions The Art of Customer Interviewing

55. 55 BUSINESS MODEL INNOVATION

56. What is a business model? A business model describes the rationale of how an organisation Creates, Delivers and Captures value 56

57. Why we need a shared language for business models? 57 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

58. Use of BMC in Established Companies IMPROVE ----------------------------------INVENT Know Problem/Know Solution -Unknown Problem/Unknown Solution ------EXECUTE -------------------------SEARCH------------ 58

59. Business Model Innovation 59

61. 61 “It is not the strongest of the species that survive, nor the most intelligent, but the one most responsive to change.” - Charles Darwin

62. Getting from Business Idea to Business Model 62

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64. Nespresso’s Business Model What is Nespresso’s Business Model? What made them so successful? 6464

65. Strategy for Startups • Planning before the Plan • Use the Osterwalder Canvas to do two things: – Organise our thinking – Get out of the Building to turn the hypothesis into facts • SEARCH for the Business Model First and then Write it Up (Business Plan) 65

66. 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 66

67. Customer vs. Product Development • More startups fail from a lack of customers than from a failure of Product Development. • We have all the processes to manage the Engineering Risk • No processes to manage the Customer Risk. 67

68. Customer Development Manifesto 1. There are No Facts Inside Your Building, So Get Outside. 2. Pair Customer Development with Agile Development 3. Failure is an Integral Part of the Search 4. Make Continuous Iterations and Pivots 5. No Business Plan Survives First Contact with Customers. So Use a Business Model Canvas 68

69. Customer Development Manifesto 6. Design Experiments and Test to Validate Your Hypotheses. 7. Agree on Market Type. It Changes Everything 8. Startup Metrics Differ from Those in Existing Companies 9. Fast Decision-Making, Cycle Time, Speed and Tempo 10.It is All About Passion 69

70. Customer Development Manifesto 11.Startup Job Titles Are Very Different from a Large Company’s. 12. Preserve All Cash Until Needed. Then Spend 13.Communicate and Share Learning 14.Customer Development Success Begins With Buy-In 70

71. 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? 71

72. 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 72

73. Strategy and Business Models – DIT PM Module 1 73 VALUE PROPOSITION CANVAS

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75. 75 Observe

76. Clayton Christensen 76 Jobs to be Done “If you understand the job, how to improve the product becomes just obvious”

77. “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 77

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85. The Environment https://strategyzer.com/projects/aca demy/business-model-environment 85

86. Case Study: Owlet Owlet Infant Health Tracker Takes The Wearable Revolution Into The Crib 86 Note: You may need to license the online learning tool on Strategyzer to view this clip from Osterwalder

87. Review –First Identify the problem and then define the solution. Not the other way around. –Find the 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 87

88. “There are no shortcuts to any place worth going” – Beverly Sills

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

90. 90 APPENDIX

91. Relevant Blogs Alex Osterwalder - www.alexosterwalder.com Business Model Generation  www.businessmodelgeneration.com Steve Blank – www.steveblank.com Ash Maurya – www.leanstack.com Eric Ries - www.startuplessonslearned.com John Mullins – www.getting-to-plan-b.com Raomal Perera – www.LeanDisruptor.com

92. Books 92

93. Additional Resources 93 Books: What Customers Want – Using Outcome- Driven Innovation to Create Breakthrough Products and Services – Ulwick Lean Analytics – Croll & Yoskowitz

94. Additional Resources 94 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.

95. Additional Resources 95 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

96. Additional Resources 96 Video creation tool: Videoscribe Business Modelling card decks: www.amazon.com

97. 97 BMC ADDITIONAL SLIDES

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99. “No one cares how much you know, until they know how much you care” – Theodore Roosevelt EMPATHY MAPS 99

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101. “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 101

102. 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? 102

103. • 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 103

105. 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 105

106. 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? 2 106

115. 115 WORKSHOPS

116. Fund Raising for Entrepreneurs 116

117. Building Emotional Capital for Leadership 117

119. How to Build a Startup 119

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

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