10. My Startup Experience
After several startup failures, 4 co-founders
Started in 2009 - Help Employers Optimize Health Insurance Benefits
Early Success & Struggles. Had 5 early adopter customers.
Funded by Golden Angels, Spring 2012. CEO, CTO duo.
Product Owner – v2 Replatform – MVP for new customers
Customer Problem & Solution Interviews. Lost Sales Interviews.
Small, High-Impact Team
Focused on Return on Investment
Cash Burn Rate & Sales Transparency
Customer Success kicking into gear
“This will double my business in 1 year.”
Customer success being featured at tradeshows
19. Myth: Build it. And they will come.
Truth
No business survives first contact with customers.
You build it, and no one cares.
Customers are often biggest risk. Not Technology.
Product development is a discovery process.
Sell before you Build.
20. No Proxies for Paying Customers
Successful people who believe in & mentor you
College Interns
Networking with other Entrepreneurs
Exceptional New Technology
Board of Director at National Realtor Association
Multiple Patent Applications
Board of Advisors at Wyndham Hotels
Business Plan
Partnering with 2x PhD’s
Multiple Pilot Programs
Building Talented Teams & Working Together
Busiest booth at trade shows
Creating New Products
Featured Articles in National magazines
Free Trials
Friends with top industry leaders
Beautiful marketing & UI
Awards in National publications
21. False Shadow Beliefs - Unspoken
Reality Distortion Field
“We know what customers want”
“We can accurately predict the future”
“Executing the plan is progress”
25. Traditional New Products - Waterfall
Business Model: Known
Business Plan
Raise Capital
Solution: Known
Requirements
Design
Development
Testing
Sales
29. What is a Startup?
Temporary organization
Searching for a Repeatable, Scalable Business Model
Environment of uncertainty
Not a small version of a large company
No VP of xyz
No Sales Department
31. Key Benefits of Lean Startup
Process for startups to follow
Learn very fast what people will buy & use.
Start selling as soon as possible.
Eliminates Risk Early.
Uses data to seek truth & avoid opinions / politics
Get more Swings at bat.
Minimizes cash burn rate.
Scales at the right time.
Much higher rates of success.
38. Ok, I get it. I want some.
Most people just want to sound cool.
Tired of Buzz words & Fluffy pictures?
Stop using the Buzz words.
Start applying Lean Startup.
43. Roadmap
High Value Problem
Solution Commitment
Scalable Solution
10 Customers
100 Customers
Scale
Have I found customers with a problem worth solving?
Are customers committed to my proposed solution?
Have I developed a Scalable Business Model?
Let’s throw money at this puppy
custdevframework.com
44. High Value Problem
Solution Commitment
High Value Problem
Have I found customers
with a problem worth solving?
Scalable Solution
10 Customers
100 Customers
Scale
45. This is not about You. Get to know your Customers.
46. Discover Problems: Voice of the Customer
What are your goals for the next year?
What could make the biggest impact on accomplishing those goals?
What are the barriers you are encountering?
How are you solving today?
Customer
Goals
Barriers /
Problems
47. Ecosystem of Target Customer
Understanding the customer
Allowed 3X the Price!
48. Problem Interviews
Everyone is Lying to you - including your Mom!
The Mom Test = Would your mom tell you the truth?
Never talk about your solution ideas.
Ask specifics about the past.
Prioritize: Rank this problem more important / less important
What would a solution allow you to achieve? What impact value to business?
Have you tried to solve in the past? If so, How?
Was there a budget set?
50. Gated Outcomes
12 Customers confirmed Problem
High Value Problem
Ranked Problem as MUST HAVE
Solution Commitment
Market is large & accessible enough.
Scalable Solution
10 Customers
100 Customers
Scale
51. High Value Problem
Solution Commitment
Solution Commitment
What is the minimum proposed solution
customers will commit to?
Scalable Solution
10 Customers
100 Customers
Scale
52. Solution Interviews
1.
Problem Confirmation
2.
Usage Scenarios = Feature Validation
Event:
Question:
Player:
Action:
When asleep at night
Would you & your family feel more safe
If a device
Monitored your home for carbon monoxide gas
and woke you up in case of an emergency?
3.
Demo - Low Fidelity MVP
4.
How well would your problem be solved with this solution?
5.
Pricing Never ask what people will pay!
6.
Ask for Commitment!
53. Low-Fidelity MVP
Ad words + Landing Page MVP
Video MVP
Clickable Mockups MVP
App demo MVP
Wizard of Oz MVP
Concierge MVP
No code MVP
Pre-orders, Capture Commitments!
Start Removing Features!
54. Gated Outcomes
Quantified Problem Value to Buyer
Minimum Solution will solve Problem
Validated Pricing
5 Early Adopters committing to pay for it
Letters of Intent…. Pre-sales are even better!
High Value Problem
Am I ready to COMMIT to making this go?
Solution Commitment
Scalable Solution
10 Customers
100 Customers
Scale
55. High Value Problem
Solution Commitment
Scalable Solution
Can I mold this into
a Scalable Business Model?
Scalable Solution
10 Customers
100 Customers
Scale
68. Myth: We just need to hit Scale
Truth
Traffic & Hits are not a business.
Premature scaling is the #1 cause of startup failure.
Spending money faster cannot fix a business model.
Product must be fit to Customer before scaling.
69. Myth: It’s all about Execution
Truth
Achieving Failure =
Successfully executing a flawed plan.
Startups don’t know enough to just execute.
70. Myth: I must be the Hero
Truth
Share your struggles.
Transparency sets you free from the hero burden
Builds Trust
Team effort – Let’s solve this together.
Be fair to employees & their families.
Background:Mining for GoldJim is an engineer, recently retired. Joined up with some well-off friends to start a Lucrative business in gold mining.Jim’s company invested the limited funds they had in purchasing a quarry, large equipment & a building an expensive processing plant.
Background:This is some of the heavy equipment required to mine ore for gold.Company A is another mine which has been successful.100 years old, has lots of capital, lots of equipment, runs 24/7 nonstop – and hauls LOTS of oreChallenge:You might think Jim is making a killing. He’s mining for gold.Truth is – Jim and his investors are losing money every day.
What you might not know about mining ore for gold:Gold is invisible, microscopic… too small to see in the rocks. Gold is only fractions of a percent. Takes Really expensive operation to run63 TONS OF ROCK = 1 OZ OF GOLDMining & Processing is very expensiveStrip away Waste Rock(explosives, ore mining, massive trucks, crushing; processing plant: wash & separation, extremely hot furnaces, purify, pour)Only at the end of the process do you find – how much gold you were digging.Jim only had a few ounces of gold.Cause:Jim & his friends realized their assumptions about mining for gold were wrong.Spending lots of money & going nowhere.Jim is getting too much ore, not enough gold.Jim is digging in the wrong spot - but doesn’t know where to dig.Forced to Think Differently:Jim is constrained.He’s losing money, he’s got a small team, and running out of timeForced to either Innovate or Die.Innovation:Instead of digging to find the gold…Find the gold. Then dig.----Jim assumed he could do the same things that big companies do.Jim was wrong.Jim’s company is losing money every dayBig company can afford to lose money until they find gold.Small company can’t.
Hero:Jim and his team built an X-ray gun to test & find the highest value rocks – before investing in any digging.Jim now only digs the most valuable rocksFast Feedback allows him to find the value before investing resources.Jim’s return on investment is much higherFirst Test – Then Invest.
Targeted new customers, instead of existing customersDidn’t even have delete, sometimes not even rename.
We moved so fast…Our clients were selling to their clients using our Staging environment, not production environment!Biggest learnings:Dan was the User, not the Buyer. That’s why small agencies were early adopters – they had the user problem. Big agencies didn’t understand how we could help them. Until usage scenarios.Tried to scale too early. Wait to hire sales team until you can reproduce sales.
You may not see the crashes, because you tend to focus on the successes.There are a whole lot of rocket crashes going on - all around you.Heap of scrap metal & smoke
You see 10 bullet points.I see 5 years of my life.I used to be ashamed of the failure.In many ways - I thought I was a failure.Until I realized – the problem wasn’t me or my team.The problem wasn’t the PEOPLE.It was the PROCESS we’d applied.
Your Business IS the product. Businesses are bought and sold.
Each pitch is a customer pitch / sale attemptLOT more sales attempts using Lean Startup
Living document. Changes rapidly.
Cycle through learn loop as fast as possible.
Startups are ugly. Chaos. Must change things rapidly to find what works.
Key takeaway.
Only constant is – we’re losing money every day.
Much higher valuationTake on new investment to execute
Customer / Problem Fit
Be willing to listen.And be willing to be wrong.
One of Steve Blank’s healthcare startup students found they could charge 3x as much, by tapping into multiple budgets from multiple personas (sales budget, marketing budget)… was able to deliver value to both personas
“Hey mom I built something, what do you think?”Mom: “Oh, I just love it, my dear. I know you will be so successful.”YOUR MOM IS LYING TO YOU.People will try to please you.
Customer Segments, Ecosystem, & PersonasTop Goals & Challenges
Problem / Solution Fit
Usage Scenarios allow you to validate features, even before any demo.Find MINIMUM number of features which solve the customer’s problem.MVP = Minimum Viable Product = Minimum you must do to learn
Start removing features – and see if people still commit. Find the MINIMUM.
Product / Market Fit
2 Growth engines: Paid & ViralI don’t count Sticky because retention is always important & describes how well you help the customer solve real problems.