LEAN Startups: a primer

Learn

Entrepreneurial

Agility

Now!

a little about me? Norris Krueger, PhD

recovering tech entrepreneur

PhD researcher in entrepreneurship

(entrep ecosystems & entrep learning)

global speaker (next up: Denmark, Cairo)

Total lean startup fanboy!

Norris.krueger@gmail.com

@entrep_thinking, LinkedIn, Facebook, G+

http://bit.ly/NKblog ; http://bit.ly/NKshortbio

the “Lean” movement

• … just a few key names:

• Eric Ries

• Steve Blank

• Dave McClure and other cool cats

• …BUT… Is this really that new?

• Isn’t this what smart entrepreneurs ALREADY do? How smart entrepreneurs ALREADY think?

• And how the best educators already work?

What is a “Startup”..really?

• A startup is simply the vehicle for figuring out a sustainable, repeatable, scalable business model

• This is no time for a business plan… takes very different planning (and thinking)

• Finding your Scalable Business Model:

– Test each critical assumption in your model

– Measure (qual & quant) ruthlessly

– “Pivot” quickly

– Iterate

A few quick thoughts… • “Lean” doesn’t mean cheap.. It means FAST • “Lean” could just as easily be called “Learn”!

WHEN to be Lean? • Extreme uncertainty • Significant ambiguity (Type III errors) • Startups – scalable startups • Social / Sustainable / BOTP • New Product Development

The Process

• from Steve Blank: The search (SBM) we can call “Customer Development”

• Implementing SBM = “Agile Development”

Minimize TOTAL time through the loop

Source: Eric Ries,

The Lean Startup

Build Measure Learn

• BUILD: Identify & Test

• Minimum Feature Set

• Minimum Viable Product (MVP)

• MEASURE:

• Find out what customers love… and especially hate (Kathy Sierra vs Dave McClure)

• LISTEN! (to your metrics & your customers)

• LEARN:

• Pivot quickly & decisively

• “Failing fast” is also a misnomer – “fail FORWARD” which means…

• Better your assumptions fail… than your biz

• Disrupts the “Inventor Mentality” -

forces attention on Value (benefits>>features)

• Build Test/Measure Learn (L,R,R)

Get Out of the *%^$#@ Building!

Venture formation starts with the search for a business model

What is a business model?

describes how an organization rationalizes the way it captures, creates, and delivers value

Why it is important?

Clarifies the makeup and interlacing of fundamental elements needed by any organization: customers, offer, infrastructure, and financial viability

How is it developed?

12 Source: Osterwalder & Pigneur, 2010

What’s a Business Model?

• Three key questions to answer – identify all key assumptions for each:

1) Value Proposition [what customer values]

2) Value Delivery [how to make it happen]

3) Value Capture [how to get paid]

(shall we get started??)

www.businessmodelgeneration.com

Quipu: online support platform

www.quipuapps.com

Powerful new cloud-based platform for supporting business model evolution

Other strategic analysis tools

Useful for starting a plan

Useful for developing your pitch

(tell Mike Issa at Quipu that Norris sent you!)

Lean Startup Machine

25

Key Partners Key Activities Value Propositions

Customer Relationsihps

Key Resources Channels

Cost Structure Revenue Streams

Customer Segments

Online retail shopping

Fulfillment by Amazon

Amazon web services

Customized online profiles &

recommendations

Global consumers (NA, EU, Asia)

Developers & companies

Individuals and companies that need fulfillment

Logistics Partners

IT & S/W Dev. & Maintenance

IT infrastructure

Global fulfillment

infrastructure

Amazon.com

Affiliates

Affiliates

Marketing

Technology and content

Fulfillment

Source: Osterwald & Pigneur, 2010

Sales margins

Fulfillment handling fees

Web services

for more info…

The 'Lean' Gurus & Key Links:

• Eric Ries (@ericries,www.startuplessonslearned.com)

• Steve Blank (@sgblank, www.steveblank.com)

• Alex Osterwalder (@business_design)

•Trevor Owens (Lean Startup Machine)

GET STARTED HERE: www.slideshare.net/sblank/successful-entrepreneurship-1

www.StartupWeekend.org

• www.TechStars.org

• www.gewusa.org; www.unleashingideas.org

• www.ideatoproduct.org (Idea to Product)

• Utah Foundry

One exercise: Get Out of the *%^$#@ Building!

• Form pairs; • Group into sets of four pairs, numbered 1-4. • #1 is the Brilliant Entrepreneur • #2-#4 are Demanding Customers/Clients

• #1 specifies product/service then makes plausible

assumption in each canvas category then... • In turn, asks #2, #3, #4 separately for feedback –>

who give plausible but DISconfirming feedback

• #1 pivots • (can integrate with “SRI” model)

Making opportunities happen: Causation & Effectuation

29

M1

M2

M3

M4

M5

M1

M2 M3

M4

M5

Given Goal

Given Means

Given Means

Imagined Ends

Source: Sarasvaty et al. 2005; Read et. Al 2010;

Causation Logic Effectual Logic

- Selecting between a given set of means to achieve a pre-determined goal

- Presumes a market’s existence and ample resource and process availability

- Begin with the end in mind & generate alternatives

- Imagining new possible ends using an existing set of means

- No assumptions about a market’s existence

- Starts with entrepreneur’s own knowledge, resources, networks, affordable loss, and goes from there