Lean EntrepreneurshipSean Ammirati

October 22, 2012

#CMULean © Sean Ammirati, 2012

About me...

• Research Fellow, CMU Software Industry Center

• Director Business Development, Peak Strategy (sold to Morgan Stanley)

• CEO & Co-Founder, mSpoke (sold to LinkedIn)

• COO, ReadWriteWeb (sold to SAY Media)

• Partner, Birchmere Ventures#CMULean © Sean Ammirati, 2012

Lean Entrepreneurship

• Technology Startup are not just small versions of big technology companies

• Introducing innovation (especially in technology based innovation) requires a more agile approach

• Social & Cloud platforms are catalyzing significant additional changes (for the better)

• Many principals are applicable to “intrapreneurship” as well

Class Format

• Lecture emphasizing a specific best practice

• Interactive discussion on a topic of interest in the national startup or technology media

• Student group led analysis of a historical startup & patterns that can be learned

#CMULean © Sean Ammirati, 2012

Best Practices Covered

#CMULean © Sean Ammirati, 2012

Customer Discovery

• Testing problem & product concept quickly using digital tools like CPC advertising and landing pages

• Understanding the difference between customer needs and product features

• Using Web Platforms, Services & Tools to quickly build “Minimally Awesome Products”

#CMULean © Sean Ammirati, 2012

Developing a Replicable Sales & Marketing Plan

• Understanding difference between innovators / early adopter customers those ‘across the chasm’

• Sales Process

• Tools & Techniques to automate continuous measurement and scale

#CMULean © Sean Ammirati, 2012

Digital Business Models

• The business model canvas paradigm

• Financial Modeling

• Common High Growth Technology Business Model Patterns

#CMULean © Sean Ammirati, 2012

Recruiting Team Members

• Culture

• Generalist vs Specialist

• What do technologists really want?

#CMULean © Sean Ammirati, 2012

Agile & Continuous Software Development

• SCRUM vs Continuous Deployment

• Leveraging Platforms

#CMULean © Sean Ammirati, 2012

Raising Capital for Your Startup

• VC Fundamentals

• Emergence of Accelerators for High Growth Tech Startups

#CMULean © Sean Ammirati, 2012

Logistics

#CMULean © Sean Ammirati, 2012

Class Preparation

• Each week, you will be required to spend approximately an hour watching video lectures or reading content to prepare for that week’s class material.

• Each week, you should be prepared to discuss a topic of interest in the national tech / startup media.

• One week, you will be required to have (as part of a group) conducted an analysis of a historical startup

#CMULean © Sean Ammirati, 2012

Class Evaluation

• Student Group Presentation (30%)

• Attendance & Participation (20%)

• Two Application Exercises (25% each – 50% total)

#CMULean © Sean Ammirati, 2012

Student Group Presentation (30%)

• Clarity of overall presentation

• Metrics & benchmarks identified

• Lessons learned identified

#CMULean © Sean Ammirati, 2012

Attendance & Participation (20%)

• Contribution to the discussion by raising thoughtful questions and analyzing relevant issues

• Builds on others’ ideas (listen!)

• Expands the class’ perspective and appropriately challenging assumptions and perspectives

• For each weeks’ discussion on a topic of interest in the national startup / technology media, suggests interesting and relevant topics.

• Attends class regularly

#CMULean © Sean Ammirati, 2012

Application Exercises (25% each - 50% total)

• Clarity of overall presentation

• Process and work conducted to create the deliverable (please show the work completed to land on the deliverable)

• Quality and thoughtfulness of the analysis conducted

#CMULean © Sean Ammirati, 2012

Application Exercises• Put into practice the best practices you are learning in the class.

• If you are working on or exploring launching a startup, you should target the exercises on your startup. If not, you can partner with a local startup or just do the exercises on a fictitious startup.

• For your grade, I am more concerned with the process and work you do. Therefore, the quality of the idea you are exploring won’t impact it. However, I’d always encourage you to maximize the value of your personal time by investing in ideas you actually are interested in.

• Each exercise should be delivered as a SINGLE PDF FILE and uploaded to blackboard.

#CMULean © Sean Ammirati, 2012

Exercise 1: Customer Discovery & Development

• A set of hypothesis you set out to test about your customer’s problems and needs.

• The customer discovery experiments you conducted to test these hypothesis

• Validated (or invalidated) learning’s about your customer’s problems & needs

#CMULean © Sean Ammirati, 2012

Exercise 2: Technology Development

• A specification for your Minimally Awesome Product (or MVP) based on Exercise 1

• A product backlog of the work required to build your M.A.P.

#CMULean © Sean Ammirati, 2012

Laptop Policy

Use your laptop only to participate &

take notes!

#CMULean © Sean Ammirati, 2012

Sample Quick Presentation:

PayPal

#CMULean © Sean Ammirati, 2012

Confinity Founding Team: 12/1998

#CMULean © Sean Ammirati, 2012

#CMULean © Sean Ammirati, 2012

#CMULean © Sean Ammirati, 2012

http://www.fastcompany.com/1837839/reid-hoffman-paypals-pivoted-path-success

X.com + Confinity March 2000

#CMULean © Sean Ammirati, 2012

Early Metrics

#CMULean © Sean Ammirati, 2012

0

2,250,000

4,500,000

6,750,000

9,000,000

Q1 2000 Q2 2000 Q3 2000 Q4 2000 Q1 2001 Q2 2001$0

$200,000,000

$400,000,000

$600,000,000

$800,000,000

Number of Accounts Total Payment Volumne

824,000$46 M

8.8 M$747 M

source: PayPal S1 -- http://www.secinfo.com/dRqWm.4G9Ag.htm

Toll Bridge Business Model

#CMULean © Sean Ammirati, 2012

Charge a % off each transaction (tax)

Key is how do you require people to use your bridge?

Barrier to Entry: Fraud Detection

#CMULean © Sean Ammirati, 2012

http://ecorner.stanford.edu/authorMaterialInfo.html?mid=1028

#CMULean © Sean Ammirati, 2012

Lessons

• Pivot till you have a product market fit worth scaling: Palm Pilot -> Email $

• Barriers to entry aren’t always patents: Fraud Detection

• Never underestimate the value of a strong team

#CMULean © Sean Ammirati, 2012

Thoughts as you do yours ...

• Target: 45 - 60 Minutes

• Find & analyze data on early usage

• Pull out interesting lessons learned

• Doesn’t have to be all slides

#CMULean © Sean Ammirati, 2012

Creating Your Groups

#CMULean © Sean Ammirati, 2012

Create Groups

1. Form your own groups (3 - 4 people) x 7 weeks diversity among group is great!

2. Pick your company

3. Pick your week

#CMULean © Sean Ammirati, 2012

Potential Companies

#CMULean © Sean Ammirati, 2012

• Google

• Facebook

• OpenTable

• LinkedIn

• eBay

• Yahoo

• Amazon

• Groupon

• Yelp

• ... (feel free to propose your own)