Lean Canvas Lite

Noyes Limited

• GU MBA

• Startup Weekend

•Early stage consulting & advisory

Permission

• Be myself• Have fun• Be honest

Overview

• Introduction to Lean Canvas• 9 sections• 1 minute to fill-in• Coaching & Advisory

Introductions

• Name• Business/idea• Expectations

Areas of Focus

Problem Solution Key MetricsUnique Value Proposition

Unfair Advantage

Channels

Customer Segments

Cost Structure

Revenue Streams

Business Model

A business model describes how your company creates, delivers and captures value – Steve Blank

First Step

• Important step• Brainstorm possible customers• Create a list

Pick Customer Segment

• Pick strongest customer segment• Highest ROI• Be specific

Example Company

Barters Closet• Online clothing trading platform

• Pivoted

Example

Barters Closet• Broad: Anyone who has unwanted or unused clothing

• Specific:– Moms with children under 5– College Students– Hipsters (trend setters)– Thrift store shoppers

Canvas/Segment

• Use a canvas for each segment– College Students– Hipsters (trend setters)– Thrift store shoppers

Title

• Customer segment becomes canvas title

5 Minute

Customer Segment

Customer Segments

Target customers

Early Adaptors

Customer Segment Sketch

Moms with young children under 5

Early Adopters

• First customer to pay• Willing to pay for imperfect product

• Essential to identify & market• Revenue & Feedback

Example

• Barters Closet– Lower middle class– Use Pinterest & Facebook– Avid coupon users

Customer Segment Sketch

Young mom’s with children under 5

Early AdoptersLower middle class

mom’s who are tech savvy. Use Pinterest & Facebook. Most likely an avid couponers.

1 Minute

Problem

Problem

Top 3 problems

Problem-Customer Segment

• What problem are you solving• Drive rest of canvas

Big Problems

• Solve big problems– Customer– Investor

• Pain points

Top 3 Problems

• Research• Focus Group• Create list• Pick top 3

Example

• Barters Closet– Kids go through clothing quickly– Thrift store does not buy/trade– EBay expensive & time consuming

List Alternatives

• List current alternatives• There is always an alternative• Doing nothing an alternative

Example

• Barters Closet– Thrift stores– Consignment stores– EBay

Problem Sketch Kids go through

clothing quickly

Thrift store does not buy/trade

EBay listing fees are to high

Alternatives:• Thrift stores• Consignment

stores• Ebay

1 Minute

Unique Value Proposition

Unique ValueProposition

A single, clear compelling message that states why you are different and worth buying.” - Steve Blank

The Challenge

• Hard to get right• Use as marketing copy

A difference

• It must be different• A difference that matters

First Interaction

• First interaction• Capture attention• Best guess

Picking Your Words

• Pick carefully• Marketing & branding• SEO

Example

– Square: Start accepting credit cards today.

– Evernote: Remember everything.– MeetingBurner: Fast & simple desktop sharing.

How to Create

• Study UVP• Brands you admire• Deconstruct• Create passionate customers

Example

• Barters Closet– A community of mothers helping mothers through the exchange of clothes.

High Level Pitch

• Create a high-level pitch• Builds on familiar concepts• Quickly communicate message• Used with elevator pitch

Example

• Barters Closet– An online swap meet for mom's.

UVP Sketch

A community of mothers helping mothers through the exchange of clothes.

High-level Concept

An online swap meet for mom's with young children.

1 Minute

Solution

Solution

Top 3 features

Hypothesis

• Untested hypothesis• Define hypothesis• Match solution to problem

Minimal Features

• Minimal Viable Product• Create minimal number of features that will create value

Customer Focus

• Major mistake• Focus on customer needs

Match

• Match solution to problem• Many fail• An exercise in focus

Problem/Solution 1

• Problem– Kids out grow clothing quickly

• Solution– Create clothing trading platform• Allow mothers to trade/sell

Problem/Solution 2

• Problem– Thrift store does not sell/trade

• Solution– Allow users to sell/trade or buy

Problem/Solution 3

• Problem– EBay listing fees are to high

• Solution-Only charge commission on products sold.-No fees on products traded.

Solution Sketch

Create clothing trading platform

Allow users to sell/trade or buy

Only charge commission on products sold

1 Minute

Unfair Advantage

Unfair Advantage

Can’t be easily copied or bought

Unfair or competitive advantage

Duplication

• Not easily duplicated• Advantage not easily purchased

Good but Not Unfair

• More features• Less features• Design• Passion• Determination

Features

• Less features– Hard to protect– Easy to duplicate– i.e. Apple

• More features– Same issues– Not sustainable

Design

• Hard to create• Easy to duplicate• Hard to protect

Personal Attributes

• Passion & determination– Not quantifiable– Not sustainable/enduring– Able to be duplicated

Unfair Advantages

• Insider Information• Dream Team• Existing Customers• Celebrity Endorsement• Network Effects• Community• Organic Search• Patents

Unfair Advantage Story

• May arise over time– Facebook: Community– Zappos: Customer service– Toyota: Internal processes (Lean)

• Focus on what it will be• Or, leave it blank

Example

• Barters Closet– Community of mothers helping mothers

– Seasoned Board of Directors w/Ecommerce experience

Unfair Advantage Sketch

– Community of mothers helping mothers

– Seasoned Board of Directors w/Ecommerce experience

1 Minute

Revenue Streams

Revenue Streams

Revenue ModelLife Time ValueRevenueGross Margin

Importance of Pricing

• Price is a component of your product.

• Perception of value• Keeps you in business• Signals branding & positioning

Customer

• Determines your customer• Communicates value

Example

Example

Why Charge

• Set expectations• Raises customer commitment • Creates cash flow• Address business model challenge

Free Trial

• Free-Trial pricing method• Pre-determined period of time• Force conversion decision• Iterate faster

Barters Closet Example

• 15%commission on sales• $1 shipping & handling fee

Revenue

$1 shipping & handling fee

15%commission on sales

1 Minute

Cost Structure

Cost Structure

Customer Acquisition CostsDistribution CostsHosting, People, etc.

Accuracy

• Impossible to 100% accurate• Focus on known costs• Margin for error

Research

• Broad understanding• Lean approach

Fixed & Variable

• Broad understanding of fixed & variable costs

• Action in uncertainty

Fixed Costs

• Time-related– Salaries– Rent

Variable Costs

• Production-related– Rise with increase– Fall with decrease

Scaling Costs

• Costs that increase incrementally with use or growth

• Fixed or Variable– Rent– Hosting cost

• Broad Understanding

Cost Structure Example

• Barters Closet– Trading platform development $45,000

– Credit card fee-3%/transaction– Rent - $500– Web hosting $200– Monthly salaries

• Entrepreneur - $600• Designer - $600• Developer - $1,000

Fixed

• Barters Closet– Trading platform development $45,000

– Rent - $500– Web hosting $200– Monthly salaries• Entrepreneur - $600• Designer - $600• Developer - $1,000

Variable

• Credit card fee-3%/transaction

Scaling

– Rent - $500– Web hosting $200– Monthly salaries• Entrepreneur - $600• Designer - $600• Developer - $1,000

Cost Structure Sketch

Trading platform development $45,000Credit card fee-3%/transactionRent - $500Web hosting $200Monthly salaries

Entrepreneur - $600Designer - $600Developer - $1,000

1 Minute

Key Metrics

Key Metrics

Key activities you measure

Measure

• Key component of lean start• Conventional accounting• Measure activity• Measure engagement

Identify

• Identify 2 metrics that drive your business

• Pre-revenue– First user– First customer– Think about engagement

Action & Success

• Divide metrics into action & success metric

Action

• Quantify engagement– Beta trial– Open email– Respond to email

• Goal is data points• Move towards success

Success Metrics

• Associate with action• Financial metrics• Success at each phase• Metrics depend on situation

5 Common Metrics

• Customer Acquisition Cost• Customer Retention• Viral Reach• Turnover• Revenue

Key Metric Example

• Barters Closet– Key Action: Get users to upload “Closets.”

– Success Metric: $3,000 monthly sales

Key Metric Sketch

–Key Action: Get users to upload “Closets.”–Success Metric: $3,000 monthly sales

1 Minute

Channels

Channels

Path to customer

Reach

• How you reach your customer• Right product-right path• A.K.A. Product/Market fit

Reality

• Many channels• Inapplicable today• Viable at later stage• Realistic• Develop strategy

Build & Test

• Build, test & measure from start

• Use small samples• Scale when validated

Free Fallacy

• No such thing• Human capital cost• ROI calculation challenge• Focus on key metrics

Paid

• Search engine marketing• Keyword competition• Learning to optimize

Inbound VS Outbound

• Inbound-pull messaging– Blogs, SEO, E-books, white papers, webinars

• Outbound-push messaging– SEM, print/TV ads, trade shows, cold calling.

Initial Channel Strategy

• Lean channel strategy• Testing & measuring• Creativity & risk taking• Experiment & have fun

Scale Channel Strategy

• Learning to revenue• Know how to reach customer• Scale– Internally– Outside professional

Channel Example

• Barters Closet (Current)– Friends/Family– Facebook/Blog/Twitter– Thrift fashion bloggers– Thrift stores– Trading events– Seasonal trading parties

Channel Example

• Barters Closet (Future)– PPC campaign– Facebook target ads– Paid advertising– Street team– Inside sales team

Channel Sketch

– Friends/Family– Facebook/Blog/Twitter– Thrift fashion bloggers

– Thrift stores– Trading events– Seasonal parties

Example

Best Practices

Sketch in One Sitting

• Sketch in one sitting• Sketch quickly• Get your ideas on paper

Blank Sections

• It’s ok to leave blank• It’s ok to come back• Some elements take more thought• Evolves over time

Think in present

• Predict the future (business plan)

• “Doer” attitude• What hypothesis are you testing?

Picking a Canvas

• Create canvas for each segment• Choose best canvas

Ease of Reach

• Take path of least resistance• Build, learn faster

Margin

• Highest margin

Market Size

• Large enough market• Stepping stone• Build a business

Mentor

• Seek outside help• Indentify blind spots

Services

• Business Model Creation• Pitch Decks• Go-To-Market Strategy• Business Plans• Advisory

Workshop

• Slides available• brettnoyes@startupweekend.org• www.noyeslimited.com