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Transcript of Lean Startup Minder Chen, Ph.D. Professor of MIS Martin V. Smith School of Business and Economics...
Lean Startup
Minder Chen, Ph.D.Professor of MIS
Martin V. Smith School of Business and EconomicsCalifornia State University Channel Islands
Lean Startup - 2© Minder Chen, 2012-2014
The Startup Owner’s Manual• A startup is a temporary
organization designed to search for a repeatable and scalable business model (under extreme uncertainty).
- Steve Blank, The Startup Owner’s Manual
Steve Blank video at http://www.youtube.com/watch?v=6t0t-CXPpyM
Lean Startup - 3© Minder Chen, 2012-2014
Resources
• http://theleanstartup.com/
• http://wiki.mbalib.com/zh-tw/ 精益创业 • http://en.wikipedia.org/wiki/Lean_startup
• http://steveblank.com/• http://steveblank.com/2012/11/27/open-source-entrepreneurship/• http://www.slideshare.net/sblank/lean-launchpad-educators-handbook-sept-2013
– Video: Steve Blank on entrepreneurship 1, 2, 3, 4 and 5
– Video: Steve Blank, the start-up owners manual
– Slides: Steve Blank, the nine deadly sins of start-ups
– Paper: Steve Blank, the nine deadly sins of start-ups
• http://theleanstartup.com/ – Video: Lean Start-up (Eric Ries)
– Slides: Principles of the Lean Start-up (Eric Ries)
– Paper: Lean Start-up Methodology (Eric Ries)
Lean Startup - 4© Minder Chen, 2012-2014
The Lean Startup Method
• Entrepreneurs are everywhere.
• Entrepreneurship is management.
• Validated learning.
• Build-Measure-Learn.
• Innovation accounting.
– Eric Ries, The Lean Startup: How Today's Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses, 2011.
Lean Startup - 5© Minder Chen, 2012-2014
10 Top Ten MistakesMistakes of Entrepreneurs1. Multiplying big numbers by 1%
2. Scaling too soon
3. Partnering
4. Pitching instead of prototyping
5. Using too many slides and too small a font
6. Doing things serially
7. Believing 51% = control
8. Believing patents = defensibility
9. Hiring in your own image
10. Befriending your VCs & Thinking VCs can add value
Guy Kawasaki, The Top 10 Mistakes of Entrepreneurshttps://www.youtube.com/watch?v=HHjgK6p4nrw
Lean Startup - 6© Minder Chen, 2012-2014Source: http://businessmodelgeneration.com/canvas
Video
Lean Startup - 7© Minder Chen, 2012-2014images by JAM
customer segments
key partners
cost structure
revenue streams
channels
customer relationships
key activities
key resources
value proposition
Osterwalder’s Business Model - Insight
(c)2010 K+S Ranch Consulting Inc. www.steveblank.com 7
Lean Startup - 8© Minder Chen, 2012-2014
Cash Flow
How
What
Who
Source: Alexander Osterwalder & Yves Pigneur, Business Model Generation (Preview version), 2009.
Lean Startup - 9© Minder Chen, 2012-2014
The Use of the Business Model Canvas
• Describe
• Discuss
• Design
• Challenge
• Improve
• Innovate
• Invent
• Pivot
• Choose
Your Business Model
Lean Startup - 10© Minder Chen, 2012-2014
Lean Startup - 11© Minder Chen, 2012-2014
Reverse Engineering Facebook’s Business Model with Ballpark Figures
http://www.businessmodelalchemist.com/
Lean Startup - 12© Minder Chen, 2012-2014
Questioning Business Model Components
Lean Startup - 13© Minder Chen, 2012-2014
A Starting Point of Innovation
A customer friction is a (re)discovered of relevant and often unmet needs in a recognizable situation from a target group.
– Adapted form http://www.innovationexcellence.com/blog/2011/07/08/solve-customer-frictions/
Lean Startup - 14© Minder Chen, 2012-2014
Value Proposition Canvas
• http://www.businessmodelgeneration.com/downloads/value_proposition_canvas.pdf
• http://www.franciscopalao.com/english/value-proposition-canvas-get-to-know-your-customers-and-improve-your-value-proposition/
Lean Startup - 15© Minder Chen, 2012-2014
Lean Canvas
Lean Startup - 16© Minder Chen, 2012-2014
Key Metrics
• Diffusion / Spreading - active users - number of cities/countries in which events have been created so far
• Depth of customer relations - created events - average amount of received ratings
• Monetization - standard advertising metrics - percentage / total number of premium users
Lean Startup - 17© Minder Chen, 2012-2014
“Get out of the building approach” – It is not a business plan.
No startup business plan survived first contact with customers.
Validate Your Business Model
• Most startups lack a structured process for testing their business model hypotheses.
Lean Startup - 18© Minder Chen, 2012-2014
Marketing Sizing: TAM, SAM, and TM
• Total Addressable/Available Market
http://en.wikipedia.org/wiki/Total_addressable_market
Lean Startup - 19© Minder Chen, 2012-2014
TAM
http://aiti.mit.edu/media/programs/india-bms-summer-2013/materials/step_4_calculate_the_tam_---trepreneurship_101.pdf
Lean Startup - 20© Minder Chen, 2012-2014
Adoption of Innovative Things
Lean Startup - 21© Minder Chen, 2012-2014
Technology Adoption Cycle
Lean Startup - 22© Minder Chen, 2012-2014
Crossing the Chasm
http://ewthoff.home.xs4all.nl/Weppage%20documents/Summary%20Crossing%20the%20Chasm.pdf
Lean Startup - 23© Minder Chen, 2012-2014
太肯運動科技• 【店家資料】太肯運動科技• 官網 https://www.titan-tech.com.tw/創業資金 初期投入 150萬元 (為開發產品, 2012年投入 300萬元、 2013年再投入 600萬元 )去年營收 1800萬元 (獲利再投入研發、行銷,年度盈餘剩 50萬元 )
Lean Startup - 24© Minder Chen, 2012-2014
太肯的機能運動襪•年賣 1800萬 運動襪 跑出商機• https://www.titan-tech.com.tw/static/aboutus
•擁有亞洲頂尖研發團隊之人員共同開發– 臺灣師範大學 運動科學研究所– 國際生物力學學會– 台灣運動科技發展協會
Source: http://www.appledaily.com.tw/appledaily/article/finance/20140324/35720083/
(link)
許景泰
Lean Startup - 25© Minder Chen, 2012-2014
Biomechanics生物力「就是一種希望“活用生物力學,創新運動科技”的執著,襪子是腳與鞋的唯一介面,全世界那麼多的製鞋大廠不惜耗費鉅資研發鞋類,但卻很少有人重視襪子!」 - 相子元教授
https://www.titan-tech.com.tw/truestory/research3
Video: https://www.youtube.com/watch?v=ndEnngIOxCI
Lean Startup - 26© Minder Chen, 2012-2014
他山之石可以攻錯•為了研發出最適合國人走路、運動穿的專業襪子,他不惜在短短不到三年的時間,飛往世界各國,砸下台幣 20多萬,買了將近 300雙的襪子,還不包括旅費在內!
•「所有能買的 " 機能性 " 襪子,我幾乎都買了… ..最貴的,一雙就要2000多塊台幣…」相子元教授收藏的 300雙襪子,遍佈五大洲,除了日本、韓國、美國、加拿大、紐西蘭、澳洲和歐洲各國,包括德國、擁有最好的織襪機台的義大利等,甚至遠到南非,他也去了一趟。
Video: https://www.youtube.com/watch?v=ndEnngIOxCI
Source: https://www.titan-tech.com.tw/truestory/research3
Lean Startup - 27© Minder Chen, 2012-2014
Source: Link
Lean Startup - 28© Minder Chen, 2012-2014
Pressure
https://www.youtube.com/watch?v=dldpSlkPLew
https://www.titan-tech.com.tw/sport_socks/low_arch_pro_basketball_socks
Lean Startup - 29© Minder Chen, 2012-2014
Lean Startup - 30© Minder Chen, 2012-2014
Six Steps to Successful
Elevator Pitch
Lean Startup - 31© Minder Chen, 2012-2014
10 Things to Include in Your Startup Pitch Presentation1. Cover Page: The cover page should have your logo, business name and a tagline. Your tagline should give insight into your company and be easy to remember, for example, “We are the Groupon for X." Remember to include your contact information — you would be surprised how many people forget it. Especially if your deck was forwarded, it should be easy for a person to track you down.
2. Summary: Summarize all of the information before you present it, and use this opportunity to get your audience interested in your company. Talk up the most interesting facts about your business, as well as any huge milestones you may have hit.3. Team: Investors are not only putting money toward your idea, they’re investing in your team. It’s important they know the people who are going to make the concept successful. Make sure to include your background too, and how it relates to your new company. Highlight any of your team's successful exits. Investors like to see that you can take a company to acquisition.
If applicable, emphasize that your team has worked together in the past or for a long period of time. It shows you can and like to work together. If you have any important advisors, list them, but make sure they know you’re using their name.
http://mashable.com/2011/06/24/startup-pitch-presentation/
Lean Startup - 32© Minder Chen, 2012-2014
4. Problem: You need to be able to explain the problem your concept is going to solve. Further, you need to prove why investors should care about solving it with your product or service.
5. Solution: This is the value proposition you are bringing to the table. It should solve the problem you just mentioned. If you have a demo of your product, this is the time to show it. Include any case studies to show that your product has worked for existing customers.
6. Marketing/Sales: You'll want to show the market size for your product. This can include profiles of target customers, but be prepared to answer questions about the cost of acquiring these customers. Not knowing this information is a red flag to investors. If you already have sales, you can discuss your growth and forecast future revenue.7. Projections or Milestones: It is difficult to create financial projections for a startup. If you don’t have a long financial history, your forecast is really just an educated guess. Instead, you should present the milestones that you've already reached. For instance, include that you acquired 1,000 customers by X date, that you have a partnership with company Y, that you signed a major customer or that you will be cash flow positive by Q3.
Lean Startup - 33© Minder Chen, 2012-2014
8. Competition: Every business has competition even if you think you're offering something new and unique. List your competition and why your product/service is different from their model. If your competitors have been acquired, list acquisition prices and who acquired them.
9. Business Model: Every investor wants to get his money back, so it's important to tell them how you plan on generating revenue. Show a list of the various revenue streams for your model and the timeline for each of them. How will you price your product and what does your competition charge? You should also discuss the lifetime value of your customer and how you will keep him engaged.10. Financing: If you have already raised money, you will want to talk about how much, who invested and what you did with it. If you have not raised money yet, talk about what you have accomplished with minimal funding. If you have personally funded your startup, make it known. Investors like to see entrepreneurs who have invested their own money. If you’re pitching to raise capital, list how much you're looking to raise and how you intend to use the funds.
Lean Startup - 34© Minder Chen, 2012-2014
Learning and Assumptions Testing
Start-upBig Company
Lean Startup - 35© Minder Chen, 2012-2014
Hypotheses Testing and Insight
Hypotheses
Facts
Business Model
Lean Startup - 36© Minder Chen, 2012-2014
Customer Problem: known
Product Features: known
Waterfall / Product ManagementExecution on Two “Knowns”
Requirements
Design
Implementation
Verification
Maintenance
Source: Eric Rieshttp://startuplessonslearned.blogspot.com
More startups fail from a lack of customers than from a failure of product development
Lean Startup - 37© Minder Chen, 2012-2014
The Customer Development Process
1. Try many times before you get it right. 2. It is OK to fail so plan to learn from it.3. Only move to the next stage when you learn
enough and reach the “escape velocity”http://www.ctinnovations.com/images/resources/Startup%20Owners%20Manual%20-%20BlankDorf.pdf
More startups fail from a lack of customers than from a failure of product development
Lean Startup - 38© Minder Chen, 2012-2014
BioIQ.Com Case Study
Lean Startup - 39© Minder Chen, 2012-2014
The Startup Owner’s Manual
• Customer Discovery– Phase 1: State Your Business Model Hypotheses
– Phase 2: Get out of the building to test the problem: “Do people care?”
– Phase 3: Get out of the building to test the product solution.
– Phase 4: Verify the business model and “Pivot or proceed?”
• Customer validation– Phase 1: Get ready to sell
– Phase 2: Get out of the building to sell
– Phase 3: Develop product and company positioning
– Phase 4: The toughest question of all: “Pivot or Proceed?”
Lean Startup - 40© Minder Chen, 2012-2014
The Lean Start-Up
Steve Blank, "Why The Lean Start-up Change Everything," HBR, May 2013. (link)
Lean Startup - 41© Minder Chen, 2012-2014
What Is Pivot?
• Pivot: A change to business model component based on customer feedbacks. A pivot is not a failure.
• Pivot is a structured course correction designed to test a new fundamental hypothesis about the product, strategy, engine of growth, etc.
– Eric Ries, The Lean Startup, 2013.
• Pivots are vision driven.
Lean Startup - 42© Minder Chen, 2012-2014
Lean Startup - 43© Minder Chen, 2012-2014
MVP
• In product development, the Minimum Viable Product (MVP) is a strategy used for fast and quantitative market testing of a product or product features. It is an iterative process of idea generation, prototyping, presentation, data collection, analysis and learning.
Lean Startup - 44© Minder Chen, 2012-2014
An MVP Example
Why is Dropbox more popular than other programs with similar functionality?
•Well, let’s take a step back and think about the sync problem and what the ideal solution for it would do:
– There would be a folder.
– You’d put your stuff in it.
– It would sync.
Source: http://michaelrwolfe.com/2013/10/19/why-is-dropbox-more-popular-than-other-programs-with-similar-functionality/
Lean Startup - 45© Minder Chen, 2012-2014
Source: http://startitup.co/guides/294/becoming-a-lean-startup-guru
Lean Startup - 46© Minder Chen, 2012-2014
http://upscalability.com/
Lean Startup - 47© Minder Chen, 2012-2014
http://upscalability.com/lean-startup/
Lean Startup - 48© Minder Chen, 2012-2014http://upscalability.com/
Lean Startup - 49© Minder Chen, 2012-2014
Not Seeing the Opportunities
1. Cannot see at its nascent stage
2. Don’t take it seriously once seen
3. Don’t understand when it has become successful
4. Wait until it is too late
視而不見見而不屑察而不懂行已不及
先見之明人棄我取摸透產業先人一著
Lean Startup - 50© Minder Chen, 2012-2014
Lean Startup - 51© Minder Chen, 2012-2014
Lean Startup - 52© Minder Chen, 2012-2014
Transition/Buyout
Transition/Buyout
Large Company
Large Company
ScalableStartup
ScalableStartup
Sustaining Innovation
• Existing Market / Known customer
• Known product feature needs
From Startup to Large Company Sustaining
Innovate or Evaporate
Disruptive Innovation• New Market• New tech, customers, channels
Goal is to solve for: unknown customer
and unknown features Search Execute
Build
Exit Criteria- Business model found- Total Available Market > $500m- Can grow to >$100m/year- Can be Venture capital funded
Lean Startup - 53© Minder Chen, 2012-2014
Lessons Learning
• The search for the business model is the front end of the startup process
• The goal is to find a repeatable/scalable model, and then execute
• Customer and Agile Development are the processes to search and build the model
• Execution requires operating plans and financial forecasts
• Product management is the process for executing the model
• This is true in the smallest startup or largest company
http://steveblank.com/2012/03/05/search-versus-execute/
Lean Startup - 54© Minder Chen, 2012-2014http://thumbnails.visually.netdna-cdn.com/the-lean-startup_50291668aa9bb.png
Lean Startup - 55© Minder Chen, 2012-2014
SCRUM Process
Source: https://www.youtube.com/watch?v=WxiuE-1ujCM
Lean Startup - 56© Minder Chen, 2012-2014
Lean Startup = Customer Development + Agile Method
Lean Startup - 57© Minder Chen, 2012-2014
Lean Startup - 58© Minder Chen, 2012-2014
Startup vs. Large Company
http://steveblank.com/2012/03/05/search-versus-execute/
Lean Startup - 59© Minder Chen, 2012-2014
Lean Startup