Lean Startup in 1 Hour

LeanStartup Roadmap

Matt RutterCCI Gagauzia

Matt RutterCCI Gagauzia

Small Enterprise Advisormatt@mattrutter.com

Entrepreneurial

The reason most startups fail is not because they build a bad product, it’s

that they build a product nobody needs.

-Eric Ries

“A startup is not a ‘doll house’ version of a large

company.”

- Eric Ries

What is а “Lean Startup?”

• “Startup” – a temporary organization designed to search for a repeatable and scalable business model.

• Tradition– Write and Execute– Assumptions– Static (Unchanging)

• Lean– Model and Test– Customer Development

– Agile (Iteration, Pivots))

“Startups that succeed are those that manage to

iterate enough times before running out of

resources.”- Eric Ries

Eric Ries, The Lean Startup

LeanStartup Roadmap

• Idea– Problem

Interviews– Market Research

Need

TalentInterest

IDEACustomer/Problem Fit

Determine if the problem exists and is worth solving

• Problem Interviews• Market Research

Customers care about their problems – not

your solution.

IDEA

- Dave McClure

Problem Interview

Goal: To understand…1. What is the problem? Why is it a

problem?2. Who has the problem?3. How do they currently solve the

problem?

Ash Maurya, Running Lean 81

Problem Interview• Example Script

1. What’s the hardest part about [problem context]?

2. Can you tell me about the last time that happened?

3. Why was that hard?4. What, if anything, have you done to solve

that problem?5. What don’t you love about the solutions

you’ve tried?Justin Wilcox – How I Interview Customershttp://customerdevlabs.com/2013/11/05/how-i-interview-customers/

Market Research• What current solutions/alternatives exist?– Cost– Function– Revenue model

• What barriers to entry exist?• Is this a rising or dying trend?

Resources:– google.com/trends, google.com/think– entrepreneur.com/businessideas/index.html– hbr.org, forbes.com, wsj.com,

techcrunch.com

LeanStartup Roadmap

• Idea– Problem

Interviews– Market Research

• Model– Lean Canvas– Solution

Interviews

MODELProblem/Solution Fit

Determine if your model solves the problem

• Lean Canvas• Solution Interviews

Why Lean Canvas?

• Fast• Concise• Dynamic

“Your Product is not The Product”

- Ash Maurya

A business model describes the rational of how an organization creates,

delivers, and captures value.

-Alex Osterwalder, Business Model Generation

Customer Segments• The specific group of

people or organizations a business intends to serve.– Who has the problem?– For whom are we creating

value?– Who must we sell to or

make happy?

• Early Adopters: The characteristics of the first group of people who will purchase your product.

• Sketch:– Title– Age– Family Details– Income Level– Amount of Free Time– Location– Their Values/Morals– Social Groups– Professional

Associations– Hobbies– Where They Shop

Problems• The top 1-3 problems

your Customer Segments need solved.– What problem are we

curing?– How strong is this

problem?– Will the customer pay to

have this problem removed?

• Existing Alternatives: How the problem is currently solved by the Customer Segments.

• Sketch:– Frequency– Expense– Awareness– Reaction– Newness

Solution• The minimum activities

or features needed to solve the Customer Segments’ top 1-3 Problems.– Outline a feature set to

solve each problem (description of your product or service)

– Only include what is necessary (according to Solution Interviews)

• Sketch:– How problem is

solved– Time needed for

solution– Resources needed– Partners needed

Unique Value Proposition

• A clear and short message stating the business’ unique Solution to the Customer Segments’ Problem.– The value you create for the

Customer Segment– How are you improving the lives

of our customers?– How are you different?

• High-Level Concept: Brief relation of your UVP to something commonly understood (i.e. ВКонтакте: “Facebook for Russians”).

• Sketch:– How your solution relates

to the customer’s #1 problem

– Finished story benefit of purchasing your product

– How the solution will make your customer feel

Note: The UVP represents the emotional trigger that will convince your customer to purchase your product/service

Channels1. Product: How a company

delivers its Value Proposition to the Customer Segments.

2. Marketing: How a company attracts the interest of its Customer Segments.

• Customer Relationship – The closeness and frequency of the relationship developed with the Customer Segments.

• Sketch:– How will you deliver

your solution?– How will your

customer make a purchase?

– How will you find your first 10 paying customers?

– What is the most resource efficient way to attract Early Adopters?

Revenue Streams

• The various income-generating activities of a business.– Customer Segment

paying money to receive the business’ Value Proposition

– Charge as early as the customer will permit

– Determine price based on the value you add, not the cost of production

• Sketch:– For what features will

the customer pay?– What features will be

free?– How will you position

your business against alternative solutions?

– Are you adding value to non-customers who would be willing to pay?

Cost Structure

• All operational expenses of running your business.

• Sketch:– Immediate fixed

costs– Immediate variable

costs (including your labor)

– Break-even point

Key Metrics• The 3-5 indicators of a

business’ health (success).– How you track your

customer’s behavior and preferences

– Monitoring the implementation of your business’ key activities

– Informs a business whether or not it needs to pivot/iterate

• Sketch:– Customer Segment

Awareness– New Customer

Acquisition– Inventory Turnover– Time Needed to

Complete Job– On-Time Payments– Customer Retention– Customer Referral

Unfair Advantage• The features of your

business that are difficult for competitors to copy or buy. – What keeps new

competitors from taking your customers?

– If someone “steals” your idea, how will you continue to exist?

• Sketch:– Current advantages

(often based on existing relationships or networks)

– Advantages your business could develop over time

– Note: passion, existing resources, and being “first to market” are not sustainable competitive advantages.

MODEL• Lean Canvas• Solution Interviews– Return to the earlier interviewees and

propose the Solution and UVP you sketched• Do you have the right feature set?

– Discuss your business model (the interaction of all 9 boxes) with mentors or fellow entrepreneurs• Do you have a realistic path to profit?

LeanStartup Roadmap• Idea– Problem

Interviews– Market Research

• Model– Lean Canvas– Solution

Interviews

• Test– MVP– Early Adopter

Sales

TESTSolution/Product Fit

Determine how to effectively offer your solution in a minimal product

• Minimal Viable Product (MVP)• Early Adopter Sales

Lean Startup

Traditiona

l Startup

Minimum Viable Product

Minimum Viable Product

• Strategy used for fast and qualitative market testing of a product or product feature

• The most resource-efficient (time, money, energy) method of creating and capturing value from the Customer Segment–MUST solve the problem of customer– Should not require a loan or long timeframe

Early Adopter Sales

• Begin selling to very specific Customer Segment (10-15 people)

• Learn which features are “must-have” and which are unnecessary

• Determine price point – High enough the customer must contemplate

the purchase, low enough the customer will buy

Goal: Validate business model not # of sales

LeanStartup Roadmap• Idea

– Problem Interviews– Market Research

• Model– Lean Canvas– Solution Interviews

• Test– MVP– Early Adopter Sales

• Scale– Product 1.0 Launch– Business Plan– Investors

SCALEProduct/Market Fit

Determine if your product will attract demand from regional / national /

international markets

• Product 1.0 Launch• Business Plan• Investors

What is Success?

Know the impact you wish to make in the

world and scale accordingly.

Discussion

Matt RutterEntrepreneurial Development Consultant

Chamber of Commerce and Industry of Gagauzia+(373) 60 735 102

matt@mattrutter.comSkype: matthewlrutter